Franchise business revenue plunges 80%

The decline was particularly in the F&B segment, which dropped by 70%, and the education sector which shrank by 80%

by S BIRRUNTHA/ pic credit: mfa.org.my

THE franchise industry suffered a significant loss of income during the Movement Control Order (MCO).

Domestic Trade and Consumer Affairs Minister Datuk Alexander Nanta Linggi said the decline was particularly in the food and beverages (F&B) segment, which dropped by 70%, and the education sector which shrank by 80%.

On the other hand, online sales recorded a 28.9% jump in April as it became the ideal alternative for consumers due to movement restrictions.

“According to the annual Franchise Business Report in 2018, the franchise industry had recorded sales worth over RM11 billion and the figure was believed to have increased to RM13 billion in 2019.

“This shows the franchise industry is one of the most important industries with a significant contribution to the country’s economy,” he said after witnessing the signing of a memorandum of understanding between the Malaysian Franchise Association (MFA) and Shopee Malaysia in Putrajaya last Friday.

To date, 583 local and 63 foreign franchisors have registered with the Domestic Trade and Consumer Affairs Ministry (KPDNHEP).

He added that the value of the franchise industry’s sales this year may not be as successful as the previous years due to the impact of Covid-19.

Meanwhile, MFA has collaborated with online shopping platform Shopee to promote the products of local franchises, as well as help industry players cope with business challenges caused by the pandemic.

Through the collaboration, businesses can open official stores on Shopee and promote their products and offer vouchers online. MFA chairman Datuk Dr Radzali Hassan said buyers will have the opportunity to receive and enjoy greater savings when making a purchase if there is a promotion on Shopee by the brands.

“One of the main reasons Shopee was selected as MFA’s strategic partner is because Shopee’s platform can promote franchises overseas like Indonesia, Singapore, the Philippines and Thailand,” he said at the event.

Shopee Malaysia head of fast-moving consumer goods Tan Ming Kit said the platform is pledging to assist local franchises, not just with setting up their online stores, but also providing support through marketing tools and in-app features like Shopee Live, Shopee Games, campaigns and more.

“Additionally, we will offer contactless solutions in the form of our ShopeePay e-wallet which can be used both online and offline to help MFA’s members synergise the full potential of omnichannel retail.

“We hope that more local franchises, too, will get to share the same kind of success as their counterparts,” he added.

MFA will serve as a mediator between franchises and Shopee to drive the digitalisation of offline retailers via mass onboarding onto Shopee’s solutions.

The digital solutions will include training, the setting up of their official stores and activating ShopeePay e-wallet as a payment mode in their offline retail outlets.

The collaboration is also touted as essential to the country and economy’s needs as contactless transactions are a precautionary measure to keep Malaysians safe amid Covid-19.