Presented by:
SHAHRUL AZLAN MOHD ZULKIFLI
Head of Investment Division
Perbadanan Nasional Berhad (PNS)
18/11/2010 ADFIAP CEO FORUM VII, SIEM REAP
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• Perbadanan Nasional Berhad (PNS) is the lead agency in the franchise industry in Malaysia
• An agency of the Ministry of Domestic Trade,
Consumerism & Cooperative
• A government-owned company, a subsidiary of MOF
(Ministry of Finance) Incorporated
• Supporting and developing the franchise industry since 1998
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Total Franchise Products In Malaysia as of Sept 2010
150
32%
68%
TOTAL: 473
323
Source: KPDNKK
Local Franchise Products
Foreign Franchise Products
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Total Franchisees in Malaysia 2010
48
Number of franchisees excluding franchisees of foreign franchisors
Number of franchisees of foreign franchisors
TOTAL = 4,004 3,956
Source: KPDNKK
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1,199
Franchise Outlets in Malaysia
1,102
355 246 96 36
Food
Learning Centers &
Nurseries
Clothing & Accessories
3,598
Other Businesses
Total =
10,380
2,847
Source: KPDNKK
Beauty & Healthcare
Services &
Maintenance
Convenience Stores &
Supermarkets
IT, Telecommunications
& Electrical
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• Franchisors must train their franchisee and employees extensively.
There is also a shortage of good retail staff
• Shortage of management skills in the franchise industry leads to staff pinching not only among local but, also international international brands
• PNS provides franchise management skills training to franchisees, franchisors and their employees through the PNS Franchise
Academy
• Entrepreneurs lack start-up capital.
PNS provides up to 80% financing on total project cost (capex, opex and franchise fees)
• Facilities are centered in Kuala Lumpur. PNS provides support from its five (5) corridor offices in high growth areas around the country
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Kuala Terengganu
Kota Kinabalu
Georgetown
Miri
Ipoh
Klang Valley
Kuantan
Kuching
Melaka
Johor Bahru
Where Most of Franchise Businesses are Located and Opportunities in Other Cities (doted arrows)
PNS Corridor Office
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Financial Support for the Franchise Industry through Development Finance Institutions
1. PNS - lead agency in the franchise industry. Franchise financing schemes. Setting up PNS Academy to train franchisors, franchisees & their employees in mastering the management and business of franchising)
2. SME Bank Berhad - franchise financing schemes
3. Bank Kerjasama Rakyat (M) Berhad - franchisee loans
4. Credit Guarantee Corporation (CGC) - provides guarantee services through commercial banks such as
CIMB, Maybank
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• PNS provides funding to franchise businesses throughout their business life cycle
• For Franchisees, we provide Franchisee Loans from single outlet and as they grow into a multiple-outlet franchisee
• For Franchisors, we provide Pre-Franchise Loans to support their conversion to franchise their business, then Franchisor
Loans for them to grow their franchise business, next
Mezzanine Investment to expand their business further, then
Pre-IPO Investment as they get ready for a public listing exercise
• Foreign Franchise Investment scheme is also available for those seeking to acquire Master Franchise rights
• Special Programs for Graduates, Women & Youth.
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• Franchisees are almost always start-ups Commercial banks would want to see audited accounts
• Franchisees are almost always without business experience. Commercial banks would need business track record
• Franchisees are almost always individuals without assets. Commercial banks would require collateral
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• Franchisees would be trained by franchisors.
Good franchisors train their franchisees well and very often.
We can measure the probability of success of franchisees by the quality and length of training by franchisors.
• Strong brand, proven products and market presence of the franchise would help franchisees achieve sales targets to be profitable.
• A proven business format and solid standard operating procedures of the franchise would help franchisees go through the learning curve of operating a business.
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• A well-practiced marketing plan of the franchise would help a franchisee market their products and services effectively.
• A strong supply chain and economies of scale of the franchisor would help franchisees overcome supply issues and enjoy lower cost of goods.
