Grooming the franchise industry
THE retail industry is a strong contributor to the country’s economy. A report by the Economic Transformation Programme noted that the wholesale and retail industry contributed about 12.7% to Malaysia’s GDP in 2014.
Nonetheless, Malaysia Retail Chain Association (MRCA) vice president Datuk Liew Bin opines that the sector’s contribution can be furthered strengthened by growing the franchise segment in Malaysia.
“In developed countries, 40% of the retail industry revenue is channelled through franchises. In Malaysia, the franchise business makes up less than 5% of the retail sector. So there is definitely room to grow the franchise segment and the retail industry as a whole,” says Liew.
To support the Government’s plan to increase the share of the franchising segment to 9.4% by 2020, MRCA will be organising its second Malaysia International Retail and Franchise Exhibition (MIRF) on July 13-16 at Mid Valley Exhibition Centre.
“It is our responsibility as the retail association in Malaysia to enhance the retail industry and this is one of our efforts to do that,” says Liew, who is also the organising chairman for MIRF 2017.
According to Liew, having a vibrant fair is crucial to developing Malaysia as a regional retail and franchise business hub. It provides a platform for local and international franchisors to expand their brands as well as for potential franchisees to engage with brands.
MIRF 2017 will gather local and overseas retailers and franchises across 10 countries including Singapore, Korea, Taiwan and China to tap into networking opportunities and to educate and create awareness on the prospects available in the industry.
The fair, expected to be an annual event, drew in some 15,000 visitors to 230 booths last year and generated about RM50mil in transacted revenue.
Liew hopes to maintain, if not exceed, its previous success at this year’s exhibition.
The fair will also feature busi- ness talks and workshops as well as various consumer engagement activities such as product demonstrations and competitions.
MIRF 2017 is sponsored by BMW with Mah Sing Group as the Diamond Sponsor.
Apart from a successful fair, Liew adds that the local industry needs more professional franchise consultants that are able to guide franchisors to manage their franchises.
“Last year, there were many enquiries for franchising but not a lot of franchisors were able to manage the franchisees so it was not so easy for a lot of these franchising opportunities to take off,” he says.
He notes that there were not many strong local franchises. And while Malaysia is not short on good products, many of the fran- chises or businesses with franchise potential lack proper systems to succeed.
“You need a mature system and mature products and you must be financially strong to be able to support your franchisees. And it would help to have good consultants in the market that can advise these franchisors, not just prepare the licensing agreements,” he says.
Liew also urges the Government to support franchisors through incentives and grants that would enable them to afford good consultancy services.
“Franchise is one of the ways to grow the business fast. But if you don’t know how to manage it, it can also kill your business.
“Nowadays, there are a lot of new startups with new ideas. But a lot of them don’t know how to manage the business. So the Government can support them with incentives for consultancy and through franchisor education. Government support is very important,” he emphasises.
MRCA also hopes to collaborate with other existing associations to organise more educational workshops for retailers and franchisors to better support the retail ecosystem in Malaysia.