Choco Loco Charged with Using the Term ‘Franchise’ Without Approval

Choco Loco (M) Sdn Bhd, a director and a former director face charges relating to the use of the term ‘franchise’ without approval from Malaysia’s Registrar of Franchises. According to a DagangNews report dated 2 November 2026, all pleas entered at the Kuala Lumpur Sessions Court were not guilty, leaving the charges to be determined by the court.

Charges relate to two agreements signed in 2021

Company director Syaidatul Natasha Suhaimi, 36, and former director Hadi Asasa, 37, were jointly charged in connection with two agreements entered into by Choco Loco. The agreements involved Chocolate Cravings Sdn Bhd and Choco Rush Global Trading Sdn Bhd.

The alleged offences took place in Solaris Dutamas on 1 April 2021 and 1 June 2021. The charges concern the alleged use of the term ‘franchise’ without approval from the Registrar of Franchises; they are not a court finding that an offence has been proved.

Both individuals pleaded not guilty. They should therefore be described as facing charges, not as having been convicted.

For Malaysia’s franchise community, these details provide important context: the charges relate to terminology used in two specific agreements. They should not be taken as grounds for conclusions about all of the company’s dealings or about other parties named in those agreements.

Chocolate Cravings and Choco Rush Global Trading were named in the report as parties that entered into agreements with Choco Loco. Their mention in that context should be distinguished from the reported charges against Choco Loco, its director and its former director.

Relevant provisions and potential penalties

The charges against the two individuals were brought under Section 37A of the Franchise Act 1998, read together with Section 34 of the Penal Code. The report linked the alleged use of the term ‘franchise’ without approval to the requirements under Section 8 of the Franchise Act 1998.

If convicted, the two individuals could face a maximum fine of RM100,000 (Malaysian ringgit), up to one year in prison, or both. DagangNews cited an FMT report for these penalty details.

These are the stated maximum penalties for the charges, not sentences that have been imposed. The distinction between a potential penalty following conviction and the court’s current position is essential to understanding the case.

At the stage reported, both individuals had pleaded not guilty. Any reference to fines or imprisonment must therefore be qualified with ‘if convicted’, so that readers do not mistakenly assume the proceedings have already resulted in a guilty verdict.

The case is also not an announcement of a legislative amendment or a new requirement. The reported development is a prosecution under the provisions of the Franchise Act 1998 specified in the charges.

Company also faces two charges

In addition to the charges against the individuals, Choco Loco (M) Sdn Bhd faces two charges relating to similar offences under Section 37A(a) of the Franchise Act 1998.

Syaidatul entered not-guilty pleas on the company’s behalf before Judge Siti Shakirah Mohtarudin. These pleas should be distinguished from her own plea as an individual who also faces charges.

For the company, the report stated that a first offence could carry a maximum fine of RM250,000, while subsequent offences could attract fines of up to RM500,000. These figures are also reported penalty limits, not fines imposed on Choco Loco.

The court granted joint bail of RM16,000 covering all the charges. This amount should not be confused with a fine: the report described it as bail, whereas the potential penalties outlined above apply only in the event of a conviction.

Practical considerations for the franchise community

For prospective franchisees and brand owners considering the Malaysian market, this development serves as a reminder to check the status of an offer before signing an agreement. The use of the word ‘franchise’ in a document should not be the sole basis for a business decision.

Prudent steps include requesting registration and approval documents, checking the identities of the parties to the agreement, and seeking legal advice on the structure of the offer. These checks should be based on the actual documents, rather than solely on a brand name or verbal explanations.

At the same time, the franchise community should distinguish recommended due diligence from any assessment of this particular case. Not-guilty pleas have been recorded, and charges do not in themselves prove wrongdoing.

Practical takeaway: Check the documents and approval status before making a commitment, while respecting the court process for all parties facing charges.