Many businesses in Sabah not registered as franchise


Ewon chatting with an exhibitor at the event.

KOTA KINABALU (Nov 26): Local businesses which have branches throughout the state are encouraged to register their business as a franchise.

As a registered franchisor, they will have access to various opportunities to expand their business further, said Entrepreneur Development and Cooperatives Minister Datuk Ewon Benedick.

Ewon pointed out that there are many businesses in Sabah which have outlets in other districts that are operated by not only their subsidiary but also by other entrepreneurs who pay them royalties for selling their products, are not registered in the franchise industry.

“I therefore encourage them to register their business with the ministry or with Perbadanan Nasional Berhad (Pernas) for example, as this will open up many opportunities for them, among which is financing.

“Access to financing is added value to their business. Next year, Pernas will allocate RM50 million for the financing of franchise and pre-franchise entrepreneurs, so this is an opportunity that must not be wasted,” he stressed.

Ewon said this when met by reporters after officiating Pernas’ Bizfrancais program here on Sunday.

He disclosed that Pernas, an agency under the Entrepreneur Development and Cooperatives Ministry, has disbursed financing of RM12.6 million to 72 companies, encompassing 33 franchise and pre-franchise brands in Sabah, from 2010 until now.

He hoped that with the implementation of the Bizfrancais by Pernas, the number of franchise and pre-franchise companies and entrepreneurs in the state will continue to grow.

“The Bizfrancais aims to raise awareness among Sabah entrepreneurs to venture into franchise entrepreneurship. Next year, Pernas will allocate RM50 million for the financing of franchise and pre-franchise entrepreneurs,” he said.

According to Ewon, among factors contributing to the increased participation of Sabah entrepreneurs in the franchise business include its ease compared to developing their own brand, as franchise brands are already well-established in the market so they just need to become franchisees of the existing brands.

“In Sabah, there are also homegrown brands that are marketed, and they become franchisors. With the continuous campaign by the ministry and Pernas promoting Bizfrancais as well as its ongoing efforts in public awareness campaigns about franchises, there has been successful development of interest among entrepreneurs in Sabah to enter the franchise field,” he said.

“We do not limit to any age segment; the important thing is their interest in entrepreneurship. We are open to all segments of society, including cooperatives and I see that the increase is significant among existing entrepreneurs, as they know the potential so they seize that opportunity. I encourage entrepreneurs in Sabah, youth, graduates, women, to take part in this business,” he added.

According to Ewon this year, Pernas is targeting RM4.2 million in potential financing for Sabah as there are homegrown brands in the state have the potential to be developed into franchises among which are Mok, Fook Yuen, Nuvis, Sinar Suria and Happy Potato, which are seen as capable of competing with international franchise brands.

Earlier in his speech, Ewon disclosed that since 2010, Pernas has disbursed a total of RM509 million in franchise financing to 2,200 franchise and pre-franchise entrepreneurs nationwide and since the introduction of the BizFrancais, a total of RM14.94 million in financing has been approved.

“To produce more franchise entrepreneurs, in 2024, Pernas has allocated RM50 million for franchise and pre-franchise financing. The Entrepreneur Development and Cooperatives Ministry, through Pernas, will continue various new program initiatives that not only target women and youth but also retirees, veterans and social enterprises,” he said.

Ewon also said that to expand local franchise brands internationally, Pernas will also introduce the Nurturing Brands for Expansion and Growth (NEXT) program which aims to identify and provide local franchisors with the opportunity to develop their franchise product brands internationally.

The role of Pernas in developing franchise entrepreneurs also supports the Entrepreneur Development and Cooperatives Ministry’s mission in providing platforms, support services, assistance, and entrepreneurship capacity development, he pointed out.

“Pernas not only produces many franchise entrepreneurs but also develops local franchise brands domestically and internationally, providing a conducive franchise entrepreneurship ecosystem by offering suitable products and services to entrepreneurs,” he said.

Ewon also said that the products offered by Pernas are comprehensive and cover the needs of franchisors, franchisees and pre-franchisors.

These include franchise financing schemes, pre-franchise financing, licensing, micro and property management, and equity financing, he said, adding that the franchise industry is growing rapidly, and this positive scenario benefits the domestic economy by stimulating economic growth.

“Until December 2022, a total of 1,154 brands have been registered as franchise businesses. This year, the national franchise industry is expected to grow by about 20 per cent to 30 per cent, with the targeted economic value for the franchise business being RM25 billion.

“My hope is that more franchise businesses can be developed in Sabah. I also want to see potential pre-franchise businesses in this state identified and developed, thereby contributing to economic growth and increasing income for entrepreneurs, especially and the general public,” he said.

Also present were Deputy Chief Secretary (Entrepreneurial Development) of the Entrepreneur Development and Cooperatives Ministry, Datuk Zamri Salleh and Pernas chairman Datuk Hazimah Zainuddin.