Government Regulation no. 35 of 2024 on Franchises.
Criteria: Profitability
To demonstrate profitability, it must be proven by the following:
(a) The franchise business activity has been ongoing for at least 3 consecutive years; and
(b) Audited financial statements which recorded profits for the last 2 years.
Previously, franchisor was only required to demonstrate a minimum of 5 years of experiences and possess business strategies to address operational challenges (as evidenced by the franchisor’s ability to sustain and grow the business profitably).
Intellectual Property (IP) Rights: Registered or Recorded
In line with the fulfillment of franchise criteria, the relevant IP rights must have been registered (trademark) or recorded (copyright) and proof of registration must be included in the franchise offering prospectus. This stricter requirement no longer allows franchisor to apply for Franchise Registration Certificate or Surat Tanda Pendaftaran Waralaba (STPW) based on pending applications.
Franchise Term & Logo:
Individuals or business entities, without possessing a STPW, are prohibited from utilizing the term “franchise” in their agreements, business name and/or activities, and the display of the franchise logo.
