KUSKOP — the Ministry of Entrepreneur Development and Cooperatives — is the government ministry responsible for regulating franchising in Malaysia. Every franchisor operating in Malaysia must comply with KUSKOP’s requirements, register via the MyFEX 2.0 system, and maintain their registration in good standing.

This guide covers everything Malaysian business owners need to know about KUSKOP’s franchise requirements.

What Does KUSKOP Do?

KUSKOP’s franchise regulatory functions include:

Administering the Franchise Act 1998 and its regulations
Operating and maintaining the MyFEX 2.0 franchise registration portal
Reviewing and approving franchise registrations and renewals
Issuing Franchise Registration Certificates
Conducting compliance audits on registered franchisors
Enforcing the Act — investigating complaints, issuing compounds, initiating prosecution
Promoting franchise development through training, exhibitions, and export support

KUSKOP’s franchise division has been increasingly active in enforcement in recent years, with more compliance audits and faster action on registration lapses.

The Core Legal Framework

Franchise regulation in Malaysia operates under two primary instruments working together:

1. The Franchise Act 1998 (Act 590)

The Act establishes:

The legal definition of a franchise
The mandatory disclosure requirement (FDD)
The registration and licensing framework
Rights and obligations of franchisors and franchisees
Offences and penalties for non-compliance
KUSKOP’s enforcement powers

2. The Franchise Regulations 1999

The Regulations prescribe the detailed rules for:

The format and content requirements for the FDD
The registration application process
Fee schedules (both initial registration and renewal)
Annual reporting obligations
The Register of Franchises

Both the Act and the Regulations must be complied with. The Act sets the framework; the Regulations fill in the operational details.

Who Can Register as a Franchisor with KUSKOP?

Basic Eligibility

To register a franchise with KUSKOP, the applicant must:

Be a Malaysian-incorporated entity (company or partnership), OR a foreign franchisor with a locally-incorporated representative
Have at least two operating outlets under the same brand/business model
Have operated those outlets for more than one year
Have a complete, accurate Franchise Disclosure Document
Have a Franchise Agreement prepared and ready to attach to the FDD

These are minimum requirements. KUSKOP can refuse registration even to eligible applicants if the FDD or Franchise Agreement contains deficiencies or problematic provisions.

Malaysian Companies

A Malaysian company incorporated under the Companies Act 2016 is eligible to register as a franchisor. The company’s own track record — not just the brand’s history — is relevant. If the company was incorporated 18 months ago but the brand has operated for 5 years through a different entity, KUSKOP will want to understand the corporate relationship.

Foreign Franchisors

Foreign brands cannot register directly with KUSKOP. They must either:

Incorporate a Malaysian subsidiary and register through that entity
Appoint a Malaysian master franchisee who registers in their own name

Foreign franchisors who have been operating internationally for many years sometimes find this frustrating — but the Malaysian registration requirement is non-negotiable and applying through a local entity is the standard solution.

What Does NOT Qualify

The following do not qualify for franchise registration:

Sole proprietors or individuals (must incorporate first)
Businesses with fewer than two operating outlets
Businesses that have operated for less than one year
Businesses that cannot produce an FDD in the prescribed format
Businesses whose proposed Franchise Agreement contains unconscionable provisions

The FDD — KUSKOP’s Specific Standards

Beyond the 23 items required by the Act, KUSKOP reviewers apply specific quality standards when assessing an FDD submission.

Completeness

Every item must be populated. KUSKOP will not accept an FDD with blank items, even if the franchisor believes the item is not applicable. Write a brief explanation for any item that is not applicable rather than leaving it blank.

Internal Consistency

All 23 items must be consistent with each other. Common inconsistencies that trigger KUSKOP Information Requests:

Item 6 (franchise fee) says one amount, but Item 20 (Franchise Agreement) shows a different fee structure
Item 5 (franchisor obligations) describes extensive support, but Item 16 (support) describes minimal support
Item 10 (franchisee obligations) is silent on a matter that Item 5 makes the franchisor responsible for

Franchise Agreement Alignment

The Franchise Agreement (Item 20) must accurately reflect every material representation made in the FDD. This is where most franchise disputes originate — the FDD said one thing, the Agreement says another. KUSKOP reviewers look for this.

Financial Information Currency

Audited financial statements attached as Item 22 must be the most recent available — generally no older than 18 months from the date of submission. Stale financial statements suggest the franchisor is not in good financial standing.

