Fundamentals of Malaysian Franchising – An Entrepreneur’s Perspective

The WackyD - salted egg yolk kaya

Just 2 days ago I shared about franchising as an option for those contemplating “entrepreneurship“.

Many might not realize, but starting a business isn’t what you read in the news.
All that grand success stories?
They were encouraging no doubt, but what do you know about the high number of those who have failed?
They don’t write about those. No one write about those, since not many (if any) wants to be interviewed or reveal their failures.
But business failures are VERY real.

While franchising doesn’t guarantee success, a proven business model and organized standard operating procedure (SOP) might mitigate some of the challenges.

In PART 2, GoBear got some tips from local franchisee and entrepreneur Fendi Edip-Chuan.

Malaysian Franchising – An Entrepreneur’s Perspective 

In Part 1 of this segment, we learnt that franchising is a suitable option for entrepreneurs looking for guidance and support in their early business venture. Yet, buying a franchise comes with its own set of risks and legal requirements.

Nonetheless, local franchisee and entrepreneur Fendi Edip-Chuan believes that if one is bold and prepared enough, success is possible. As the Business Development Director and Shareholder of Doryan Solutions Sdn. Bhd, a Korean based Franchise, Shopping Mall and Real Estate Consulting Company, Fendi brings forth investors from Korea into South East Asia market via Malaysia. The ambitious entrepreneur from Sabah shares his views on franchising with GoBear Malaysia.

Question 1: Tell us about yourself.

FENDI: I grew up in Kota Kinabalu (KK) and have been working in Kuala Lumpur for 10 years, mostly in sales and marketing. In 2013, I started a home based business: Nining Food & Bakery in KK currently managed by my family members as I focus on my Korean franchises.

Question 2: How did you first learn about franchising?

FENDI: It began when I worked as the Business Development Manager for BBQ Chicken; the No.1 franchise brand in Korea and the 1st F&B franchise brand to be selected under Korea’s top 100 brands.

In this role, I was managing the entire Malaysian franchise which involved setting up new outlets (supervising, operations, cost, logistics, project timelines), dealing with banks to secure financing for franchisees, negotiating rental fees and agreements with shopping malls/landlords and liaising with government officials on legislation requirements.

Question 3: What are the current franchises that you are involved with?

FENDI: Currently, we operate Snowball Bingsoo Café, a Korean Dessert establishment located in Avenue K. “Bingsoo” or “patbingsu” is a type of Korean dessert made of iced shavings popular in Korea. We brought it into the Malaysian market given the recent appeal for Korean culture among Malaysians.

In April, we will introduce Outdark: Chicken& Beer, a highly successful restaurant franchise in Korea and Hong Kong. The restaurant will launch in Subang with another outlet in Genting Highlands by end 2017.

I am also actively working on FoArt, eco-friendly furniture that combines the functionality of a toy, furniture and learning. You can say it’s similar to Lego but 100 times bigger. Currently, we scheduled an exhibition at Avenue K from March to April to raise awareness on the brand.

It’s tiring but equally exciting to work on such unique and vibrant franchise business. I have plans for more franchises in the future. If the market is right, nothing would stop me.

GoBear x Rebecca Saw - franchising

Question 4: Did you undergo a stringent interview process in order to become a franchise candidate?

FENDI: Oh yes. But as a franchisee, you have the right to interview the franchisor as well. Never be afraid to ask specific questions pertaining to your best interests. That also proves that you are not a follower but a thinker, this is a key quality that franchisors look for as they want you to grow their business in the market.

Franchise business makes it easier for entrepreneurs to start their own business. Some people have the money and desire to start own business, but don’t have the know-how to even begin. If you are considering a franchisor with existing outlets or business in Malaysia, conduct site-visits and get to know the local franchise owners. You learn more if you are proactive.

Question 5: Tell us your experience when you started your franchise business?

FENDI: I always run a cost evaluation before determining the exact investment for the franchise. The cost varies and mostly depends on the location and size of the franchise.

