Advice on re-registration of franchises under the Malaysian Franchises Act 1998

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The Franchise Registrar (“Clerk”) issued a circular on July 28, 2022 advising that all franchise registrations will expire in conjunction with the entry into force of the Franchise (Amendment) Act 2020 (“Amending law”) on July 28, 2022. Below we provide the steps to be taken in accordance with the circular.

1. Franchise re-registration

In this regard, 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 through the new system (MyFEX 2.0) which was officially launched on July 28, 2022. A 3-year grace period applies to all existing franchisors to complete the re-registration process. The grace period is calculated from August 1, 2022. Failure to 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 a franchise, existing franchisors are required to submit their annual franchise activity 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 their franchise registration separately as a master franchisee through the new system (“registered master franchisee”) and then re-register for each of its sub-franchisees (who were previously registered under the old system) (“registered sub-franchisee”).

While there are official prescribed fees for new Franchisor and Franchisee/Master Franchisee and Sub-Franchisee registration applications under the new system, the prescribed fees will be waived for re-registration of Franchisors and Franchisees, previously registered master franchisees and sub-franchisees. under the old system provided the process is completed within the grace period.

2. Franchise renewal

Following the implementation of the amending law and the new system, the registration of franchises will be effective for a period of 5 years from the date of approval by the Registrar under the new system. As such, Registered Franchisors and Registered Master Franchisees must upon expiration of their franchise registrations apply for renewal through 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

It is recommended that the franchisor follow the following steps:

  1. submit the annual report of the franchise business, if not already done;
  2. re-register its franchise registration under the new system on the basis of the previous registration under the old system;
  3. re-register for each of its franchisees under the new system on the basis of prior registration under the old system and/or register for any franchisee who was not previously registered under the old system, if applicable, in order to regularize the non-conformity; and
  4. if any of its franchisees in step (3) is a master franchisee, re-register as a master franchisee under the new system and then re-register for each of its sub-franchisees.
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