Billion-ringgit Econsave retail business grows from humble roots

MORE home-grown franchise businesses are expected to venture abroad in the next five years with the government's support.

To date, 26 local franchise businesses have successfully spread their wings to 49 countries.

Domestic Trade, Cooperative and Consumerism Minister Datuk Seri Ismail Sabri Yaakob said the ministry will set up a committee to identify strong local franchises and guide them into the international market.

"Our focus during the 10th Malaysia Plan (10MP, 2011-2015) is not only to develop more franchise businesses in the domestic market, but also to bring them abroad.

"Malaysia has a lot of franchise businesses that have the ability to expand overseas," he told Business Times in an interview in Kuala Lumpur last week.

Ismail Sabri said the ministry plans to organise specific exhibitions on franchise business abroad to provide greater exposure and networking for local franchise businesses.

The government has yet to announce details on allocation for each ministry under the 10MP.

However, the minister is confident that the budget to develop the franchise industry will be sizeable as franchise plays an important role in contributing to the nation's aim of achieving high-income status.

Under the Ninth Malaysia Plan (9MP, 2006-2010), the ministry was allocated a direct funding of RM20 million to implement various programmes to assist local entrepreneurs to convert their businesses into franchise.

Ismail Sabri said so far, the ministry has used up RM16 million from the funding to develop the local franchise industry and is expected to fully utilise the fund by year-end.

Perbadanan Nasional Bhd (PNS), the agency under the ministry, has been allocated RM177 million for loans to be extended to franchisors and franchisees.

Ismail Sabri said up to July 7 this year, 449 companies have registered under the Franchise Act 1998 as franchise business. Of the total, 305 are local companies and the rest foreign franchise business.

"For the whole of last year, revenue generated by 330 franchise business amounted to RM10.22 billion," he said.

If the revenue by the franchisees of these franchises is taken into account, the figure would be much bigger.

However, franchisees are currently not required to report their sales turnover to the Registrar of Franchise.

Up to April this year, there were 6,083 franchisees, of which 2,542 franchisees were established during the 9MP.

On the Franchise Blueprint, Ismail Sabri said it is expected to be launched in September.

"The blueprint is ready. We are only waiting for the right time to launch it," he said.

He said the blueprint has taken into account the New Economic Model as well as the contribution of the franchise industry to the country's high-income objective.

The Franchise Blueprint is a long-term development plan that would guide the development of the industry until 2020.