For instance, a franchise setup located in a popular shopping mall will include high rental costs. If you have a large space, more money is invested to furnish and decorate the establishment. Plus, you will need good interior designs and fittings to comply with the franchise’s business look.

I studied the market and identified potential gaps to introduce new possibilities. You can own the best franchise in town but if your location and target market is wrong, the business won’t last long.

I also encountered fair amount of logistic issues. Most of our items come directly from Korea so we had expensive fees and taxes. This of course adds up to the overall costs of the franchise. However, in business you can’t avoid such problems and you need to look for solutions, I identified ways to reduce costs for interior parts.

Question 6: How do you think the experience changed you?

FENDI: You can run a business well if you know how to handle operation. In my case, I grasped the operations aspect well and now am able to venture into any type of franchise business. Franchisors always offer knowledge and training to start your business but thereafter, you need to manage the business on your own.

Question 7: Do you think there is adequate support for young entrepreneurs or franchisors looking to build a franchise or bring in a franchise to Malaysia?

FENDI: You can start by looking up the website for Malaysia Franchise Association (MFA). They provide a list of franchisors that you can choose from. You can also be a member of Malaysia Retail Chain Association (MRCA) as they gather businesses and are great for networking.

There are banks that offer loans specific to franchise business (SME Bank, CIMB, Maybank, etc.) but each bank require different sets of documentations, so find out more before reaching out to them. Your skills as an entrepreneur are tested when you apply for financing. Trust me.

Question 8: What would be the questions one should ask oneself before buying a franchise?

FENDI: Well, you could step into franchising without prior business experience as the franchisor will teach you everything you need to know to get the business up and running. However, you will need to listen and follow 100% of what the franchisor tells you to do. You can’t operate anything without the consent of the franchisor.

So, before committing to a franchise, do your research and pay attention to what the franchisor tells you during the sales presentation. They won’t lie to you but be alert, ask the right questions and get accurate answers.

Question 9: What are the usual legal issues that one should be mindful off in franchising?

FENDI: Know your rights. Find out the dos and don’ts applicable to you and your franchisor, as it goes both ways. Personally, I always look into territorial rights. Make it clear with to your franchisor that no other franchisee should be allowed to open an outlet nearby your targeted location. You wouldn’t want another similar outlet operating a few blocks from where you are operating right?

Set your expectations before signing the deal. Usually it takes a franchise two or three years to generate profit but this is not assured (similar to any other business). Make sure that you are well aware of the investment requirements and the terms and conditions before embarking on a franchise business.

Question 10: How does one determine a suitable franchise?

FENDI: Find something you like or have passion for and not just because the franchise is popular. A franchise is a business like any other and you need to be focused and involved from day one. You must be passionate or you lose interest.

Personally, I will look for a franchisor with a good management team that takes care of the franchisees more than numbers of outlets being operated.

Question 11: What is your advice to an aspiring franchisee or entrepreneur in Malaysia?

FENDI: Not everyone is fortunate enough to start their own business and be successful on the first try. Sometimes, we need the guidance and expertise of others. Franchise is still one of the best options for starting your own business. You may have the passion and the money, but if you lack the knowledge and skills to manage operations, it will be chaotic and you could fail.

My advice would be to be well informed and never commit at once upon hearing the sales presentation. Take your time, ask around and keep your options open. Lastly, it’s important to maintain a good relationship with your franchisor.

Remember that a franchisee and a franchisor should work together and grow together. If the franchise is successful, both parties will benefit. So, nurture your relationship and play to each other’s strength.

Thanks for reading!

The GoBear Malaysia team hopes that aspiring local entrepreneurs and franchisees would benefit from Fendi Edip-Chuan’s experience. Franchising is definitely a viable business option, so do your research and explore its possibilities!

To compare the most appropriate credit cards or personal loans for you, visit GoBear Malaysia’s comparison site today!





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