Franchise Questions, Answered

Yes, foreign franchisors can sell franchises in Malaysia, but face additional requirements under the Franchise Act 1998 and MITI regulations. Key requirements: (1) Register with KUSKOP via MyFEX 2.0. (2) Appoint a Malaysian agent or representative as primary contact with KUSKOP and Malaysian franchisees. (3) The FDD must be in English and comply with Malaysian disclosure requirements. (4) Foreign franchisors may face restrictions on bringing foreign personnel to Malaysia. (5) All representations made to Malaysian franchisees must be accurate and complete. SQV regularly advises foreign franchisors entering Malaysia.

Franchise consultant fees in Malaysia range from RM 30,000 to RM 150,000+ depending on scope. A full engagement with SQV — from feasibility through MyFEX 2.0 registration — typically runs RM 80,000 to RM 200,000.

The Franchise Disclosure Document (FDD) is a comprehensive legal document that discloses all material information about your franchise programme to prospective franchisees. In Malaysia, KUSKOP requires franchisors to address 23 specific items including: the franchisor's background, litigation history, franchise fees, franchisee obligations, franchisor's obligations, financing terms, franchise territory, trademarks, patents, copyrights, restriction on goods/services, franchisee participation requirements, termination and transfer provisions, and audited financial statements. A well-prepared FDD protects both franchisor and franchisee.

Franchise agreement terms in Malaysia typically range from 5 to 10 years, with options to renew. The Franchise Act 1998 and KUSKOP regulations provide franchisees with certain protections around termination and non-renewal. Key provisions that must be addressed: initial term length, renewal conditions and process, termination grounds (for both franchisor and franchisee), post-termination obligations (non-compete, confidentiality, brand de-identification), exit assistance provisions, and dispute resolution mechanisms. A franchise agreement drafted by a non-specialist lawyer often fails to address these complexities adequately.

KUSKOP's MyFEX 2.0 registration fees vary based on your franchisor category. Application fees typically range from RM 1,000 to RM 5,000 depending on the type of application. Annual renewal fees apply separately. However, the more significant cost is usually the professional fees for FDD preparation, legal review, and franchise consulting — which can range from RM 30,000 to RM 100,000+ depending on complexity. SQV offers transparent pricing for full MyFEX 2.0 registration support.

Royalty rates in Malaysian franchises vary by sector and business model. Typical ranges: F&B franchises: 5-8% of gross revenue. Retail franchises: 5-10% of gross revenue. Services franchises: 8-15% of gross revenue. The right royalty rate depends on the value you provide — ongoing support, brand equity, system access, and marketing. Some franchisors also charge marketing fees (typically 1-3%) to fund national brand marketing. Royalty rates that seem attractive to franchisees (very low rates) often correlate with minimal franchisor support — which tends to produce poor franchisee outcomes.

Finding the right franchisees requires a deliberate process. Define your ideal franchisee profile — not just financially capable individuals, but people with relevant experience, entrepreneurial mindset, and alignment with your brand values. Sources include: industry events, LinkedIn outreach, franchise exhibitions, referrals from existing franchisees, and targeted advertising. The selection process should include: initial application screening, financial capability assessment, discovery day, site visit to their proposed location, background and reference checks, and final approval. Never rush this process — a bad franchisee can damage your brand irreparably.

To register as a franchisor in Malaysia, you must: (1) Have a franchise that meets the legal definition under the Franchise Act 1998 — an established business system, brand, and grant others the right to operate under that system for a fee. (2) Have operated at least one franchise outlet successfully for at least one year. (3) Prepare a complete Franchise Disclosure Document covering all 23 KUSKOP-required items. (4) Submit your application via MyFEX 2.0. (5) Pay applicable KUSKOP fees. Foreign franchisors have additional requirements including the appointment of a Malaysian agent.

MyFEX 2.0 is KUSKOP's online franchise registration portal. If you want to sell franchises in Malaysia, you must be registered through MyFEX 2.0. Operating an unregistered franchise is an offence under the Franchise Act 1998. Registration typically takes 4-8 weeks and requires a complete Franchise Disclosure Document (FDD) covering all 23 required items.