Franchise Act 1998 was amended in September 2012 in a number of
ways, some of these amends will have a substantial impact on
franchising in Malaysia.
Malaysia has not been the easiest of markets
to enter since the advent of the 1998 Franchise law. It was
hoped that the new amendments would improve the situation, but that
seems not to have been the case.
The scope of the Act has been broadened to
cover franchise transactions which are concluded outside Malaysia
but operated within Malaysia and the definition of "franchise"
broadened to facilitate better enforcement.
There is now a requirement to register the
franchise before the franchisor can operate a franchise business or
make an offer to sell the franchise to any person. It also creates
new offences centred around avoiding the impact of the act.
It is now compulsory for the franchisor to get
approval from the Registrar if there are any changes to the
disclosure document and there is clarification of the power of
Registrar to suspend and terminate the registration of franchise.
The power to the Registrar to cancel registration of the franchise
business is also increased and clarified.
The good news for franchisors is that there is
now more time for the franchisor to submit its annual report to the
Registrar which is thirty days from the anniversary date of the
registration to six months from the end of each financial year of
the franchise business.