Malaysia’s new Franchise Act 1998 recently came into force on 8 October 1999. The Minister of Entrepreneur Development Datuk Mustapa Mohamed stated the purpose of the Act as "to obtain greater understanding of the industry" rather than to regulate it. Another purpose in setting up rules to facilitate the franchise industry in Malaysia is to provide a dispute resolution mechanism for problems arising between franchisors and their franchisees.
The Act requires that all franchisors register and furnish details of their businesses to the government within a year. According to the Minister, there are about 6,000 major franchisors in Malaysia who will be affected by the new law. Those who fail to comply with this requirement can be liable to pay a fine not more than RM5,000.
To ensure the smooth development of the franchise industry in Malaysia, the government has also set up a franchisor council, which comprises consultants, academicians as well as franchisors and franchisees.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
