LICENSING & FRANCHISING

IN MALAYSIA
LEE SWEE SENG
LLB, LLM, MBA
Advocate & Solicitor
Notary Public, Trademark, Patent Agent
Certified Mediator
[email protected]
www.leesweeseng.com

Topic
Licensing
Licensor

/ A Licensee
Licensing Process Chart
License Agreement
Types of License Agreement
Common Terms and Conditions in Licensing
Agreement
Licensing Fees & Payment Terms
Contract Duration, Renewal and Termination
The Benefits of Licensing for Licensor
The Benefits of Licensing for Licensing
Intellectual Property License Agreement

Topic
Franchise
Franchisor

/ A Franchisee
Franchise Agreement
Requirement of A Franchise Agreement under Section
18 of Franchise Act 1998 (Act 590) & Regulation
Payment of Franchise Fee, etc.
Section 22 Promotion Fund
Section 23 Promotion Fees, etc.
Section 24 Registration of Trade Mark or Service
Mark
Section 25 - Franchise Term
Section 26 Confidential Information
Section 27 Prohibition Against Similar Business

Topic
Section

28 Waivers Void
Section 29 Conduct of Parties
Section 30 Obligations of Franchisor & Franchisee
Section 31 - Termination of A Franchise Agreement
Section 32 Non Renewal of A Franchise Agreement
Section 33 Earlier Termination of A Franchise Term
Section 34 - Extension of A Franchise Term
Statistic of Approved Franchise Registration
Some of the Franchise Categories Approved by the
Registrar of Franchise
Comparison between Licensing and Franchising

LICENSING IN MALAYSIA

Licensing

Licensing is the practice of leasing a legally protected

property (such as a trademarked or copyrighted name,
logo, likeness, character, phrase or design) to another
party in conjunction with a product, service or promotion.

It is based on a contractual agreement between the

owner of the property (or its agent) known as the
licensor and licensee (normally a manufacturer or
retailer).

Sources: www.licensingpages.com

Licensing

It grants the licensee permission to use the

property subject to specific terms and conditions
which may include the purpose of use, a defined
territory and a defined time period.

In exchange for this usage, the licensor receives

financial remuneration normally in the form of a
guaranteed fee and/or royalty on a percentage of
sales.

Sources: www.licensingpages.com

Licensing
The verb license or grant license means to give
permission. The noun license (licence in
British spelling) refers to that permission as well as to
the document memorializing that permission. License
may be granted by a party ("licensor") to another
party ("licensee") as an element of an agreement
between those parties.
A shorthand definition of a license is "an
authorisation (by the licensor) to use the licensed
material (by the licensee)."
Sources: http://en.wikipedia.org/wiki/License

Licensor
The owner of the Licensed property or brand.
e.g Bugs Bunny is owned by Warner Bros, so
Warner Bros is the Licensor of Bugs Bunny.
Licensee
The manufacturer or distributor of a product or
service that has purchased use of a license to
sell products to retailers. Major retailers can also
be licensees as they often sign license
agreements directly with licensors

Sources: www.licensingpages.com

Licensing Process Chart

Sources: www.licensingpages.com

A License Agreement

Ensuring that the intention of the parties (Licensor and

Licensee) arrangement is properly documented is vital
to protecting the parties position in the event of a
dispute in the future.

Remember the faintest ink is better than the most

retentive memory.

Documentary evidence in less susceptible to being

challenged in a court of law.

Sources: www.licensingpages.com

Types of Licensing Agreement

1. Sole License
The Licensor grants the Licensee a sole license of
the Rights for the Territory for the duration of this
Agreement. The Licensor shall not, subject as
provided below appoint other licensees for the
Territory, but may itself manufacture and sell the
Products in the Territory.
or
A Sole License means that you as trade mark owner
and the licensee (but no one else) may use the trade
marks.
Sources: http//pharmalicensing.com/public/articles_Susan Singleton

Types of Licensing Agreement

2.

Exclusive License

.The Licensor grants the Licensee an exclusive license

of the Rights for the Territory for the duration of this

Agreement. The Licensor shall not, subject as provided
below, actively sell the Products on the Territory nor
appoint other licensees for the Territory.
or
An Exclusive License means that only the licensee may use
the trade marks.

Sources: http//pharmalicensing.com/public/articles_Susan Singleton

Exclusive License
The Copyright, Design and Patent Act 1998 UK defines it
as a license in writing signed by or on behalf of the owner
of the right authorising the licensee to the exclusion of all
other persons, including the person granting the license,
to exercise a right which would otherwise be execisable
exclusively by the owner of the right.

