Franchise Registration in Malaysia: Before Making an Offer

Having an established customer base does not automatically mean a business can start offering franchise packages. For owners looking to expand an existing business in Malaysia, registration is a legal requirement that must be met before any offer is made. This guide focuses on managing that process so that your entry into the franchise market is not preceded by premature sales promises.

1. Set clear boundaries before making an offer

Malaysia specifically regulates franchising through the Franchise Act 1998 (Act 590), including its 2020 amendments. Section 6 requires a franchisor to register its franchise with the Registrar before operating a franchise business or offering to sell a franchise to anyone. Submitting an application alone does not mean the franchise is registered.

Keep internal preparations separate from activities that involve offering a franchise. You can organise financial records, develop support systems and seek professional advice. However, do not assume that a package still “undergoing registration” can be marketed as an available franchise opportunity.

Before your sales team releases promotional materials, put the following controls in place:

• Assign someone to check the registration status.
• Require internal approval for all materials inviting people to buy a franchise.
• Ensure staff do not accept reservation payments or promise territories without a legal review.
• Set the launch date for franchise offers only after registration has been confirmed.

The name of the contract is not the sole deciding factor either. Calling a relationship a “brand licence” or “business partnership” does not necessarily place it outside the Act if its actual characteristics meet the definition of a franchise. Seek a lawyer’s assessment if your model falls into this grey area.

2. Assign responsibility for each part of the application

Section 7 of the Franchise Act 1998 sets out the core application documents, including a disclosure document, a sample franchise agreement, an operations manual, a training manual and financial information. Government registration guidance also lists audited financial statements for the latest three years. Use the current official checklist, as forms and administrative requirements may change.

The most practical approach is to allocate work to the relevant people, rather than handing everything to one coordinator at the last minute.

Responsible team or person	Required deliverables
Management	Details of the applicant entity, ownership structure and key officers
Finance	Audited accounts and any supporting financial information requested
Operations	Operations manual and documentation of business systems
Training	Training manual and arrangements for delivering training
Legal adviser	Sample agreement and review of legal requirements
Application coordinator	Disclosure form, document register and proof of submission

For each item, record who is preparing it, the target completion date and anything still outstanding. If the accounts have not yet been audited, speak to your auditor early; do not assume that management accounts can replace the audited documents requested.

If your business records are insufficient to meet the checklist requirements, seek clarification from the Registrar before incurring the cost of preparing the full application. Do not assume an exemption will be granted. This step helps you identify genuine obstacles before making commitments to prospective franchisees.

3. Manage submission and queries as a single project

Applications are made to the Registrar of Franchises through the designated official channels. Consult the MyFEX portal and the instructions issued by the ministry responsible at the time of your application. Avoid relying entirely on old forms, former ministry addresses or fee schedules copied from promotional materials.

The Franchise (Forms and Fees) (Amendment) Regulations 2022 are among the regulations relevant to this process. Check current fees through official channels, then distinguish government fees from the costs of lawyers, auditors or consultants. Payment to a consultant is not proof that registration has been approved.

After submission, retain the reference number and a complete copy of everything submitted. Create a query log with four columns: information requested, person responsible, deadline and date the response was submitted. Uncoordinated responses sent in stages can easily lead to omissions or repeated queries.

Do not promise investors an approval date. Your internal timetable should allow for further clarification and corrections. If you use a representative, ensure that your company retains access to the application records and is kept informed of every response from the Registrar.

4. Confirm approval before starting sales

When you receive a decision, read the approval documents or registration certificate carefully. Check the registered entity, the scope of the franchise, any relevant conditions and the validity period. Add renewal dates and applicable reporting obligations to your company’s compliance calendar.

Registration is not a substitute for disclosure to prospective franchisees. Section 15 of the Franchise Act 1998 requires a copy of the franchise agreement and disclosure documents to be provided at least ten days before the agreement is signed. Record the delivery date and retain proof of receipt; do not schedule signing immediately after handing over the documents.

Nor should you assume that only franchisors have registration obligations. The Act also imposes obligations on franchisees, with different arrangements depending on whether the franchise is granted by a local or foreign franchisor. Include an explanation of the relevant responsibilities in your franchisee onboarding process, supported by appropriate legal advice.

Practical action: Appoint a coordinator, complete your document register and hold off on sales offers until registration is confirmed. Following the right sequence protects your business and builds trust within the franchise community.