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WHAT ARE THE PROCEDURES FOR REGISTRATION OF FRANCHISOR OR MASTER FRANCHISEE OR FRANCHISEE TO FOREIGN FRANCHISOR ?

You must submit your application Form BAF 2 and Disclosure Document Form BAF 1 accompanied by relevant certified true copy documents and fees.

There will be a one-time registration fee of RM1,000 for franchisor or master franchisee or franchisee to foreign franchisor. Processing fee of RM50 will also be imposed. For amendment to documents, you will be charged RM50 for each application.

All payments must be made by postal order or money order. Cash and cheque are not acceptable.

Your application have to be enclosed with the following documents

• Sample of franchise agreement
• Operation manual
• Training manual
• Certificate of incorporation, Form 8 or 9 (whichever is applicable)
• Form 24 and 49
• Form of annual return of a company having a share capital pursuant to section 165 of Companies Act 1965
• Latest audited balance sheet and profit and loss account
• Company's organizational chart together with names and position of key personnel's
• Company's business brochures.

You can obtain Form BAF 2 and BAF 1 from the Ministry of Entrepreneur Development at no cost.

For successful applicant, the registration of a franchise shall continue to be effective unless the Registrar issues an order made by written notice to the applicant or the franchisor to suspend, terminate, prohibit or deny the sale or registration of the franchise.

An applicant or the franchisor shall submit an annual report by Form BAF 6 to the Registrar of Franchise within 30 days from the anniversary date of registration.

WHAT ARE THE COSTS INVOLVED IN BUYING A FRANCHISE OR BECOMING A FRANCHISEE ?

The main reason for purchasing a franchise is the right to associate with the company's or franchisor's name. Nevertheless, you must be cautious like any other investment. Purchasing a franchise does not necessary guarantee a success and can be quite costly.

They are certain fees which you may be required to pay.

Generally, a franchisee will have to pay an initial franchise fee. The fee may be non-refundable and costing several thousand to hundred thousand Ringgit Malaysia.

You may have to pay the costs to rent, renovation, equipment, initial inventory, insurance, research and development, training fee, legal fees, centralized accounting and processing services and probably "grand opening" fee to the franchisor to promote your new franchise outlet.

Franchisor royalties are usually based on a percentage of your monthly gross turnover. You pay royalties partially for the right to use your franchisor's name thus you may be required to pay royalties to your franchisor even if your franchise business has not earned sufficient income at that time.

Some franchisors may have advertising fund whereby you have to pay a certain amount to them to advertise to attract new franchise owners or customers but this does not normally target your particular franchise outlet. This is normally a certain percentage paid monthly.