Types of Licensing Agreement

3. Non-Exclusive License
The Licensor grants the Licensee a non-exclusive license
of the Rights for the Territory for the duration of This
Agreement. The Licensor shall be free to manufacturer and
sell the Products in the Territory and appoint other
licensees to do so.
or
A Non-Exclusive License means that you as a trade mark
owner may also use the trade marks and may grant the
right to use the trade marks to as many others as you
wish.
Sources: http//pharmalicensing.com/public/articles_Susan Singleton

Common Terms and Conditions in Licensing

Agreement
Below are some of the important issues that should be
considered when preparing a licensing agreement.
1. Consider relevant requirements of each party as
follows:1.1
1.2
1.3
1.4

whether agreement comes into force on

the date of agreement or specified start
date;
duration of license and any renewal terms;
whether renewal is automatic or optional;
whether agreement is terminable by
either or both parties and on what
ground;

Sources: Tolleys Commercial Contract Checklist _Lexis Nexis

Common Terms and Conditions in Licensing

Agreement
1.5 whether duration of license is simply linked
performance or payment of license fees;
1.6 whether approval is required in respect
specification and any relevant provisions;
1.7 what documentation and in what forms it is
be provided i.e., disk, paper, web, email.
1.8 testing and acceptance arrangements
applicable);

Sources: Tolleys Commercial Contract Checklist _Lexis Nexis

to
of
to
(if

Common Terms and Conditions in Licensing

Agreement
2. What types of license is required?
Will it be a Sole license, an Exclusive license or
Non-exclusive license or Sole and Exclusive.
3. Review the relevant territory.
Territorial limitations are extremely common,
particularly in the area of trade-mark licenses where
different distribution partners may be granted
exclusivity for their regions. The territory may be as
broad as world-wide, limited to a particular
province or region, or even as restricted as a plant
location .
Sources: 1) Tolleys Commercial Contract Checklist _Lexis Nexis
2) Key Aspects of IP License Agreement, Donald M. Cameron &
Rowena Borenstein 2003

Common Terms and Conditions in Licensing

Agreement
4.
5.
6.
7.
8.
9.
10.

Licensing Fees and Payments

Termination
Consequences of Termination
Service of Notice Clause
Confidentiality Clause
Applicable Law Clause
Mediation and Arbitration Clause

Sources: Tolleys Commercial Contract Checklist _Lexis Nexis

Licensing Fees & Payment Terms

License fees and payment terms consider or specify
1. License fee payable.
2. License fee payment date (s):2.1
2.2
2.3
2.4
2.5
2.6

monthly
quarterly on quarter dates
annually
30 days after specified period
any deposit or initial payments or fees
due upon singing license
any time based charged

Sources: Tolleys Commercial Contract Checklist _Lexis Nexis

Licensing Fees & Payment Terms

2.7
2.8

any additional costs/material charges

whether any fixed cost are applicable
(including staff, material and travel
expenses)
2.9 whether fee and sums are inclusive or
exclusive of taxation; payments;
2.10 whether renewal fees are payable and if so
when and at what rate

Sources: Tolleys Commercial Contract Checklist _Lexis Nexis

Contract Duration, Renewal and Termination

1. Term and Expiration
The license agreement should specify the following:1.1 Date of commencement
1.2 The period of time during which the parties
obligations are in force
1.3 An expiration date, unless it is intended to be a
perpetual agreement

Sources: Key Aspects of IP License Agreement handout by Donald M Cameron Rowena

Borenstein_Ogilvy Renault

Contract Duration, Renewal and Termination

2. Renewal
2.1
2.2
2.3

2.4

The agreement may also provide for a right of

renewal;
A renewal provision it is always open to the
parties to negotiate;
If the renewal is not automatic, the licensee
will be required to provide the licensor with
notice of its intent to renew within a set period
of time before expiry;
If the renewal is automatic, the notice will only
be required if a party does not wish to have
the agreement term be extended.

