Are you looking to start your own business? But try as you might, you just haven’t figured out the perfect business idea to launch. In this case, why not try buying a franchise to launch your entrepreneurial dreams? To get a head start, it would be best to first describe what a franchise is.
A franchise can be loosely defined as an independent entrepreneur buying the branding rights and licenses from a pre-existing company. This means that they can operate as an outlet of said company and sell goods and services using their brand. An example of a globally renowned franchise business would be the fast food giant, McDonald’s.
Of course, you too can always buy a McDonald’s franchise in Malaysia, but there are plenty of other options to look at. From fast food to apparel to beauty essentials, Malaysia has a wealth of opportunities for aspiring franchise owners.
Pros and cons of buying a franchise in Malaysia
Pros on franchise in Malaysia
No need to start from scratch. With a franchise, you have no need to come up with an elaborate business plan and go through the troubles of product testing.
Buying a franchise means you essentially buy a customer base as well. This is because the brand already has a reputation and as such has recurring customers.
The training programs will be easily replicable as you have pre-existing outlets to look at for guidance.
Ease of advertising
Most franchising companies offer assistance in terms of advertising. Therefore, even though you will also need to invest certain amount in the advertising, the parent company will help out as well.
Access to equipment and machinery
As a franchisee, you will gain access to necessary equipment that your outlet needs to operate. As such, you may be provided these by the franchise owner as part of the contract, or you may be sold them at a discounted rate.
Note: You may read this: Useful tips before buying a ready business in Malaysia
Cons on franchise in Malaysia
High start-up costs
Buying the rights to use a franchise always incurs a high initial cost. This is because of the initial capital investment the franchise owner requires you to pay. This is normally a non-negotiable fixed amount.
The initial capital investment is not the only cost you will have to pay. You will be asked to pay a respective franchising fee to the main company. In addition to this, some franchises also require a monthly payment of royalties to be made. This will usually be a percentage of all profit made.
This is factor that may not translate directly into numbers. However, it is extremely important as well. As a franchise of a company, the general public will see the company as a whole as a unified brand. Therefore, if the head company or another popular franchise are attached to any media scandals, it will affect your franchise as well. Regardless of your involvement with the scandal.
The individual franchisee will have to sign a contract with the company owner. Depending on the terms, they will ask individual franchise owners to adhere to a strict set of rules. In this case, any stray from these terms may result in you losing ownership of your franchise indefinitely.
Franchising in Malaysia- what are your cheapest options?
Now that we’ve covered the pros and cons of buying a franchise in Malaysia, you may want to look into your options. As a new business owner, your start-up capital may not be large enough to buy some of the most popular brands in the country. However, that doesn’t mean all is lost for you. Buying a franchise is simply the first step in beginning a business. You will have to then use the normal business strategies to market and advertise your business.
Below are some of the cheapest franchising opportunities you have in Malaysia:
Bonia is a luxury leather goods seller, but don’t let that fool you. This company is considered one of the cheapest franchises for new entrepreneurs.
The initial capital investment required to buy a franchise of Bonia is RM 145000. However, the franchising fee, is very low in comparison at RM 20000. The percentage of royalties the firm takes is 2%.
Vincci is a high street fashion brand known for their shoes and accessories. Known for having both affordable and durable goods, Vincci now has 200+ outlets worldwide. The initial capital investment for this brand is RM 38000. In turn, the brand also charges RM 400000 as a franchising fee. Finally, the percentage of royalties is set at 4%.
Daily Fresh is a snack retailer with almost 800 outlets scattered across the world. The brand also owns a sweetcorn plantation, making costs lower overall. The initial capital investment required ranges from RM 85000 to RM 120000. In addition, there is a franchising fee of RM 25000. The percentage of royalties they charge is 2%. In addition, this brand also has an advertising fee of 3%.
With the craze for bubble tea showing no signs of stopping, buying a boba franchise such as Tealive would be a profit savvy choice. With over 200 outlets in Malaysia alone, Tealive is possibly Malaysia’s most popular milk tea brand. The initial capital investment for Tealive is RM 250000 and the subsequent franchising fee is RM 75000. For the latter, all necessary material is provided as well as marketing support. The brand also charges a 3% fee on royalties.
MarryBrown is a Malaysian fast food restaurant known for having quintessential Malaysian flavor in all its dishes. It is now an Asian fast food giant and boasts stores across the world. The initial capital investment ranges from RM 500000 to RM 700000 and the franchising fees are RM 80000. In addition, they charge a royalty fee of 4% and an advertising fee of 3%.