Buying a Franchise in Malaysia: Check the Training Pass Requirements

Pre-opening training is more than an opportunity to learn how to run the business. If passing the training is a condition of opening an outlet, assessment results can determine when trading begins and who is allowed to manage the branch. Prospective franchise buyers in Malaysia need to understand these requirements before signing an agreement, not after paying fees or hiring staff.

1. Identify who must pass and what is assessed

Start with a specific question: is attendance compulsory, or must participants also pass an assessment? These involve different obligations. Full attendance does not necessarily mean a pass if the franchisor also assesses practical skills, stock management or compliance with procedures.

Ask for a list of roles subject to training requirements. Owners, branch managers and supervisors may have different requirements. If you intend to be an owner who is not involved in day-to-day operations, check whether a manager can fulfil the requirement on your behalf or whether you must still pass personally.

Get written clarification on:

• The training content and the duration of each stage.
• The language of instruction and the format of learning materials.
• Assessment methods, including written tests or practical demonstrations.
• Pass criteria and who makes the decision.
• How long a pass remains valid, if applicable.

Avoid relying on assurances that the training is “easy” or that “everyone usually passes”. Ask for a sample assessment form with no other participants’ personal information. This will help you judge whether the programme suits your experience and identify skills you need to strengthen before joining the brand.

2. Cross-check training requirements against the franchise documents

Malaysia regulates franchising through the Franchise Act 1998, as amended, including the 2020 amendments. Registration guidance from the Ministry of Domestic Trade and Cost of Living (KPDN) lists a training manual among the application documents, alongside the disclosure document, a sample agreement and the operations manual.

The inclusion of a training manual in the registration process does not mean every participant is guaranteed to pass. Nor does it replace a review of the terms that will bind you. Ask for access to the sections covering assessment and passing requirements, subject to reasonable confidentiality arrangements.

Under Section 15 of the Franchise Act 1998, the franchisor must provide the prospective franchisee with the disclosure document and a copy of the franchise agreement at least 10 days before the agreement is signed. Use this review period to compare the salesperson’s explanations with the written documents.

Find answers to three questions: where is the obligation to pass stated, does the agreement refer to the training manual, and which document sets out the consequences of failure? If the brochure says training is included in the package but the agreement allows additional charges, ask for the difference to be explained.

Ask a lawyer to review anything that remains unclear. Do not assume that all training details must be provided free of charge or are negotiable; instead, make sure you understand your actual obligations before agreeing.

3. Calculate the cost of passing, not just the course fee

Training fees may be only one part of the expense. Prepare separate estimates for travel, accommodation, meals, staff wages during training and the owner’s time away from other work or business interests. Distinguish payments to the franchisor from expenses you incur independently.

Next, check the cost of a second attempt. Ask whether participants must repeat the entire programme or only the sections they failed. Obtain the current charges and the contractual basis for reassessment fees, additional materials and on-site training.

Build two scenarios without assuming failure is inevitable:

• Passing on schedule: all required participants complete and pass the training before the planned opening date.
• One participant needs another attempt: include retraining costs and expenses incurred during the waiting period.

For example, if the manager has not yet passed but the premises are ready, you may still face wage and utility costs even though you cannot start trading. Ask whether another approved manager can provide temporary cover and who pays for that replacement.

Do not set an opening date based solely on the course completion date. Allow time for results, availability on repeat sessions and final confirmation from the franchisor.

4. Agree a way forward if passing is delayed

Before signing, ask for a written procedure for participants who fail. A clear procedure should explain how results are communicated, what feedback is provided and what remedial steps are available. These are points to assess or negotiate, not a guarantee that every brand must offer the same process.

Check whether there is a limit on attempts, a deadline for retaking the training and an option to replace a participant. Also ask what happens if the franchisor postpones the course or cannot provide an assessor.

The most important issue is the effect on your purchase. Is the opening simply delayed, or could repeated failure trigger action under the contract? What happens to payments already made? Ask a lawyer to identify the relevant clauses, and do not assume that payments will be refunded automatically.

Keep the training schedule, breakdown of charges, pass criteria and agreed explanations with your purchase documents. If a promise is important to your decision, ask for it to be recorded in an appropriate form and reviewed before you sign.

Practical takeaway: Before buying a franchise, make sure you know who must pass the training, how a pass is determined, the total cost of another attempt and the consequences if the requirements are not met.