Sources: Key Aspects of IP License Agreement handout by Donald M Cameron Rowena

Borenstein_Ogilvy Renault

Contract Duration, Renewal and Termination

3. Right to Terminate
There are two basic types of termination rights
3.1. Termination for convenience
3.1.1 A party with a right to terminate the agreement for
convenience may usually do so at any time,
provided
that adequate notice is given to the
other party.
3.1.2 Licensee typically do not want the licensor to be
able to terminate the Agreement for convenience,
as they have a great deal of money invested in a
business plan related to exploitation of Intellectual
Property, including unrecoverable costs.
Sources: Key Aspects of IP License Agreement handout by Donald M Cameron Rowena
Borenstein_Ogilvy Renault

Contract Duration, Renewal and Termination

3.2 Termination for cause
3.2.1 Termination for cause can encompass any
number of events.
3.2.2 The most common triggering events allowing a
party to terminate for cause including the
material of breach by other party of terms of the
Agreement, or the failure of the other party to
conduct business ordinary course.

Sources: Key Aspects of IP License Agreement handout by Donald M Cameron Rowena

Borenstein_Ogilvy Renault

Contract Duration, Renewal and Termination

3.2.3 Licensee have the right to terminate the
Agreement if the licensed intellectual
property
is determined to be invalid.
3.2.4. The Licensee may also wish to be able
terminate the Agreement if it is sued by a
third party for infringement, particularly if it
does not have a resource of indemnity from
the
licensor.

Sources: Key Aspects of IP License Agreement handout by Donald M Cameron Rowena

Borenstein_Ogilvy Renault

Contract Duration, Renewal and Termination

4. Effects of Termination
4.1

A-well drafted license agreement should provide

for the consequences of termination on the rights
and obligations of each of the parties, to avoid
additional disputes at a time when the parties
may already be on less than good terms.

4.2

The licensee's most pressing business concern

will be the ability to wind down and exhaust any
existing inventories.

Sources: Key Aspects of IP License Agreement handout by Donald M Cameron Rowena

Borenstein_Ogilvy Renault

Contract Duration, Renewal and Termination

4.3 The licensor's perspective, its most
pressing
concern is that the licensee discontinue all
exploitation of Intellectual Property as soon as
possible. It may opt to reverse the right to purchase
any of the licensees existing stock, at cost of the
licensee is amenable, rather than extend the
license grant
4.4 The licensor may also require that the licensee
return any and all materials that contain or
reflect licensed know-how. This provision may
operate in tandem with the provision requiring the
return or destruction of all confidential information.
Sources: Key Aspects of IP License Agreement handout by Donald M Cameron Rowena
Borenstein_Ogilvy Renault

The Benefits of Licensing for Licensor

The key benefit for a licensor is the ability to exploit and
enhance its brand or property
1.
Increasing its brand presence at retail or
distribution outlet.
2.
Creating further brand awareness to support its
core products or services.
3.
Supporting and enhancing its core values by
associations with the licensed products.
4.
Entering new markets (consumer or
geographical) which were unfeasible with its own
resources or capabilities.
5.
Generating new revenue streams, often with little
involvement or additional financial or other
resources implication.
Sources: www.licensingpages.com

The Benefits of Licensing for Licensees

The key benefit for a licensee (especially manufacturer
or retailer) is the ability to significantly increase consumer
interest in and sales of its products or services. Licensing
can be applied as follows:1.
Transferring the values and consumer favour
towards the property to the licensed product or service.
2.
Providing added value and differentiation from
competitive offerings.
3.
Providing additional marketing support or
momentum from the core propertys activity
provided
by the licensor.
Sources: www.licensingpages.com

The Benefits of Licensing for Licensees

4. Appealing to new target markets who have not
historically been interested in a licensees product or
service.
5. Giving credibility for moving into new market sectors
through product extension.
6. Gaining additional retail space and favour.

Sources: www.licensingpages.com

Intellectual Property License Agreement

1. The Nature of the Intellectual Property will dictate
the scope of the rights granted under the
Agreement.
2. A Licensor can only part with those rights that it
itself holds therefore the license of patent is
typically limited to any or all of the right to make,
use and sell the patented invention.
3. A license granted under copyright could include any
of many subsidiary and derivation right accorded to
the copyright owner.
Sources: Key Aspects of IP License Agreement handout by Donald M Cameron Rowena
Borenstein_Ogilvy Renault

Intellectual Property License Agreement

Obligation of the Parties
1. Each of the Licensor and Licensee may have
obligations to fulfill under the Agreement other than
the grant of License Rights and the Payment of
Royalties or other License Fees.
2. The nature of the obligation is dependent upon the
nature of the Intellectual Property Licensed and the
scope of the License Grant.

