Legal Firm in Penang, Malaysia Specialised In Franchising Agreements & Intellectual Properties
Every owner of a successful business, often comes to a point where they need to decide whether to invest more capital and grow or continue to stay small. In most cases, business owners tend to opt for the latter, due to the inherent risk and the investment capital required to grow.
Licensing and franchising are two ways for business owners to be able to grow rapidly with a much lower cost and lower risk.
Franchising is a subset to Licensing. Franchising will usually comprise of standard operating system, distribution systems, marketing platforms, operation manual provided by the Franchisor and also include other IPs, commonly known by law person as a manual to success. In return, the franchisee pays an upfront fee, royalties, promotional funds and other fees if any stated in the Franchise Agreement. Franchise registration is mandatory process before someone can commence with a franchised business within Malaysia and Chung Chambers do provide advice and full range services in respect of franchise registration.
Licensing is one way of Intellectual Property Commercialization. However, as compared to Franchising, Licensing can be arranged and negotiated between the parties in a more flexible form. A contract giving permission to another party to use its intellectual properties, for example: patents, trademarks, copyrights and/ or industrial designs be it wholly or partly can also be done under licensing.
In return, the Licensee will pay the Licensor one off fee and/ or monthly or annual royalties and/ or consideration in kind as part of the consideration for licensing arrangement. Thus, be it Franchise Agreement and/ or Licensing Agreement is also advisable to be drafted in a way to customize for that very particular business model and arrangement and not otherwise.
There are other differences when drafting a franchising agreement versus a licensing agreement. Some of the key terms and conditions that are considered in the area of setting up, control, support, exclusivity and competition can be very different. Get legal advice to clear your doubts and prevent time consuming mistakes when drafting a franchising agreement.
When both parties are preparing documentations to register the franchise in Malaysia, you would need to take into account the specific requirements of the Franchise Act. While you are busy getting ready for the outlets’ setup opening and the trainings for new staff, you do not want to be caught by surprise with legal stuff and technical issues pertaining to your franchising agreement and registration.
All these could be easily resolved by engaging an experienced lawyer! At Chung Chambers, we provide extensive support, professional consultation and appropriate legal advice to both franchisor and franchisee.