The challenges of franchising in Malaysia: food and beverages industry / Nor Farahidah Jaafar and Siti Nurfatiha Maulad Jamari

Franchising sector in Malaysia has growing significantly for the last ten years. From the perspective of agency theory, franchising is a unique way of doing business where a principal (franchisor) receives a specified amount of fee or royalty from an agent(franchisee) who uses the franchisor’s business model and trademark to sell products and services by sharing profits with the owner of the idea or concept. However, there have many challenges that always affect the franchisor performance or motivation to enter into global market. This study was conduct to identify the challenges of franchising in Malaysia which are increasing cost, government regulatory and cultural differences. There have three objectives in this study. Firstly, to identify the level of challenges faced by the franchising in Malaysia. Secondly is to verify the significant relationship between the challenge’s factors of franchising in Malaysia. Thirdly is to determine the most significant challenges of franchising in Malaysia. This research has been answered by 136 respondents through questionnaire. Instead of it, the Statistical Package for the Social Science (SPSS) version 21 has been used to summarize the data. Based on this research, the result indicates that the government regulatory is the most challenges franchising in Malaysia. However, the others challenge’s which are increase of cost and cultural differences also effect the challenges although least and can be taken into consideration.