Buying a Franchise in Malaysia: Check the Franchisor’s Support Promises

Franchisor support is often a key reason for buying a franchise rather than building your own brand. Yet phrases such as “comprehensive training” and “ongoing assistance” do not explain what you will actually receive. Before buying a franchise in Malaysia, scrutinise each promise of support as an operational commitment: who will deliver it, when it will be provided, how much it will cost and how problems will be resolved.

1. Distinguish legal obligations from sales promises

Malaysia has specific legislation governing franchises: the Franchise Act 1998, which has been amended, including in 2020. Section 30(3) provides that a franchisor must assist franchisees in operating their businesses, including through the supply of materials and services, training, marketing, and business or technical assistance.

However, an obligation to provide assistance does not mean that every form of support you might expect is available free of charge. Check the scope, frequency and cost of assistance in the disclosure document and franchise agreement. Do not assume that monthly visits, replacement staff or local marketing campaigns are automatically included.

Under Section 15, the franchisor must provide the disclosure document and a copy of the franchise agreement to prospective franchisees at least 10 days before the agreement is signed. Use this period to compare the salesperson’s explanations with the actual documents, rather than simply reviewing the fees.

The agreement must also provide a cooling-off period of at least seven days under Section 18(4). However, this right is no substitute for checks before signing. Seek a lawyer’s advice on how to exercise it and its financial implications before relying on it.

2. Turn general promises into a checklist you can verify

Ask the franchisor to explain its support across three stages: before opening, during opening and once operations have settled down. Create a simple table with columns for the type of assistance, the responsible party, delivery timing, charges and the relevant supporting document.

For initial training, ask:

• Who must attend: the owner, the manager or all staff?
• What modules are covered, how long does training last and how is competence assessed?
• Who pays for travel, accommodation and staff wages during training?
• Are there charges for refresher training or training new staff?

For opening support, confirm whether the franchisor’s team will attend the premises or only provide remote guidance. Establish their duties: arranging stock, testing the point-of-sale system, training staff or helping to get operations up and running. Approving the layout alone is not the same as helping to manage the opening.

For ongoing support, check the visit schedule, technical support channels, service hours and complaints process. If the point-of-sale system goes down at the weekend, who receives the report and what temporary arrangements are available?

Treat this checklist as a tool for commercial due diligence, not as a list of minimum rights that are all required by law. Its purpose is to remove scope for misunderstanding before you commit.

3. Test actual capacity, not just the paperwork

Even a detailed agreement needs to be backed by a team capable of delivering it. Ask for an explanation of how the training, operations and technical teams are structured. Find out how they manage several outlets opening at once and who takes over when a key team member is unavailable.

Request examples of materials that can be shared without revealing trade secrets, such as training schedules, visit report templates and procedures for escalating problems. If access to the full manual is restricted before signing, ask to see the contents page or a supervised demonstration. Do not assume that confidentiality alone indicates weak support.

Next, speak to several existing franchisees, ideally in different locations and with varying lengths of time in business. Ask questions about specific experiences:

• What help did they actually receive during opening week?
• When did they last report an operational problem, and how was it resolved?
• Is additional training readily available when staff change?
• What support-related expenses took them by surprise?

Distinguish compliance audits from support visits. Checks on cleanliness or the appearance of the premises may be important, but they do not necessarily include guidance on reducing waste, scheduling staff or understanding sales performance. Ask for examples of follow-up action after visits.

4. Ensure the contract reflects the support and its costs

Before signing, match each important commitment to a clause or schedule in the agreement. If the salesperson promises free additional training but the documents allow separate charges, ask an authorised representative to clarify and reconcile the discrepancy in writing.

Also check the distinctions between royalties, marketing contributions and additional service fees. A marketing fee does not necessarily guarantee advertising specifically for your outlet. Ask how campaigns are selected, what materials are provided and what information about the use of funds will be shared with franchisees.

Ask a lawyer to assess the complaints procedure, the time allowed to remedy failures and the dispute resolution provisions. Do not assume you can unilaterally stop paying royalties if you are unhappy with the support; doing so could lead to further contractual disputes.

Practical step: before paying or signing, prepare a one-page summary of the support, costs and supporting evidence. If commitments that are important to your outlet’s success remain unclear, postpone your decision until you receive written clarification.