30 March 2020
The Franchise (Amendment) Bill 2019 (“Amendment Bill”) was passed by the Malaysian Upper House of Parliament in December 2019. It is not yet in force.
The Amendment Bill seeks to amend the Franchise Act 1998 (“Franchise Act”) to be in line with current developments in the franchise business and strengthen the enforcement powers of authorised officers under the Franchise Act. The Amendment Bill introduces the following key amendments:
- Imposes an additional requirement for a foreign franchisor who has obtained approval to sell a franchise in Malaysia to also register his franchise;
- Makes it an offence where a franchisee granted a franchise from a foreign franchisor fails to register the franchise prior to commencing the franchise business;
- Makes it an offence where a franchisee who has been granted a franchise from a local franchisor or local master franchisee fails to register the franchise within 14 days of the date the franchise agreement was signed;
- Imposes a finite period of effectiveness as may be prescribed in respect of all franchise registrations;
- Introduces a new requirement for a franchisor or franchisee who is carrying on the franchise business to display its registration of franchise in a conspicuous position at its place of business;
- Codifies the requirement that the possibility of extending a franchise term be included as one of the mandatory requirements in a franchise agreement; and
- Introduces a new section which states that any search warrant issued under the Franchise Act is to be considered valid and enforceable and any book, account, document, computerised data, mark, signboard, card, letter, pamphlet, device or thing seized under such search warrant will be admissible as evidence under the Franchise Act.