Sources: Key Aspects of IP License Agreement handout by Donald M Cameron Rowena

Borenstein_Ogilvy Renault

Obligation of the Parties

3. The obligations may either be positive obligations

to take certain actions or negative obligations in the
form of restrictive covenants.
a) Disclosure and Assistance
If the Agreement contemplates a license grant
including know-how, or if the licensor is otherwise
expected to disclose information and offer
assistance to the licensee in the exploitation of its
license rights, the one of the licensors obligations
will be to disclose in the required information within
a certain amount the time.
Sources: Key Aspects of IP License Agreement handout by Donald M Cameron Rowena
Borenstein_Ogilvy Renault

Obligation of the Parties

b) Exclusivity
If the license grant is exclusive, the Agreement may
include a provision whereby the licensor agrees that it
will not license the technology to any other person
within the defined exclusive territory or for use in the
defined exclusive field.
c) Enforcement of Intellectual Property Rights
The agreement should contain a clause indicating
which party will be responsible for the maintenance of
registered intellectual property rights, and which party
is responsible for payment of all the fees associated
which those registration.
Sources: Key Aspects of IP License Agreement handout by Donald M Cameron Rowena
Borenstein_Ogilvy Renault

Conflict of Resolution
Litigation
1. If an alternative dispute resolution procedure is not
provided for the Agreement, a party may still attempt
to resolve disputes through arbitration, but will only be
able to do so if the other party agrees.

Sources: Key Aspects of IP License Agreement handout by Donald M Cameron Rowena

Borenstein_Ogilvy Renault

FRANCHISING IN MALAYSIA
FRANCHISE
As governed by Franchise Act 1998 (Act 590) &
Regulation which came into force on 8 October 1998

FRANCHISE

Section 4 - franchise means a contract or an

agreement, either expressed or implied, whether oral
or written, between two or more persons by which
(a) The franchisor grants to the franchisee the right to
operate a business according to the franchise system
as determined by the franchisor during a term to be
determined by the franchisor

FRANCHISE

(b) The franchisor grants to the franchisee the right

to use a mark, or a trade secret, or any
confidential information or intellectual property,
owned by the franchisor or relating to the
franchisor, and includes a situation where the
franchisor, who is the registered user of, or is
licensed by another person to use, any
intellectual property, grants such right that he
possesses to permit the franchisee to use the
intellectual property;

FRANCHISE
(c) The franchisor possesses the right to administer
continuous control during the franchise term over the
franchisees business operation in according with the
franchise system;
(d) The franchisor has the responsibility to provide
assistance to the franchisee to operate his business
including such assistance as the provision or supply of
materials and services, training, marketing, and
business or technical assistance;

FRANCHISOR
Section 4 franchisor means a person who grants a
franchise to a franchisee ad includes a master franchisee
with regard to his relationship with a sub-franchisee,
unless stated otherwise in the Act.

FRANCHISEE
Section 4 franchisee means a person to whom a
franchise is granted and includes, unless stated
otherwise in the Act.

FRANCHISE AGREEMENT

Section 4 - franchise agreement means a contract or

an agreement made between a franchisor and a
franchisee in respect of a franchise in return for any form
of consideration but does not include any contract or
agreement made for the purposes of direct selling as
provided by the Direct Sales Act 1993.

REQUIREMENTS OF A FRANCHISE AGREEMENT

SECTION 18 (1) - A franchise agreement shall be in writing.
SECTION 18 (2) A franchise agreement shall contain but is
not limited to a) The name and description of the product and business
under the franchise.
b) The territorial rights granted to the franchisee.
c) The franchise fee, promotion fee, royalty or any related
type of payment which may be imposed on the franchisee, if
any.

REQUIREMENTS OF A FRANCHISE AGREEMENT

d) The obligation of the franchisor.
e) The obligation of the franchisee.
f) The franchisees right to use the mark or any other
intellectual property , pending the registration or after
the registration of the franchise.
g) The conditions under which the franchisee may assign
the rights under the franchise.
h) A statement of the cooling off period as provided in
subsection (4).
i) A description pertaining to the mark or any other
intellectual owned or related to the franchisor which is
used in the franchise.

REQUIREMENTS OF A FRANCHISE AGREEMENT

j)

If the agreement is related to a master franchise, the

franchisors identity and the right obtained by the
master franchisee form the franchisor .

k)

The type and particulars of assistance provided by

the franchisor .

l)

The duration of the franchise and the terms of

renewal

m)

The effect of termination or expiration of the

franchise agreement .

