Advisory on re-registration of franchises under the Malaysian Franchise Act 1998

The Registrar of Franchise (“Registrar”) has issued a circular on 28 July 2022 advising that all franchise registrations will be expiring in conjunction with the coming into force of the Franchise (Amendment) Act 2020 (“Amending Act”) on 28 July 2022. We provide below the steps to be taken pursuant to the circular.

1. Re-registration of franchise

In this connection, all existing franchisors (both local and foreign) who were previously registered under the old system (MyFEX 1.0) (“existing franchisors”) are required to re-register their franchise registrations via the new system (MyFEX 2.0) which was officially launched on 28 July 2022. A grace period of 3 years applies to all existing franchisors to complete the re-registration process. The grace period is calculated from 1 August 2022. Failure to re-register franchise registrations may result in the issuance of a notice of suspension, termination and cancellation of franchise registration by the Registrar.

Before applying for re-registration of franchise, existing franchisors are required to submit their franchise business annual reports to the Registrar.

Existing franchisors who have re-registered their franchise registrations under the new system (“registered franchisors”) will be required to re-register for each of their franchisee(s) (who were previously registered under the old system) (“registered franchisee”).

A registered franchisee who was previously registered as a “master franchisee” under the old system must re-register its franchise registration separately as a master franchisee via the new system (“registered master franchisee”) and thereafter re-register for each of its sub-franchisee(s) (who were previously registered under the old system) (“registered sub-franchisee”).

While there are prescribed official fees for new applications for registration of franchisor and franchisee/ master franchisee and sub-franchisee under the new system, the prescribed fees will be waived for re-registration of franchisors and franchisees, master franchisees and sub-franchisees previously registered under the old system provided that the process is completed within the grace period.

2. Renewal of franchise

Following the implementation of the Amending Act and the new system, franchise registration will be effective for a period of 5 years from the date of the Registrar’s approval under the new system. As such, registered franchisors and registered master franchisees must, upon the expiry of their franchise registrations, apply for renewal via the new system with payment of the prescribed renewal fee. There is no separate renewal process for registered franchisees and registered sub-franchisees.

3. Next steps

The following steps are recommended to be taken by the franchisor:

1. submit the franchise business annual report, if not already done;
2. re-register its franchise registration under the new system based on the prior registration under the old system;
3. re-register for each of its franchisee(s) under the new system based on prior registration under the old system and/or register for any franchisee(s) who were not previously registered under the old system, if any, to regularize the non-compliance; and
4. if any of its franchisee(s) under step (3) is a master franchisee, re-register as a master franchisee under the new system and thereafter re-register for each of its sub-franchisee(s).