According to the Perbadanan Nasional Berhad, franchising is a business growth model that has been around since the 1890s which the franchisor (business owners) licenses its trade name and its operating methods to a franchisee (third party operators).
Part of Malaysia’s long-term strategy through its National Entrepreneurship Policy is to become an outstanding entrepreneurial nation by 2030. With a robust entrepreneurship ecosystem, the franchise industry has seen continuous improvement from year-to year.
Based on a report by the Ministry of Domestic Trade and Consumer Affairs in 2018, the industry contributed RM30.3 billion in the country’s Gross Domestic Product (GDP), an increase of 3.4 percent in 2017 [RM27.7 billion].
As at Oct 31, there are 930 franchise companies registered in Malaysia in which the Food and Beverage sector dominates the biggest market share at 43 percent.
“PNS’ mandate is to lead the development of the country’s entrepreneurship and franchise industry through its expertise in providing quality service and products in several areas,” Mohd Hilaluddin Abd Shukor, Chief Executive Officer of PNS tells BusinessToday.
The organisation looks to provide Franchise Financing support for franchise business and entrepreneurs catering for all franchise business needs including capital expenditure and working capital requirements.
“We also provide advisory services inclusive of support to the development of Entrepreneurs and Franchise Business to increase competitiveness in business environment,” he adds.
“As the agency responsible for the development of entrepreneurship and franchise industry, PNS’ role as ‘Your Franchise Business Partner’ will continue to assist prospective franchisors/franchisees in providing advisory services, training, financing and always encourage the development of new business models,” Hilaluddin says.
Drawing on the encouragement by the government towards inclusive entrepreneurship development programmes, PNS has developed a new programme which converts businesses into becoming franchise.
The new programme is an extension of the Business-In-Transformation (BIT) programme that trains and transforms small entrepreneurs into becoming more competitive and systematic in conducting business and develop their business effectively.
“Entrepreneurs are encouraged through the programme to be more proactive in growing their business and challenge their comfort zone by setting their sights towards international markets and eventually be ready to export their local brand overseas.
The enhanced BIT programme is further supported by the PNS digital platform, promotion as well as research and development that ensures a holistic and cohesive growth of entrepreneurship is achievable,” the Chief Executive Officer tells BusinessToday.
With additional income and creation of new job opportunities, he believes that entrepreneurship development can help bridge the income gap between the society and contribute towards the country’s socio-economic growth.
“Franchising has been a popular choice of doing business to those who wish to embark in entrepreneurship because they will have access to a recognised company’s brand name and ready-made business operation,” he says.
Brands such as Gloria Jean’s Coffee, Marrybrown, Tealive, Asam Pedas, and Laundry Bar are among well-known franchises in the country.
“There is an opportunity as well for those who are keen to franchise their business as long as the business has a clear concept and business model. However, there are several misconceptions we hear time to time.
The most common one is that franchise business is expensive. Not all franchises will cost you an arm and a leg. There are many low-cost franchises that offer low start-up costs. In Malaysia, we also have franchise packages that starts as low as RM50,000 depending on the kind of budget in mind.
In short, there is always a franchise opportunity available that will bring not only personal satisfaction but also that best suits someone’s needs,” he says.
Another misconception Hilaluddin says is those interested assume they might need sufficient experience to run a franchise business. However, he says franchising offers opportunities in nearly every industry and it comes with a systematic approach in the form of manuals and Standard Operating Procedures (SOP) that has been designed for success.
“All businesses have risks, likewise in franchising as well. However, the risk is lower since the business have been developed and run for several years and have proven track record. Owning a franchise business takes commitment, hard work and determination but the franchise model offers more support than starting your own business from scratch,” he adds.
In Malaysia, one of the requirements to become a franchisor is that interested parties need have three years profitable audited account.
With sales taking a toll, businesses are currently facing financial loss as it could not keep up with the operational costs with many of them eventually closing their doors.
Recognising the franchise industry will be further impacted by the pandemic, PNS granted a 6-month moratorium starting March until August to give some relief to PNS loan borrowers during the period. Besides the moratorium, Recurve or Recovery from Covid-19 is also offered to PNS existing customers in the form of financial assistance for working capital.
To further assist borrowers at the end of the moratorium period, PNS also offers repayment assistance in the form of rescheduled loans to eligible borrowers with good repayment track record.
Assistance is also offered to entrepreneurs in terms of training and capacity building. The trainings were conducted by PNS Franchise Institute via online and it was offered for free to equip entrepreneurs with knowledge on how to manage their businesses during the unprecedented challenges posed by the pandemic.
PNS also offers seven financing schemes to assist aspiring entrepreneurs who want to turn their business into franchise. The available financing schemes are:
|
Type of Financing Schemes |
Financing Amount |
|
1 Franchisor Scheme |
Up to RM 2,000,000 |
|
2 Pre-Franchise/Master Franchise Scheme |
Up to RM 2,000,000 |
|
3 Franchisee Scheme |
Up to RM 500,000 |
|
4 BIT Pre-Franchisor Scheme |
Up to RM 500,000 |
|
5 Food Truck Scheme |
Up to RM 150,000 |
|
6 BIT Pre-franchise Scheme |
Up to RM 25,000 |
|
7 Micro Franchise |
From RM25,0000 up to RM 50,000 |
The financing rate ranges from 3.0 percent p.a to 8 percent p.a depending on the schemes.
Besides that, PNS also offers Investment Financing and purchasing/renting of property to franchise and non-franchise businesses.
While the monetary assistance helps in terms of the financing aspect allowing aspiring entrepreneurs to start their franchise business, the non-monetary assistance is also as important that supports the development of entrepreneurs to grow and improve their businesses through market expansion, innovation and productivity growth.
According to the survey done by Alliance Bank on their customers during the MCO, the bank found that SMEs also required assistance on understanding what is available in the local market to enable them to grow.
“The feedback from our customers was clear to us that embarking on digital capabilities from the portal has helped them during this pandemic.
As of today, we have conducted over 45 webinars and various activities via the banks’ social media platform to promote our customers and their businesses. We also have over 80 partners on our platform who have benefited from either using other partner’s services or expanding their own business by organising joint events with other partners from the platform,” Fozia Amanulla, Group Chief Business Development Officer of Alliance Bank said.
PNS’s Pybli which was designed as a “One Stop Centre Franchise” is currently leveraging on the strength of its strategic partner Alliance Bank via Alliance BizSmart Solution to provide optimal efficiency to PNS franchise entrepreneurs so they can spend less time in business banking transactions and have more time focusing on managing their business.
Pybli offers an integrated payment gateway solution to both sellers (merchants) and buyers for their convenience.
The integration of payment gateway together with the availability of the dashboard feature in Pybli will allow the sellers and market operator to track the transactions on daily basis and therefore enable the sellers to plan their inventory level as well as marketing and promotion activities.
To read the original article from Business Today, click here