REQUIREMENTS OF A FRANCHISE AGREEMENT

SECTION 18 (3) Failure to comply with subsection (2)
shall render a franchise agreement null and void.
SECTION 18 (4) A franchise agreement shall have a
cooling of period, which shall be determined by both
contracting parties but shall not be less than seven
working days, during which the franchisee has the option
to terminate the agreement.
SECTION 18 (5) Upon termination of the franchise
agreement under subsection (4), an amount to cover the
reasonable expenses incurred by the franchisor to
prepare the agreement may be retained by the franchisor
from the initial fees paid under section 19; however, all
other monies shall be refunded to the franchisee.

TYPE OF FEES UNDER FRANCHISE ACT 1998 (ACT

590) AND REGULATIONS

SECTION 21 PAYMENT OF FRANCHISE OF

FRANCHISE FEES OR ROYALTY
If a franchisee is required to pay any franchise fees
or royalty to a franchisor, the rate of franchise fees or
royalty shall be the rate as provided in the disclosure
documents.

SECTION 22 PROMOTION FUND

1. A franchisor who requires a franchisee to make any
payment for the purposes of the promotion of a
franchise shall establish a Promotion Fund (Fund).
2. The Fund shall be managed under a separate account
and shall only be used for the promotion of the product
under the franchise.
3. If a franchisee is required to make any payment under
section 23, the franchisor shall submit a financial
statement of the Fund, which has been endorsed by a
registered public account, to the Registrar within thirty
days after the conclusion of the last financial term.

SECTION 22 PROMOTION FUND

4. The financial statement in subsection (3) shall be
submitted to the Registrar together with the annual
report under Section 16.
5.

A person who fails to comply with this section

commits and offence.

SECTION 23 PROMOTION FEES, ETC.

1.

If a franchisee is required to make any payment for

promotional purposes or pay promotion fees to the
franchisor, the payment shall be at the rate as
provided in the disclosure documents.

2. The payment required to be made under

subsection (1) shall be deposited into the Fund.

SECTION 24 REGISTRATION OF TRADE

MARK OR SERVICE MARK
Franchisor is required to register his trademark or
service mark relevant to his franchise in accordance with
the Trade Marks Act 1976 (if they are registrable under
the Act) before applying for the registration of the
franchise Under Section 7.

SECTION 25 FRANCHISE TERM

Stated that a franchise term shall not be less than five
years.

SECTION 26 CONFIDENTIAL INFORMATION

1. A franchisee shall give a written guarantee to a
franchisor that the franchisee and his employees
shall not disclose to any person any information
contained in the operation manual or obtained while
undergoing training organized by the franchisor
during the franchise term and for two years after
the expiration or earlier termination of the
franchise agreement.
2. The franchisee and his employees shall comply with
the terms of the written guarantee given under
subsection (1).

SECTION 26 CONFIDENTIAL INFORMATION

3. A person who fails to comply with subsection (1) or
(2) commits an offence

SECTION 27 PROHIBITION AGAINST

SIMILAR BUSINESS
1.

Franchisee shall give a written notice guarantee to a

franchisor that the franchisee and his employees shall
not carry on any other business similar to the franchised
business operated by the franchisee during the franchise
term and for two years after the expiration or earlier
termination of the franchise agreement.

SECTION 27 PROHIBITION AGAINST SIMILAR

BUSINESS
2. The franchisee and employees shall comply with the terms
of the written guarantee given under subsection (1).
3. A person who fails to comply with subsection (1) or (2)
commit offence.

SECTION 28 WAIVERS VOID

1.

Any condition, stipulation or provision on a franchise

agreement purporting to bind a franchisee to waive
compliance with any provision of this Act is void.

2. This section shall not prevent any person from entering

onto a settlement agreement or executing a general
release regarding a potential or actual civil action filed in
respect of the franchise nor shall it prevent the arbitration
of any claim.

SECTION 29 CONDUCT OF PARTIES

1. A franchisor and a franchisee shall act in an honest
and lawful manner and shall endeavour to pursue
the best franchise business practice of the time and
place
2. A franchisor and a franchisee in their dealings with
one another shall avoid the following conduct:
(a) substantial and unreasonable overvaluation of fees
and prices;
(b) conduct which is unnecessary and unreasonable in
relation to the risks to be incurred by one party; and

SECTION 29 CONDUCT OF PARTIES

(c) conduct that is not reasonably necessary for
the protection of the legitimate business
interests of the franchisor, franchisee or
franchise system.
SECTION 30 OBLIGATIONS OF FRANCHISOR AND
FRANCHISEE
1. A franchisor shall give a written notice about breach of
contract by a franchisee and allow franchisee time to
remedy the breach.
2. A franchisee shall pay the franchise fees, royalty, promotion
fees or any other payment as provided in the franchise
agreement.

