Franchise Business In Financial Trouble?

KUALA LUMPUR, 8 Sept (Bernama) -- The franchise business, once viewed as lucrative, is almost resulting in many franchisees going bankrupt.

Thirty franchisees are concerned they would go bust as they are being victimised and used as "baits" by franchisors to obtain government funding.

Infact, they are calling on Perbadanan Nasional Bhd (PNS) to stop funding franchise businesses as it was not bringing any benefit to the franchisees.

Former franchisee owners of Marrybrown, Jukebox, Watershop, VV Shop, Camps Apparel, Sinma and Kwikstop hope by bringing their plight to light, the authorities would investigate their claims and find a solution to the problem.

Each franchisee claims they are in debts of between RM100,000 and RM450,000 as a result of being victimised by the unfair practices of franchisors.

"In the franchise business, it should be a win-win situation for both parties but now the situation is more favourable to the franchisor," said the former franchise owner of Jukebox, Hapsah Jaafar to reporters here today.

Hapsah claimed franchisees were runing into losses which were purposely created by the franchisor.

" For instance, we end up owing franchisors for stock purchases which we have no control over. Excessive and unsupervised stock purchase, almost daily, result in stocks overuns.

" Ultimately, the franchisee ends up in debts with the franchisor," she lamented.

Hapsah, who had to close down her Jukebox business along with eight other franchisees, hoped PNS would not continue with the franchise system involving parent companies in order to save others from going bust.

" Three others in the business are struggling to survive and may soon face the same fate," she added.

Harian Shoes Sdn Bhd is the franchisor for Jukebox which retails men, women and children shoes and accessories. Meanwhile, the Muslim Consumers Association of Malaysia called on relevant authorities to solve the critical situation between franchisees and franchisors.

" The financiers should look at the overall franchise system to determine its level of success. Will it be suffice just to provide funding and leave the franchisees on their own?" asked association secretary Datuk Nadzim Johan.

Franchisees are made to understand that PNS and franchisors will both offer other forms of assistance also to ensure they succeed.

With the deadlock now, it seems that the relevant authorities and the Franchise Association of Malaysia is just washing their hands off the problem, despite numerous representations being made to them.

" Perhaps, the Franchise Act should be amended," suggested Nadzim.

-- BERNAMA