The recent global economic slowdown has hampered the progress of many industries big and small, including those in Malaysia. How much has the franchising sector in Malaysia been affected by the setback? Franchise Asia met with Syed Kamarulzaman Dato’ SZK Shahabudin, Managing Director of Perbadanan Nasional Berhad (PNS) recently to find this out, and his views on other pertinent matters concerning PNS.
It was announced at the Malaysia Franchise Awards Night 2009 late last year that the government had managed to help create 46 franchisors out of the 50 projected. Are we also on track in achieving the 1,000 new franchisees mark under the 9th Malaysian Plan in light of the recent economic slowdown?
We are confident that by end of 2010, we will achieve our target of 50 franchisors through direct or indirect support from the government which works in two ways. One is via franchisors completing all the franchise process themselves and seek our assistance exclusively on funding, while the other is via PNS developing a franchise business from scratch.
Various strategies have been designed and implemented to increase the number of entrepreneurs in franchising as franchisees. PNS is working hard to increase franchisees awareness level, as well as conducting various franchise briefings, seminars, talks, via road shows, exhibitions, in-house trainings and indirect dissemination of information through website.
These include promotional activities and participation in Franchise International Malaysia (FIM) exhibition and conference, create awareness programmes through franchise forum, local and international exhibitions. This is an excellent avenue for business expansion and networking. We also organise franchise dialogues among the policy makers, industry players and support institutions to discuss franchising issues, and briefing sessions to get overview on the development of franchising in Malaysia.
We work very closely and cooperate with selected franchisors to identify and groom potential franchisees. We also offer competitive financing packages for franchisees, assisting them in identifying and securing strategic business premises, applying strategic conversion approach through Company Own Company Operated Outlet (COCO) to Franchisee Outlet (FO), BOT concept and intrapreneur programme.
Aggressive marketing and promotion activities are continuously initiated through series of franchise awareness programmes in radio and educational columns in major newspapers. PNS advertisements are also strategically placed to reach the right target audience e.g. through mainstream media, niche media and outdoor media i.e., newspaper, magazines and other printed media, radio, bus advertisement, bus wrap, and billboard.
To date we have created awareness and trained almost 8,000 to 10,000 likely candidates from colleges and universities on franchising. We believe the seeds that we planted in them would sprout into fruitful and profitable lifetime business ventures. Through franchise programmes, our aim is to create more business owners instead of just employees, indirectly helping to ease the unemployment dilemma of fresh university graduates. To take it one step further, we are also working with colleges and universities to allow students to work part-time in franchise outlets to gain experience and learn the fundamentals of franchising.
How much did the economic slowdown disrupt PNS’ short term plans?
In franchise, the effect of the slowdown in the economy had minimum impact as people still seek opportunities in business. Franchise business has been proven to be least affected by the economic slowdown. With the establishment of new franchise business it creates new opportunities, PNS is continuously working in tandem with leading franchisors to create more franchise entrepreneurs. In addition to this, we have also opened our doors wider to entice more business entrepreneurs by endorsing financing assistance for licensing.
In terms of franchise development, besides creating better franchise models to enhance franchise end results, we are also in the process of creating a ‘Franchise Academy’ – a franchise platform that gathers the inputs from the Ministry of Domestic Trade, Cooperatives and Consumerism, MFA, and other main franchise players to consolidate their expertise.
Last year, there was news alleging that some franchisees who had obtained financing from PNS to be facing financial difficulties. Many of them had blamed PNS for their predicaments. What are the steps taken by PNS to avoid similar incidents from happening in future?
In any business there is always the element of risk – there is no guarantee that every business will succeed. Success in a business is dependent on a few criteria, including having the right attitude and the right people to operate a business. As an agency with the mandate to lead the development of the franchise industry in Malaysia, PNS can only create opportunities for aspiring entrepreneurs to venture into franchising.
Franchisor has the responsibility to be innovative and creative in this challenging times and need to monitor the franchise business closely to ensure success.
A franchisor and franchisee relationship is akin to a relationship in a marriage; that we presume would last blissfully until the very end. No one in their sane mind would get involved in a marriage knowing that it will end soon. Furthermore, if you have to conduct proper checking on your partner, it is only wise to do so before the marriage takes place. Similarly, in any franchising business, franchisees are given the liberty to read and understand the franchise business concept thoroughly before signing on the dotted line.
Franchisees are advised to do the necessary evaluation on the business before making the decision. Franchisees should understand on what makes a business venture successful, such as location, business acumen, financial strength, owner and workers’ attitude, and taking short-cuts is not one of them. Again, franchise mind-set contributes to a larger extent to the success or failure of the business. The desire to quit would not have arisen easily, as the process to become a franchisee would have been arduous. Some of the business models are rather new in Malaysia thus the intention to quit easily by the franchisees. It is rather unfortunate that many franchisees want to be successful but are not willing to invest the time and effort to make it so.
Moving forward, strategic steps have been taken as ways of prevention, including enhancement in training to the franchisees, setting up the franchise academy to educate all those concerned comprising franchise consultants, franchisees, franchisors and other industry players, providing consultancy and advice to the franchisees if required, improve programmes with franchisors via attachment, conversion of Company Own Company Operated Outlet (COCO) to Franchisee Outlet (FO) and also working closely with the Ministry of Domestic Trade, Cooperatives and Consumerism in tracking the performance of franchisees.