🇲🇾 Country hub · reviewed 2026-10-09
Franchising in Malaysia: the 2027 guide for foreign franchisors
Of the seven markets in our ASEAN comparator, Malaysia has the most demanding franchise law. A foreign franchisor needs the Registrar's approval before it sells a single franchise, every party in the chain registers, and selling without registration is a criminal offence. The upside is a clear rulebook that applies the same way to every franchisor.
Malaysia at a glance
- Franchise law
- Franchise Act 1998, amended in force 28 April 2022 Secondary · Christopher & Lee Ong, Franchise (Amendment) Act 2020, 2022-05-22
- Registrar
- KUSKOP, via the MyFEX 2.0 system Official · KUSKOP (Registrar of Franchises, MyFEX 2.0)
- Foreign franchisor
- Prior approval under s.54, then registration under s.6 Secondary · Rahmat Lim & Partners, 2022-12-05
- Disclosure
- 10 days before signing, with 3 years of audited accounts Secondary · AmCham Malaysia
- Foreign F&B franchisors registered
- 71 of 170 F&B franchisors, end-2025 Secondary · New Straits Times, citing KUSKOP, 2026-01-29
- Royalty withholding tax
- 10% before treaty relief Official · LHDN, withholding tax, 2026-10-05
Guides for Malaysia
How Malaysia compares
Malaysia: Yes. Franchise Act 1998 (Act 590). The Franchise (Amendment) Act 2020 came into force on 28 April 2022. Compare it with Vietnam, Indonesia, Thailand, Philippines, Singapore and Cambodia in the ASEAN franchise law comparator.
Frequently asked questions
Do foreign franchisors need approval to franchise in Malaysia?
Yes. Under section 54 of the Franchise Act 1998 a foreign franchisor needs the Registrar of Franchises' prior approval before selling a franchise in Malaysia or to a Malaysian, and since 28 April 2022 must also register under section 6. The Registrar now sits in the Ministry of Entrepreneur and Cooperatives Development (KUSKOP).
What happens if a franchisor operates in Malaysia without registering?
It is an offence under section 6(2) of the Franchise Act. A company faces a fine of up to RM250,000, or up to RM500,000 for a repeat offence; an individual faces up to RM100,000 and/or one year in prison.
Is there a cooling-off period for franchisees in Malaysia?
Yes. Every franchise agreement must include a cooling-off period of at least seven working days, and leaving it out is an offence. The agreement must also run for at least five years.
Can a foreigner own 100% of a restaurant in Malaysia?
A single-brand specialty restaurant can be fully foreign-owned under KPDN's distributive trade guidelines, through a Malaysian company with at least RM1 million in shareholders' funds per outlet, Bumiputera director(s) and KPDN approval for each outlet. Non-exclusive restaurants and bistros are closed to foreign participation. KPDN said in January 2026 that it is reviewing these rules.
What tax applies to franchise royalties paid out of Malaysia?
10% withholding tax on royalties paid to a non-resident, or a lower treaty rate, remitted within one month; late payment adds 10%. Imported services such as training or management bought by the Malaysian franchisee can also attract 8% service tax under reverse charge.
Looking for a partner in Malaysia?
Master and area rights open in Malaysia are listed on the FranX Rights Board. Operating stores for sale are on Resales.