Did you know that Malaysia’s Franchise (Amendment) Act 2020 came into force on 28 April 2022? The Amendment Act introduced several changes to the franchise laws which include more rigorous requirements and penalties governing franchise registration in Malaysia. Let’s take a look at the notable changes under the Amendment Act and what this means for foreign and local franchisors.
Key Takeaways
- Franchise (Amendment) Act 2020 Enforced in April 2022 – Malaysia's updated franchise law introduces stricter rules and penalties, requiring action from all franchisors.
- Mandatory Re-Registration Under MyFEX 2.0 – All existing franchises must re-register via the new MyFEX 2.0 system, as MyFEX 1.0 is obsolete; failure may lead to suspension or cancellation.
- Franchises Deemed Expired as of 28 April 2022 – All prior registrations are considered expired, with re-registration subject to a new examination process.
- Deadline for Re-Registration is 31 July 2025 – A three-year grace period was granted, but all re-registrations must be completed before this deadline.
- New Registrations Valid for 5 Years – Franchise registrations now have a fixed five-year term, after which renewal through MyFEX 2.0 with a fee is required.
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The requirement for franchise re-registration in Malaysia
One of the most significant changes is that all existing franchisors, both foreign and local, must re-register their franchise under the new MyFEX 2.0 system as the previous MyFEX 1.0 system is now obsolete. Failure to re-register franchise registrations may result in the issuance of a notice of suspension, termination and cancellation of the franchise registration by the Registrar of Franchise.
Introduction to MyFEX 2.0
The Ministry of Domestic Trade and Consumer Affairs (MDTCA) introduced MyFEX 2.0 to replace the previous MyFEX 1.0 system. MyFEX 2.0 was launched on 28 July 2022 and all re-registration and new franchise applications are to be submitted under MyFEX 2.0.
Re-registration Process and Grace Period
Under the Amendment Act, all registered franchises will be deemed to have expired on 28 April 2022. Re-registration is not an automatic process. All old registrations must be re-registered and will be subject to a fresh examination process. The Amendment Act provides a grace period of three (3) years and all re-registrations must be done by 31 July 2025.
Franchise renewals
Under the Amendment Act, all new franchise registrations will now have an expiry date. Franchise registrations will be effective for a period of five (5) years from the date of the Registrar’s approval under the new system. Renewals should be done under the new system with payment of the prescribed renewal fee.
All foreign franchisors and local franchisors are REQUIRED to do the following:
- Re-register their franchise registration under the new MyFEX 2.0 system;
- Re-register for each of its franchisees under the new MyFEX 2.0 system; and
- Re-register as a master franchisee (if applicable) under the MyFEX 2.0 new system.
If you require any assistance to have your franchise re-registered in Malaysia, please contact us at kass@kass.asia.