Franchise Agreement

License / Permit / Service Description

• Professional franchise agreement documentation and coordination support for franchisors, franchisees and businesses involved in franchise arrangements in Malaysia. We assist with collecting party and business information, organising proposed commercial terms, coordinating supporting documents and liaising with an appointed legal professional for the preparation or review of the agreement.Our service is suitable for businesses developing a franchise system, prospective franchisees reviewing an offered arrangement, and existing franchise businesses that need to coordinate agreement-related documentation.Where included in the agreed scope, we can assist with coordinating enquiries concerning franchise registration, signing and stamp duty. Legal drafting, legal advice, franchise registration, stamp duty and third-party fees are separate unless expressly stated in the quotation. The agreement and registration requirements should be reviewed according to the circumstances of each case.

Related Departments / Regulatory Bodies ​

• Ministry of Entrepreneur Development and Cooperatives (KUSKOP).
• Registrar of Franchises / Pendaftar Francais.
• Malaysia Franchise Express (MyFEX), where applicable.
• Franchisor and franchisee.
• Appointed advocate and solicitor or legal firm.
• Intellectual Property Corporation of Malaysia (MyIPO), for trademark matters where applicable.
• Companies Commission of Malaysia (SSM).
• Inland Revenue Board of Malaysia (LHDN / HASiL), where stamp duty applies.
• Local authority or other licensing agency, for separate outlet approvals where applicable.
  

License Name ( Bahasa Malayu )

• Perjanjian Francais.
  

Application Scenarios & Business Necessity

• A franchisor is preparing documentation for a proposed franchise arrangement.
• A prospective franchisee receives a franchise agreement for review.
• A business wants to develop a franchise system and organise its proposed terms.
• A franchisor and franchisee need to document fees, royalty and operational responsibilities.
• A company needs to coordinate agreement information with its appointed lawyer.
• A franchise business is preparing supporting documents for a relevant registration process.
• The parties want to clarify the proposed outlet location and territory.
• A franchisee needs to understand the training and support to be provided.
• The parties are discussing renewal, transfer or termination arrangements.
• A business needs to coordinate signing and stamp duty enquiries.
• An existing agreement requires legal review before any amendment or renewal.

Important Rules & Compliance Standards

• The franchisor and franchisee should be identified accurately, including their authorised signatories.
• The franchise arrangement and agreement should be reviewed against the Franchise Act 1998 and applicable requirements.
• Required franchise registration or approval must be checked for each relevant party and stage of the arrangement.
• The agreement should address the matters required by applicable law, including relevant rights, obligations, fees and operational terms.
• Franchise fees and royalties should be checked against the applicable disclosure documents and legal requirements.
• The parties should review the disclosure documents and agreement before signing or making commitments.
• Trademark ownership and the right to use the brand should be verified.
• Franchise registration, outlet business licensing and other operational approvals are separate matters.
• Legal drafting, legal advice and other regulated legal work should be handled by an appropriately qualified and authorised professional.
• Stamp duty treatment and the applicable submission requirements should be checked based on the executed document.
• Changes, renewals and transfers should be reviewed against the agreement and applicable legal requirements.
• Legal fees, registration fees, stamp duty and third-party charges are separate unless stated in the quotation.
  

Compound & Legal Penalties

• A dispute may arise if the parties do not understand or comply with their obligations.
• Non-compliance with applicable franchise registration, disclosure or agreement requirements may lead to regulatory action under the relevant law.
• A breach of the agreement may result in a civil claim or other remedies, depending on the facts and applicable law.
• Late stamping penalties may apply where stamp duty is required and the document is not stamped within the applicable period.
• Additional costs may arise from legal review, amendments, registration or dispute resolution.
• Unauthorised provision of regulated legal services may result in action under applicable law.
• Any compound or penalty depends on the specific offence, provision and circumstances. A contractual dispute does not automatically mean that a government compound will be imposed.

Frequently Asked Question