KUCHING: While franchising is regarded as a high-value business model that companies can capitalise upon, the number of local small and medium enterprises (SMEs) here venturing into the field remain somewhat less vibrant than those in Peninsular Malaysia.
MAJOR OBSTACLE: Gider notices that amongst the biggest barriers as to why franchising has not been thriving here as in West Malaysia is the start-up cost, where she agrees that the initial capital can be quite costly.
To date, there are less than 30 businesses operating as either franchisors or franchisees throughout the state.
“The franchising segment in Sarawak has been quite slow. The perception among SMEs here on franchising is very different than their counterparts in the West (Peninsular Malaysia),” observed Perbadanan Nasional Bhd’s (PNS) executive officer for Sarawak Corridor regional office, Vivishir Gider in an interview with The Borneo Post.
She was met here during the ‘Business Opportunities Through Franchising’ programme organised by SME Corporation Malaysia (SME Corp) held at Bank Negara Kuching branch yesterday, where she was a guest panel speaker for the seminar.
Comparatively, current data from the Ministry of Domestic Trade, Cooperatives and Consumerism (MDTCC) has shown that there are 499 franchisors registered with the Registrar of Franchise involving 6,323 franchisees nationwide.
Moreover, Gider noted that amongst the biggest barriers as to why franchising had not been as thriving here as in West Malaysia was the start-up cost, where she agreed that the initial capital could be quite costly.
“To develop a franchise business or to convert a conventional one into becoming a franchisor, the operator could cough out up to RM100,000 or more, with development period taking from six to eight months, sometimes more than a year.
“This, what I would say, is the main reason why local SMEs are very apprehensive about opening up a franchise business. Another possible reason would be the unwillingness to share trade secrets, which is non-existent in franchisorship since it involves many chains of operations that require the same business model, standards, quality and procedures for each branch unit,” she pointed out. Last year PNS set up a target to have a total of 50 franchisees and 30 franchisors in the state.
“Sadly, we didn’t reach that goal. Thus for this year, we are revising our KPI (Key Performance Index) target to have 10 new franchisees and five new franchisors due to the different situation here in Sarawak,” she stated.
On the bright side, Gider also mentioned a number of established franchisors operating in the state such as Sugar Bun and Hartz Chicken Buffet. On the other hand, successful franchisees – operators who are running the operations initiated and regulated by the franchisors – here would include Secret Recipe, Smart Reader, Anakku, Marrybrown, Kenny Roger’s Roasters, McDonald’s and Bonia.
“It’s a successful and proven business model that comes with a known and trusted trademark or brandname. SMEs here hoping to venture into franchising can utilise the standard operating guide and procedures, with continuous training and education as well as quality control.
“As such, we are urging more Sarawakian SMEs to explore the possibility of making it into the world of franchising. PNS, as the overseeing body, does provide a number of financing schemes and tailored programmmes to help those businesses wanting to venture into franchising,” she explained.
Concurring to this, the state’s SME Corp director Ursula Unnie Thomas Salang said the agency also provided similar assistance to SME operators who wanted to do franchising.
“As stated by PNS, the franchising industry does not confined itself only to the food and beverage segment, but it also encompasses a varied range of businesses as well such as retail products and services. For SMEs interested in doing franchising business, they can come to us at SME Corp where offer advisory services as well as channels for them to apply financing options via SME Bank or Malaysian Industrial Development Finance,” she pointed out.
PNS – incorporated in 1969 and formerly known as Pernas – is an agency mandated by MDTCC to lead and oversee the development of the country’s franchise industry. The Sarawak Corridor regional office located at Jalan Tun Jugah here is one of PNS’ five corridor divisions nationwide comprising the Sabah Region, East Coast Economic Region, North Corridor Economic Region and Iskandar Development Region.