The MyFEX 2.0 Registration Process

See our MyFEX 2.0 Guide for a detailed walkthrough. The KUSKOP-specific requirements are:

Submission Requirements

The MyFEX 2.0 portal requires:

A completed franchisor profile
Uploaded FDD (all 23 items, Item 20 attached)
Uploaded financial statements (Item 22)
Uploaded SSM company extract
Payment of the prescribed registration fee

Review Timeline

KUSKOP’s target review timeline is 4–8 weeks from submission. Complex applications, foreign franchisor applications, and applications with incomplete documentation can take significantly longer.

Information Requests

KUSKOP reviewers may issue Information Requests (IRs) asking for clarification or additional documents. Each IR must be responded to in writing. Multiple IR rounds are common — do not be discouraged, but do respond promptly and completely.

Annual Renewal Requirements

KUSKOP requires annual renewal of every franchise registration. The renewal process requires:

Updated FDD — confirming all 23 items remain current
Network report — disclosing the number of active franchisees, outlet locations, and aggregate network performance
Fee payment — renewal fee based on the franchisor’s revenue tier
Material change notification — any changes to the franchise model, fees, or structure since initial registration must be disclosed

Renewal deadline: Applications must be submitted before the expiry date. There is no grace period. A lapsed registration requires a fresh application at the initial registration fee — and during the re-registration period, the franchisor cannot legally offer or sell franchises.

Compliance Audits

KUSKOP conducts periodic compliance audits on registered franchisors. Audits typically cover:

Whether the FDD remains accurate and current
Whether franchise agreements have been filed within 30 days of signing
Whether the franchisor is providing the support described in the FDD
Whether franchisee termination and non-renewal reporting is current
Whether the franchisor’s financial standing remains healthy

Franchisors who cannot demonstrate compliance with their FDD obligations face regulatory action — from written warnings to suspension to deregistration.

Reporting Obligations

Registered franchisors must file the following with KUSKOP via MyFEX 2.0:

Report	Deadline
New franchise agreement signed	Within 30 days of signing
Franchise termination or non-renewal	Within 30 days
Change in franchisor corporate structure	Within 14 days of change
Material change to FDD	Before the change takes effect
Annual renewal application	Before expiry date

Penalties for Non-Compliance

The Franchise Act 1998 sets out the following penalties:

Offering a franchise without registration: Fine up to RM 50,000 and/or imprisonment up to 2 years for first offence
Failure to provide FDD at least 14 days before signing: Fine up to RM 50,000 and/or imprisonment up to 2 years
False or misleading information in FDD: Fine up to RM 50,000 and/or imprisonment up to 2 years
Failure to renew registration: Deregistration and inability to legally operate as franchisor
Failure to report new agreements or terminations: Compound fines

These are criminal penalties, not administrative fines. Non-compliance carries real personal liability for company directors.

Franchisee Rights Under KUSKOP’s Framework

KUSKOP’s regulatory framework exists primarily to protect franchisees. Franchisees have the right to:

Receive a complete and accurate FDD at least 14 days before signing
Access to the franchisor’s dispute resolution mechanisms
Protection under the Act if the franchisor provides false information
Report non-compliant franchisors to KUSKOP

This means that from a franchisor’s perspective, compliance is not just a legal obligation — it is risk management. A franchisee who feels misled has both the motivation and the legal basis to pursue action against you.

How KUSKOP Has Changed in Recent Years

KUSKOP’s franchise division has become significantly more active since 2020:

More compliance audits: Random audits on registered franchisors have increased
Faster renewal enforcement: Late renewal applications are now treated as new registrations more strictly
Better resourced review team: Average review time for well-prepared applications has actually improved
Stricter FDD standards: The quality threshold for FDD acceptance has risen noticeably

For franchisees, this is welcome. For franchisors, it means compliance can no longer be treated as an afterthought.

How SQV Helps with KUSKOP Compliance

SQV works with franchisors at every stage of the KUSKOP compliance lifecycle:

Pre-registration audit: We review your FDD and franchise programme against KUSKOP standards before you submit
MyFEX 2.0 submission management: We handle the full portal submission and coordinate IR responses
Annual renewal: We track your renewal date and manage the process to avoid lapses
Compliance audit preparation: We review your franchise operations against FDD obligations before KUSKOP does
FDD updates: We manage FDD updates when your franchise model changes

Need a KUSKOP compliance review? Contact SQV to schedule a pre-audit consultation.