FRANCHISING IN MALAYSIA
franchise fees and promotional contributions must not exceed the rates prescribed in the disclosure documents. The Act prescribes that promotional contributions must be use as such and placed into a separate account. Financial statements relating to the same are required to be filed annually with the Registrar of Franchises. Both the franchisor and the franchisee are required by the Act to act in a honest and lawful manner and pursue the best franchise business practice current at the time and in the territory. In their dealings with each other, the franchisor and franchisee must not act unreasonably in relation to the risks assumed by each of them under the franchise arrangement and not act in a fashion that is not reasonably necessary of the protection of the legitimate business interests of the franchisor and franchisee. While in Malaysia there is at present no statutory measures regulating unfair trade practices, in respect of franchises, the Act prescribes that a franchisor must not distort competition amongst franchisees in the charges offered, services and equipment provided, rentals or advertising services unless the discriminatory practice is reasonably related to the time at which the franchises were granted or conduct of the franchisees or innovation in products or business formats or services or promotion of Government initiatives and policies. These exclusions are not exhaustive but any discriminatory practice must be reasonably justifiable having regard to the purpose of the Act to create a fair and balanced relationship between the franchisor and franchisee. The Act prescribes that the franchise term must not be less than 5 years. The franchisee is, by the Act given, the option to at any time prior to the expiration of the franchise, by written notice to the franchisor extend the term of the franchise and unless the franchisee is in breach of the terms of the franchise agreement, the term of the franchise is deemed to be so extended and shall contain terms and conditions no less favourable than the previous franchise agreement. A franchise can, however, be brought to an early end by agreement of the parties to the agreement or by court ruling that conditions in the agreement merit early termination or breach by the franchisee of the franchise agreement.
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Non - compliance with the Act is an offence punishable for the first offence with a fine not exceeding Ringgit 50,000 and for subsequent offences with a fine of not less than Ringgit 10,000 and/or imprisonment not exceeding 5 years. The court can in addition to this declare the franchise agreement null and void and order the refund of all payments made by the franchisee. Where the franchisor is a body corporate, the directors or officers of the body corporate who are responsible for the management of the affairs of the body corporate would be liable to similar punishment. Shahrizat Rashid & Lee jasmine@srl-law.com.my
FRANCHISES IN MALAYSIA BizTop Global Network Retailer Telephone: 012-2899278 Helping someone who would be interested to operate FREE store. License Fee: Nil 99 Speedsmart Telephone: 603 3291 7699 99 Speedmart® is a rapidly growing chain of refreshingly ‘new and improved’ mini-markets Futurekids Computer Learning Centers Telephone: 03-78041486 FUTUREKIDS teaches children and adults computer fluency through an innovative, proprietary computer curriculum. Kinderland & Crestar Telephone: 03-5632 2663 Providing an extensive range of education & enrichment programmes for thousands of customers each year is what we do Marry-Brown Family Restaurant Telephone: 07-3316 590 Fast Food Restaurants Smart Reader Kids Telephone: 03-2300 2555 Early Childhood, Adults and Youth English Learning Centre Vital Years Telephone: 03-2095 6300 Vital Years Centre Franchise is for anyone who wishes to start up an English Literacy Centre for Children from age 2 onwards
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The Act permits two restrictions namely the restrictions against disclosure of confidential information of the franchisor imparted either during training or in the operations manual and the undertaking by the franchisee of a similar business after the expiration or termination of the franchise arrangement. Any such restriction must not exceed 2 years beyond the expiration or termination of the franchise.
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