KUALA LUMPUR: An amendment to the Franchise Act 1998 was tabled to make it a requirement for franchisors to register their businesses before they can operate.
This move was proposed in the Franchise (Amendment) Bill 2012, tabled for the first reading by Deputy Domestic Trade, Cooperatives and Consumerism Minister Rohani Abdul Karim (BN - Batang Lupar) at the Dewan Rakyat on Tuesday.
Currently, the Act does not state that franchisors must register their business with the Registrar of Franchises before they can start operations.
It only states that franchisors must register their franchise with the Registrar before he can make an offer to sell the franchise to any person.
Under the Bill, those who fail to register their businesses before operating or making an offer to sell the franchise to anyone will commit an offence.
If the offender is a corporate body, it may be fined up to RM250,000 for the first offence.
A second or subsequent offence shall be punishable by a maximum fine of RM500,000.
If the offender is not a corporate body, the first offence is punishable by a fine of up to RM100,000 or a jail term of up to a year, or both.
Non-corporate bodies which commit subsequent offences face a fine of up to RM250,000 or jail term of three years or both.
The proposed amendment also seeks to introduce new provisions to make it a necessity for any franchisee of a local franchisor or local master franchisee and any franchisee of a foreign franchisor to register with the Registrar.
A franchisee who has been granted a franchise from a local franchisor or local master franchisee must register the business with the Registrar within 14 days from the date of signing of the agreement between the franchisor and franchisee.
On another note, the Bill seeks to amend the term of registration for franchise broker and franchise consultant from one to two years.
If the franchise broker or franchise consultant does not renew the registration within the given time, the franchise broker or consultant shall be liable to a maximum fine of RM10,000.
Second or subsequent offences will be punishable with a fine not exceeding RM25,000.
The proposed amendment also seeks to offer more time for the franchisor to submit its annual report to the Registrar, which is from 30 days from the anniversary date of the registration to six months from the end of each financial year of the franchise business.
Extracted from The Star
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