Differences between Franchising and Licensing in Malaysia

Franchising in Malaysia is governed by the Franchise Act 1998, which aims to regulate the franchise industry and protect the interests of franchisees and franchisors. Some key points regarding franchising in Malaysia under the Franchise Act 1998 include:


1. Registration: Franchisors are required to register their franchise with the Registrar of Franchise under the Ministry of Domestic Trade and Consumer Affairs before offering or selling any franchise in Malaysia.


2. Disclosure: Franchisors must provide prospective franchisees with a disclosure document at least 10 days before signing any agreement. The disclosure document should include all relevant information about the franchise system, including financial details, obligations, and any legal issues.


3. Franchise Agreement: The Franchise Act 1998 sets out requirements for the contents of a franchise agreement, including terms related to the rights and obligations of both the franchisor and franchisee, territory rights, fees, and termination clauses.


4. Dispute Resolution: The Act provides mechanisms for resolving disputes between franchisors and franchisees, including through mediation and arbitration.


5. Consumer Protection: The Act also includes provisions to protect the interests of consumers who purchase goods or services from franchise outlets.



It is essential for both franchisors and franchisees to be familiar with the Franchise Act 1998 and its requirements to ensure compliance and a successful franchising relationship in Malaysia.

To license a brand in Malaysia, you would typically need to follow these steps:


1. Identify Potential Licensees: Look for companies in Malaysia that might be interested in licensing your brand. This could be through market research, trade shows, or networking.


2. Due Diligence: Conduct thorough due diligence on potential licensees to ensure they are reputable and have the resources to effectively promote and distribute your brand in Malaysia.


3. Negotiate Agreement: Once you’ve found a suitable licensee, negotiate the terms of the licensing agreement. This should outline details such as the scope of the license, territories covered, duration, royalty rates, quality control standards, and any other relevant terms.


4. Legal Assistance: It’s advisable to engage legal assistance to ensure the licensing agreement complies with Malaysian laws and adequately protects your brand.


5. Register the Agreement: Depending on the specifics of the agreement, you may need to register it with the Malaysian authorities or relevant institutions.


6. Monitor and Maintain: After the agreement is finalized, it’s essential to monitor the licensee’s activities to ensure they comply with the terms. Regular communication and quality control checks can help maintain the integrity of your brand.



Please keep in mind that these are general steps, and the specific process may vary based on the nature of your brand and the industry you operate in. Consulting with a legal expert or licensing professional familiar with Malaysian regulations would be beneficial in navigating this process successfully.