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JUNE 2012

Legal Focus Franchise Agreements Malaysia

Despite the challenging economic climate, franchising is still a preferred model for many businesses and franchise agreements are constantly evolving to ensure protection for both parties. With economic growth still being relatively modest and consumer confidence cautious at best, franchising relationships have come under strain; often leading to arbitration and contentious exits. To find out more about this practice area, and the issues that surround it, Lawyer Monthly speaks to Dato’ Mohd Bustaman Abdullah, partner at Malaysian law firm, Bustaman.

prior to the implementation of the Franchise Act 1998, which regulates franchising in Malaysia. We have assisted and continue to assist clients in developing franchise pro- grams by conceptualizing franchise systems based on the clients’ existing business structure and help guide them in implementing a franchise that works for their business.

M

“I personally have had almost 20 years’ experience in the industry and was the past honorary legal adviser to the Malaysian Franchise Association and author of the book “Guide on Franchising in Malaysia” published in 1997.

r Bustaman Abdullah began: “Bustaman was one of the earliest players from the legal fraternity involved in the local franchise industry

As a business model, we believe that franchising has the potential to offer the best of both worlds – a proven business system with an established name to the franchisee and a means of expanding the franchisor’s business base with minimum capital outlay

“As a business model, we believe that franchising has the potential to offer the best of both worlds– a proven business system with an established name to the franchisee and a means of expanding the franchisor’s business base with minimum capital outlay.”

Mr Bustaman Abdullah continued: “We advise local companies considering franchise as a business option as well as foreign franchisors considering entering the Malaysian market. Our range of services include guiding local clients in franchise concept development and addressing potential operational issues; advising and drafting documents such as letters of offer, disclosure documents and franchise agreements as well as assisting clients in preparing operational and

training manuals, and obtaining protection of the relevant intellectual property. For foreign franchisors we assist them by ensuring all their documentation is in line with the minimum requirements under the Franchise Act including that for territorial rights, duration of franchise, and obligations of both parties during the term of the franchise and post termination obligations such as confidential information

prohibitions against similar businesses.

“Apart from attending to the registration of franchises, there are certain relevant grants and financial assistance given to local companies to develop their

home-grown

franchises from the Ministry of Domestic Trade, Cooperative and Consumerism Apart that we can also assist clients in obtaining.”

Abdullah said: “Post-

Finally, Mr Bustaman registration, our continuing

services include reviewing the existing franchise documents to address any new developments in the franchise business as well as devising and filing any proposed amendments to the disclosure documents and franchise agreements.” LM

dato’ Mohd Bustaman abdullah (Managing Partner)

Bustaman

address: Lot c9-3 Jalan Selaman 1 dataran Palma ampang 68000 Selangor Malaysia

tel: +603.4270.1819/20 Email:bustaman@tm.net.my Web: www.bustaman.com

contact details and

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