SECTION 31 TERMINATION OF A FRANCHISE

AGREMMENT
1. No franchisor shall terminate the franchise agreement
before the expiration date except for good cause as
provided in subsections (2) and (3)
2. Good cause shall include, but is not limited to
(a) the failure of a franchisee to comply with any terms of
the franchise agreement
or any other relevant
agreement entered into between the franchisor and
franchisee; and
(b) the failure of the franchisee to remedy the breach
committed by him or any of his employees within the
period stated in a written notice given by the
franchisor, which shall not be less than fourteen days,
for the breach to be remedied.

SECTION 31 TERMINATION OF A FRANCHISE

AGREMMENT
3.

Good cause shall include, but without the

requirement of notice and an opportunity to remedy
the breach, circumstances in which the franchisee:-

(a) Makes an assignment of the franchise rights for the

benefit or creditors or a similar disposition of the
assets of the franchise to any other person;
(b) Voluntarily abandons the franchised business;
(c) Is convicted of a criminal offence which substantially
impairs the goodwill associated with the franchisors
mark or other intellectual property; or

SECTION 32 AGREEMENT

NON-RENEWAL OF A FRANCHISE

A franchisor commits an offence if he refuses to renew

a franchise agreement or extend a franchise term
without compensating a franchisee either by a
repurchase or by other means at a price to be agreed to
between the franchisor and franchisee after considering
the diminution in the value of the franchised business.

SECTION 33 EARLIER TERMINATION OF A

FRANCHISE TERM
Notwithstanding Section 25, a franchise term may be
terminated before the expiry of the minimum term of five
years in the following circumstances:
(a)
Where both parties to the franchise agreement
agree to a termination; or
(b)
Where court has decided tat there are certain
conditions in the franchise agreement which merit
the
agreement to be terminated earlier than the
minimum
term.

SECTION 34 EXTENSION OF A FRANCHISE

TERM
1. At any time before the expiration of the franchise term, a
franchisee shall at his option give written notice to the
franchisor to extend the franchise term.
2. Except when a franchisee has breached the term of a
previous franchise agreement, a franchisor shall extend
the franchise term to another period if the franchisee has
applied for the extension of term under subsection (1).
3. A franchise agreement which franchise term has been
extended shall contain conditions which are similar or not
less favourable than the conditions in the previous
franchise agreement.

STATISTIC OF APPROVED FRANCHISE

BY THE REGISTRAR OF FRANCHISE
UNDER FRANCHISE ACT 1998
AS OF 22 JULY 2009

DESCRIPTION
BUMIPUTERA

NOS.
96

NON-BUMIPUTERA

249

TOTAL

345

Sources: www.pns.com.my

SOME OF THE FRANCHISE CATEGORY APPROVED BY THE

REGISTRAR OF FRANCHISE
Category: Food & Beverage

Sources: www.pns.com.my

Category: Clothing

THE REGISTRAR OFFICE ADDRESS:Registrar of Franchise

Ministry of Entrepreneur and Co-Operative
Development (MECD)
Franchise & Vendor Division,
Level 4, Menara Block,
No. 18 Persiaran Perdana,
Presint 2, 62652 Putrajaya
Tel : 603 - 8880 5593
Fax : 603 - 8880 5617

Comparison
Franchising

between

Licensing

and

A) Licensing

Not bound to any Act of Parliament or Regulation

A Licensing Agreement can contain terms which are
restricted in a Franchise Agreement by the Franchise
Act 1998.
Lower cost
Duration of licensing agreement is flexible, need not
be at least 5 years
Licensing is cheaper when in bad economic situation

Comparison
Franchising

between

Licensing

and

B) Franchise

As governed by Franchise Act 1998 (Act 590) &

Regulation which came in force on 8 October 1998
Section 7 of Franchise Act 1998 stated that all
Franchise business is compulsory to register with
the REGISTRAR OF FRANCHISE (ROF).
Cost buying a well-known franchise is very
expensive
Section 25 stated the duration of franchise term
shall not less than five years

THANK YOU