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• Franchisees do not meet sales target
• Franchisees do not enjoy marketing support from franchisor
• Franchisees do not enjoy lower cost of goods
• Franchisees lack entrepreneurial skills and cashflow management, franchisor training fails
• Franchisees have limited resources to support the business for a longer period if initial sales targets are not met
• Franchisees lack commitment and focus. Need to secure higher financial commitment from entrepreneur so that they try harder to make the business successful.

• Franchisors do not monitor their franchisees
• Franchisors need support to become bigger and stronger
• Franchisors do not have enough good franchise managers
• Franchisors fail to manage franchisor-franchisee relationship
• In summary, there are not enough good and sustainable franchisors. Franchisees chose the franchise business for wrong reasons such as they cant find employment and franchise loans are easily available
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The National Franchise Development Program since 1991
• To create awareness of franchising as an alternative mode of entry into business and entrepreneurship
• To train entrepreneurs, franchisees and franchisor on franchise business
• To promote franchise business opportunities and homegrown franchisors nationwide and internationally
• To develop homegrown franchise products
• To acquire foreign franchise rights for the development of the business in Malaysia creating opportunities for entrepreneurs
• The National Franchise Development Program (FDP) gave birth to the Malaysian Franchise Association in 1994 and the legislation of the Franchise Act 1998. In 2004, PNS was given the mandate to lead the National FDP.

• In order to be more effective in supporting the franchise industry, PNS via our 100% owned subsidiary, Malaysia
International Franchise Sdn Bhd (MyFranchise), operated franchise businesses. This investment was for PNS to develop a better understanding of the challenges in the franchise industry
• To understand the role of a franchisee, MyFranchise operated a Marrybrown Fried Chicken outlet at the Senai
Airport in Johor Bahru
• To increase their knowledge on being a franchisor,
MyFranchise invested in a homegrown franchise – 1901
Hotdogs
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• As a new Franchisor, MyFranchise has developed and now operates a new franchise brand, Forest’secret - a herbalbased beauty and wellness product shop.
This franchise program also helped the businesses of 18 SME’s to manufacture products for the brand
• MyFranchise also spread their wings abroad, by developing and managing the JomMakan franchise brand – Malaysian restaurant overseas under the government MalaysiaKitchen
Program
• MyFranchise became a Master Franchisee by acquiring the
Master Franchise rights of Gloria Jean’s Coffees for Malaysia and Brunei and has been operating the business since 2007
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• Newly introduced by PNS to assist Malaysian companies in acquiring Master Franchise rights especially regional rights and for opening of outlets in Malaysia
• PNS will participate in the negotiation process and become a
(minority) joint venture partner
• PNS will also actively do the selection and matchmaking between franchisors and potential master franchisees
• 7 year equity investment scheme.
A combination of Ordinary
Shares and Preference Shares
• PNS Master Franchise Club, an inaugural event in December 2010, an exclusive by invitation-only event which brings together a select group of high net worth individuals and medium to large corporations to meet and preview target master franchise opportunities
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• PNS has participated in the listing exercise of FocusPoint Holdings
Berhad, the homegrown eyewear franchise
• We plan to invest in more IPO-bound franchise companies – franchisors and master franchisee companies
• Some franchise-based companies already listed on the Malaysian
Stock Market : a. QSR Brands Berhad (KFC & Pizza Hut) b. CAB Cakaran Corp. Berhad (Kyros Kebab) c. Berjaya Retail Berhad (Singer & 7-Eleven) d. Berjaya Food Berhad (Kenny Rogers Roasters) soon to be listed
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THANK YOU shahrul@pns.com.my
Perbadanan Nasional Berhad
Level 9B, Menara Dato' Onn,
PWTC, 45 Jalan Tun Ismail,
50480 Kuala Lumpur
Tel: +603-26986670
Fax: +603-26986617 www.pns.com.my
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