KPDN Seeks to Develop More Malaysian MSMEs as Franchisors

The Malaysian government, through the Ministry of Domestic Trade and Cost of Living (KPDN), is focusing on developing local brands and increasing participation by micro, small and medium-sized enterprises (MSMEs) as franchisors. This approach makes business sustainability, rather than simply increasing participation, a priority for the development of Malaysia’s franchise community.

MSMEs in focus as franchise system owners

According to a report in Utusan Malaysia dated 6 November 2026, Minister of Domestic Trade and Cost of Living Datuk Armizan Mohd Ali said the ministry was continuing to strengthen the franchise ecosystem by developing local brands and encouraging more MSMEs to become franchisors.

He said KPDN’s main focus was to strengthen the presence of Malaysian franchises in the domestic market while helping Malaysian brands expand internationally. These two objectives place brand development and market expansion within the same agenda.

The emphasis on MSMEs as franchisors is central to this development. The focus is not solely on entrepreneurs participating as franchisees who operate businesses under an existing brand, but also on developing local businesses into franchisors.

For the franchise community, this direction highlights the role of local enterprises in building and expanding their own brands. At the same time, the ministry’s statement links increased participation to competitiveness within Malaysia and the ability to enter overseas markets.

Sustainability matters more than participation targets alone

In a Berita Harian report on 5 November, Armizan explained that the government’s focus went beyond increasing participation in the franchise community. It also wanted to ensure business sustainability and operators’ competitiveness in domestic and international markets.

He acknowledged that geopolitical conflicts in Europe and the Middle East posed challenges for businesses. However, the structured franchise model, with its own support ecosystem, gave operators an advantage in surviving and growing.

He said franchise operators did not work in isolation. Support within the ecosystem underpinned his confidence that they were better equipped to withstand challenges than businesses operating independently.

For MSMEs assessing the opportunity to become franchisors, the policy message is clear: expansion needs to be considered alongside the ability to sustain the business. Increased participation is not the only measure highlighted by the ministry; sustainability and competitiveness are also priorities.

These statements also position support from the franchise community as one of the model’s strengths. In Armizan’s explanation, this advantage stems from the way businesses are structured and the support available to operators, rather than any immunity from market pressures or global uncertainty.

Innovation and consumer demand are priorities

Armizan also urged franchise operators to continue carrying out research and development, introduce innovations and adapt their products to changing consumer demand. He said these steps were necessary to remain competitive.

This emphasis complements the agenda of encouraging more MSMEs to become franchisors. Brand development is not just about business expansion; it also involves ensuring that products remain relevant to customers’ needs.

In the context of the minister’s remarks, innovation and product adaptation need to go hand in hand with ambitions for expansion. Operators are being encouraged to keep improving rather than relying solely on their existing business models.

For MSME owners, this offers a starting point for an initial assessment: how well do current products meet customer demand, and what improvements need attention before planning an expansion? Such an assessment is consistent with the ministry’s emphasis on sustainability and long-term competitiveness.

Attention to both domestic and international markets

Armizan said local brands were making encouraging progress in entering international markets. He also linked this development to year-on-year increases in franchise registrations.

However, overseas expansion is not the only focus. KPDN also emphasises strengthening the presence of local brands in the domestic market. This makes domestic development and international expansion two important parts of the ministry’s stated direction.

The government is also emphasising market expansion for Malaysian franchises through Gerakan Jom Beli Produk Malaysia, or Jom Malaysia, a campaign encouraging consumers to buy Malaysian products. This initiative places support for Malaysian brands within the broader agenda for developing the franchise community.

Overall, these developments signal that MSMEs have a place in the franchise development agenda as franchisors, with sustainability, product innovation and market expansion receiving attention together.

Practical guidance: MSMEs considering the franchise model should assess their business readiness, how well their products meet customer demand and their capacity to support expansion before committing to plans to become franchisors.