How to start franchise business in Malaysia 2025

In Malaysia, the franchise industry is booming, offering a plethora of opportunities for aspiring entrepreneurs. According to the MFA‘s report, the value of the Malaysian franchise industry is expected to soar to over RM46 billion by 2025. If you’re considering taking the plunge and start franchise business in 2025, this comprehensive guide will equip you with the knowledge and insights you need to succeed.

6 Popular Franchise Opportunities in Malaysia

Malaysia’s diverse economy presents a wide range of franchise opportunities across various sectors. Popular options include:

• Food & Beverage (F&B): Fast food, cafes, restaurants, and beverage kiosks.
• Retail: Clothing, convenience stores, and specialty shops.
• Education: Tuition centers, enrichment programs, and language schools.
• Services: Laundry, cleaning, automotive services, and beauty salons.
• Healthcare: Clinics, pharmacies, and wellness centers.

Why Choose to Buy a Franchise?

Buying a franchise offers several advantages over starting an independent business:

• Established Brand: Leverage an existing brand name and reputation.
• Proven Business Model: Follow a tried-and-tested operational system.
• Training and Support: Receive comprehensive training and ongoing support from the franchisor.
• Marketing and Advertising: Benefit from national or regional marketing campaigns.
• Reduced Risk: Lower failure rate compared to independent startups.
• Buying Power: Access to bulk purchasing discounts and supplier relationships.

Franchise Business Model

The franchise business model involves a franchisor granting a franchisee the right to operate a business using the franchisor’s brand, products, and systems. In exchange, the franchisee pays an initial franchise fee and ongoing royalties.

Key aspects of the franchise model include:

• Franchise Agreement: A legal contract outlining the rights and obligations of both parties.
• Franchise Disclosure Document (FDD): A comprehensive document providing detailed information about the franchise (more on this later).
• Operations Manual: A guide to the franchisor’s operational procedures and standards.
• Training and Support: Initial and ongoing training, marketing assistance, and operational support.

What are the Risks

While franchising offers advantages, it’s essential to acknowledge the risks:

• Limited Control: Franchisees must adhere to the franchisor’s rules and regulations.
• Franchise Fees and Royalties: Ongoing payments can impact profitability.
• Franchisor’s Reputation: The franchisee’s success is tied to the franchisor’s brand reputation.
• Market Changes: External factors can affect the franchise’s performance.
• Contractual Obligations: Franchise agreements can be complex and restrictive.

The Benefits of Franchise Business

The benefits of starting a franchise business are:

• Lower startup risk.
• Established brand recognition.
• Comprehensive training and support.
• Access to proven systems and processes.
• Marketing and advertising support.
• Potential for higher profitability.

Who is Suitable?

Franchising is suitable for individuals who:

• Have a strong entrepreneurial drive.
• Are willing to follow established systems and procedures.
• Possess adequate financial resources.
• Have good communication and interpersonal skills.
• Are comfortable working within a structured framework.

Researching Franchise Opportunities

Thorough research is crucial before investing in a franchise. Consider the following steps:

1. Identify Your Interests and Skills: Choose a franchise that aligns with your passions and expertise.
2. Research Potential Franchises: Explore various franchise opportunities in your desired sector.
3. Evaluate Financial Requirements: Determine the total investment cost, including franchise fees, startup costs, and working capital.
4. Review the Franchise Disclosure Document (FDD): This document is critical for making an informed decision.
   • The FDD is a comprehensive document that outlines the history of the business, all the franchisees in a system, turnover rates, terminations, fees, rules, restrictions, and numerous aspects of that particular franchise.
   • Request the FDD for any franchise you are seriously considering.
5. Speak with Existing Franchisees: Gain insights into their experiences and challenges.
6. Consult with Professionals: Seek advice from lawyers, accountants, and franchise consultants.
7. Attend Franchise Exhibitions: Explore various franchise opportunities and network with franchisors.

How to apply Franchise:

1. Research & Inquiry: Before everything, explore franchise options online to find the suitable franchise for you. Visit the franchisor’s website or franchise resource website and contact them.
2. Application & Qualification: Complete the franchise application. Provide financial documents they requested. Attend an initial interview to understand their latest business plan and strategy.
3. FDD & Agreement: Review the Franchise Disclosure Document (FDD). If you don’t know what is FDD, read the article here. If everything is good, sign the franchise agreement.
4. Training & Support: Complete the franchisor’s training program. Get help with site selection and setup. Receive ongoing operational support.
5. Outlet Opening & Operation: Now, start to set up your franchise outlet. Then you can launch your business. Remember, always follow franchisor guidelines.

Frequest Ask Questions (FAQs)

• What is the initial franchise fee?
  • The initial franchise fee varies depending on the franchise.
• What are ongoing royalties?
  • Royalties are ongoing payments made to the franchisor, typically a percentage of sales.
• How long is the franchise agreement?
  • The term of the franchise agreement varies depending on the franchise.
• What training and support is provided?
  • Franchisors typically provide initial and ongoing training, marketing support, and operational assistance.
• How do I obtain an FDD?
  • To go deeper with your evaluation of a franchise, or a small list of franchises, request the FDD for the franchise.
• What are the financing options?
  • Financing options may include bank loans, personal savings, or investor funding. If you need a financial advisor, refer to the list here: https://franchise-info.my/financial-advisor/

Starting a franchise business in Malaysia in 2025 can be a rewarding venture. By conducting thorough research, evaluating franchise opportunities, and understanding the risks and benefits, you can increase your chances of success. Remember to request and carefully review the Franchise Disclosure Document (FDD) to make an informed decision. With careful planning and dedication, you can build a thriving franchise business in Malaysia.

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