Franchising a Business: Essential Tips on Getting Started

Franchising started in Malaysia with the introduction of the Singer sewing machine in 1948.  Singer became the first company in Malaysia to distribute sewing machines and home electrical appliances by using a product and trade name franchising format. In the initial stage, Singer appointed authorized sales agent (dealer) to distribute their products across various states in Malaysia. Similarly, other companies such as Bata shoes outlets, car/motorcycle dealers, petrol stations and soft drink production also started using product and trade name franchising format to market and distribute their products.  With regard to fast-food restaurant chains, in 1967 A&W became a pioneer in franchise restaurants. After the 1990s, the franchise industry successfully started to develop in Malaysia

Franchising is the most successful business model between business-to-business (franchisor and franchisee). Franchise firms have options to develop new business models and work in diverse economic systems and different geographical areas. Franchising is found to be the best option to enter for a new market either local or international markets. 

The survival prospects and the success of franchise business systems continue to be debated among academicians and practitioners. Stanworth, Purdy and Price (1997) assert that despite the franchising industry claims of strong growth and low failure rates, the reality appears to have been of generally modest growth and high failure rates. Bates (1995) and Shane (1998) finds that 35% of franchise business systems fail compared to 28% of non-franchised businesses. The franchise industry in Malaysia faces several key challenges:

The franchising outlook in Malaysia remains optimistic, driven by a stable economy, increasing consumer demand, and government support. With a robust regulatory framework and incentives for local and international brands, the sector continues to grow across various industries like food & beverage, retail, and services. Additionally, digital transformation and e-commerce integration are reshaping franchise models, offering new opportunities for expansion and innovation. As Malaysia positions itself as a critical player in the ASEAN market, franchising offers lucrative potential for entrepreneurs seeking scalable business models and established brand leverage. However, adapting to evolving consumer preferences and regulatory shifts will be critical for sustained success.