With the coming into force of the Franchise (Amendment) Act 2020 and its subsidiary legislation ("the Amendments") on 28 April 2022, the Amendments have brought along changes to the Malaysian Franchise Act 1998 ("the Act"). This Legal Alert is intended to provide a brief snapshot of the key changes made to the Act:
1. Foreign Franchisors
A foreign franchisor registered under Section 54 of the Act prior to 28 April 2022 shall be deemed to have been registered under Section 6 of the Act (previously interpreted to cover local franchisors and local master franchisees only).
Consequently, all provisions previously perceived to be applicable only to local franchisors and local master franchisees will now extend to foreign franchisors, and such provisions, include without limitation, the requirements to provide disclosure documents as part of the compulsory practice and the filing of annual report.
2. Period of Effectiveness and Renewal of Franchise Registration
The Amendments prescribe a period of five (5) years as the period of effectiveness for franchise registrations, which applicable to all franchisors, regardless of whether they are registered before or after 28 April 2022. After such period, the franchise registrations may be renewed by applying to the Ministry of Domestic Trade and Consumer Affairs (MDTCA) in a prescribed format with payment of the requisite renewal fee (specified as follows).
3. Changes to the Fees Payable to the MDTCA
The new fee structures* are as shown below:
Registration
Category |
Processing Fee |
Registration Fee |
Total Fee |
|||
MYR |
USD | MYR | USD | MYR |
USD |
|
Local Franchisor |
50 | 12 | 1000 | 239 | 1050 |
251 |
Local Master Franchisee |
50 | 12 | 1000 | 239 | 1050 | 251 |
Foreign Franchisor |
50 |
12 | 5000 | 1191 | 5050 |
1203 |
Franchisee (of Local Franchisor) |
20 |
5 | – | – | 20 |
5 |
Franchisee (of Local Master Franchisee) |
20 |
5 | – | – | 20 |
5 |
Franchisee (of Foreign Franchisor) |
50 | 12 | 1000 | 239 | 1050 |
251 |
Renewal
Category |
Renewal Fee (valid for 5 years) |
|
MYR |
USD | |
Local Franchisor |
1000 |
239 |
Local Master Franchisee |
1000 |
239 |
Foreign Franchisor |
5000 |
1191 |
Application for amendment of supporting document (pursuant to Section 11 of the Act)
Category |
Processing Fee |
|
MYR |
USD |
|
For all applicants |
50 |
12 |
Note:
The amounts quoted in USD are for reference only and based on the exchange rate of USD 1 = MYR 4.20. The actual amounts will be charged at the prevailing exchange rate.
4. Registration of Franchisees
A franchisee of a foreign franchisor, local franchisor or local master franchisee is required to register with the MDTCS before it commences its franchised business. Failure to comply with such registration is now a criminal offence under the Act.
Originally Published with Wong Jin Nee & Teo, Franchise (Amendment) Act 2020 And Its Subsidiary Legislation
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.