The franchise laws in Malaysia are unique in many ways and we advise any franchisor to seek legal advice before making a start. The Franchise Act (FA) is one that allows regulators to add to a franchise territory size, prevent new companies from entering the market and seeks compensation from a franchisor who does not renew a franchisees agreement.
Although the FA does not expressly restrict the manner in which a franchisor recruits franchisees or selects its suppliers, the government does exercise some form of control and impose certain conditions (when granting its approval during the approval application/registration process). For instance, if the territorial area granted to a potential franchisee is considered to be too small or restrictive, the Registrar would request that the applicant to extend the territorial right to a larger area (usually by reference to a radius in km). The Registrar of Franchises would also require the franchisor to submit a list of its suppliers in granting approvals. If the franchisor has not shown profitability or healthy growth in their financial statements for the franchise business, the Registrar is likely to refuse the approval application or registration on the basis that the franchisor is not ready to sell its franchise systems to franchisees in Malaysia.
It might however be a case of attending a tradeshow in say Singapore and nobody can stop a Malay businessman from approaching your stand and making a master franchise enquiry.
If this does happen I would suggest you ask the prospect to come up with some answers and this is what is happening with Our Space after Air Stream had some great guys to meet after the franchise show