Agency calls for more local SMEs to venture into franchising

KUCHING: While franchising is regarded as a high-value business model that companies can capitalise upon, the number of local small and medium enterprises (SMEs) here venturing into the field remain somewhat less vibrant than those in Peninsular Malaysia.

MAJOR OBSTACLE: Gider notices that amongst the biggest barriers as to why franchising has not been thriving here as in West Malaysia is the start-up cost, where she agrees that the initial capital can be quite costly.

To date, there are less than 30 businesses operating as either franchisors or franchisees throughout the state.

“The franchising segment in Sarawak has been quite slow. The perception among SMEs here on franchising is very different than their counterparts in the West (Peninsular Malaysia),” observed Perbadanan Nasional Bhd’s (PNS) executive officer for Sarawak Corridor regional office, Vivishir Gider in an interview with The Borneo Post.

She was met here during the ‘Business Opportunities Through Franchising’ programme organised by SME Corporation Malaysia (SME Corp) held at Bank Negara Kuching branch yesterday, where she was a guest panel speaker for the seminar.

Comparatively, current data from the Ministry of Domestic Trade, Cooperatives and Consumerism (MDTCC) has shown that there are 499 franchisors registered with the Registrar of Franchise involving 6,323 franchisees nationwide.

Moreover, Gider noted that amongst the biggest barriers as to why franchising had not been as thriving here as in West Malaysia was the start-up cost, where she agreed that the initial capital could be quite costly.

“To develop a franchise business or to convert a conventional one into becoming a franchisor, the operator could cough out up to RM100,000 or more, with development period taking from six to eight months, sometimes more than a year.

“This, what I would say, is the main reason why local SMEs are very apprehensive about opening up a franchise business. Another possible reason would be the unwillingness to share trade secrets, which is non-existent in franchisorship since it involves many chains of operations that require the same business model, standards, quality and procedures for each branch unit,” she pointed out. Last year PNS set up a target to have a total of 50 franchisees and 30 franchisors in the state.

“Sadly, we didn’t reach that goal. Thus for this year, we are revising our KPI (Key Performance Index) target to have 10 new franchisees and five new franchisors due to the different situation here in Sarawak,” she stated.

On the bright side, Gider also mentioned a number of established franchisors operating in the state such as Sugar Bun and Hartz Chicken Buffet. On the other hand, successful franchisees – operators who are running the operations initiated and regulated by the franchisors – here would include Secret Recipe, Smart Reader, Anakku, Marrybrown, Kenny Roger’s Roasters, McDonald’s and Bonia.

“It’s a successful and proven business model that comes with a known and trusted trademark or brandname. SMEs here hoping to venture into franchising can utilise the standard operating guide and procedures, with continuous training and education as well as quality control.

“As such, we are urging more Sarawakian SMEs to explore the possibility of making it into the world of franchising. PNS, as the overseeing body, does provide a number of financing schemes and tailored programmmes to help those businesses wanting to venture into franchising,” she explained.

Concurring to this, the state’s SME Corp director Ursula Unnie Thomas Salang said the agency also provided similar assistance to SME operators who wanted to do franchising.

“As stated by PNS, the franchising industry does not confined itself only to the food and beverage segment, but it also encompasses a varied range of businesses as well such as retail products and services. For SMEs interested in doing franchising business, they can come to us at SME Corp where offer advisory services as well as channels for them to apply financing options via SME Bank or Malaysian Industrial Development Finance,” she pointed out.

PNS – incorporated in 1969 and formerly known as Pernas – is an agency mandated by MDTCC to lead and oversee the development of the country’s franchise industry. The Sarawak Corridor regional office located at Jalan Tun Jugah here is one of PNS’ five corridor divisions nationwide comprising the Sabah Region, East Coast Economic Region, North Corridor Economic Region and Iskandar Development Region.

TONY Roma’s Malaysia. The Star

Tasty: Low (left) and Adam holding a plate of Tony Roma’s Beef Ribs and the newly introduced Lamb Ribs, which earned Tony Roma’s Malaysia the Brand Innovation Award.

TONY Roma’s Malaysia has added another feather to its cap by clinching Tony Roma’s Global Brand Innovation Award, recently.

Awarded by Romacorp, the Tony Roma’s franchisor in Orlando in the US, the award was given in recognition of the restaurant’s new item on its menu — Lamb Ribs.

The win is even more noteworthy as the dish was a Malaysian innovation, created by the local R&D team and will be adopted across Tony Roma’s outlets worldwide.

The award was presented by franchise owner Revenue Valley chief operating officer Dickson Low to Tony Roma’s Malaysia operations manager Muhammad Adam Mah, who also headed the Malaysian R&D team that created the dish, at the newly refurbished Tony Roma’s outlet in Sunway Pyramid.

While the Beef Ribs are the prime attraction at Tony Roma’s and were still a bestseller, the management felt that a large segment of the Malaysian public were left out due to their religious sensibilities.

The introduction of the Lamb Ribs serves to cater to this market, as well as provide an alternative option for diners who prefer lamb to beef and ensure that everyone can enjoy a fantastic meal at the restaurant.

The Lamb Ribs were introduced to Tony Roma’s customers through the Best Ribs Election Showdown campaign held recently, where diners were required to vote for their favourite Ribs among Tony Roma’s signature Bountiful Beef Ribs, Beef Short Ribs and the new Lamb Ribs.

Although the Bountiful Beef Ribs emerged the eventual winner, the Lamb Ribs came in a close second, with just 3% less votes than the winner.

Winning dish: A plate of Tony Roma’s Lamb Ribs which won the Brand Innovation Award trophy.

“The results of the Best Ribs Election Showdown were an eye-opener,” said Low.

“While we know that the Bountiful Beef Ribs are still Tony Roma’s bestseller, we have also extended Tony Roma’s market through the introduction of the Lamb Ribs.

“Developing the Lamb Ribs was a painstaking process; from conception to perfecting the seasoning so that it was palatable to Malaysians of all races.

“We wanted to make sure the Lamb Ribs would not just be another addition to the menu, but a dish that could stand up to scrutiny from our loyal diners,” said Adam, who has been involved in the F&B industry for more than 25 years.

The Brand Innovation Award is the latest achievement in the continued success story of Tony Roma’s Malaysia, following a win for Best Operator of the Year in 2008.

“Winning Tony Roma’s Brand Innovation Award has shown us that we are on the right track,” said Low.

“We have a hardworking and dependable team here at Tony Roma’s Malaysia, who are constantly striving to provide the best possible dining experience for our customers through a commitment to product and service innovation, food quality and first-rate service,” he said.