Franchise (Amendment) Act 2020 and its subsidiary legislation

Pua Siau Kee analyses the recent legislative amendments impacting franchise laws in Malaysia.

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.

The information provided in this publication is for general information purposes only and is not intended to constitute legal advice. Please consult a legal professional if you require further clarification.

For more information regarding the above, kindly get in touch with the firm’s associate, pua Siau Kee, or any other professionals in the firm whom you are dealing with. Siau Kee actively advises clients on license and franchise matters, and also assists with franchise registration at the Franchise and Direct Selling Development Division of the Ministry of Domestic Trade and Consumer Affairs. She is also a registered patent agent and is a key contact of the firm for patent prosecution matters.

Email: psk@wjnt-law.com