A Powerful Synergy for Malaysia’s Economic Growth
By Damian Yeo | Malaysian Franchise Association
Together with Mr. Khalek Awang, I had the honour of representing the Malaysian Franchise Association (MFA) at National Cooperative Day 2025, held from 25th to 27th July at the Melaka International Trade Centre (MITC). This annual event was a vibrant and impactful showcase of Malaysia’s dynamic cooperative movement. Featuring over 200 exhibition booths, the event highlighted a diverse spectrum of products and services—from agriculture and food-based enterprises to finance, education, logistics, and more. It was a powerful reflection of the cooperative sector’s resilience, innovation, and enduring relevance in Malaysia’s economic landscape.
We were accompanied by four of MFA’s dedicated officers—Fabian, Rafel, Ahmad Adib, and Muhammad Asri—and had the privilege of engaging with numerous cooperative societies. Many of these cooperatives have substantial memberships, underscoring their strong community presence and operational capacity. For example, a cooperative from Selangor has more than 30,000 members, while those from Sabah and Kedah have approximately 15,000 and 8,000 members, respectively. Additionally, civil service cooperative societies maintain some of the largest memberships in the country. These figures highlight the remarkable scale and influence of Malaysia’s cooperative sector.
Both cooperative societies and franchise businesses fall under the purview of the Ministry of Entrepreneur and Cooperative Development, currently led by YB Datuk Ewon Benedict. Under his stewardship, both sectors have benefited from strong institutional support aimed at enhancing their roles in promoting entrepreneurship, generating employment, and contributing to sustainable national economic growth.
Collectively, cooperative societies and franchise businesses contribute close to RM90 billion annually to Malaysia’s Gross Domestic Product (GDP). This significant economic contribution demonstrates not only their financial impact but also their potential to uplift communities, empower entrepreneurs, and drive inclusive and equitable development across the nation.
A Forward-Looking Proposal for Cooperative Participation in Franchising
At a recent meeting of the Franchise Advisory Board, the Cooperative Commission of Malaysia (SKM) presented a well-considered proposal aimed at increasing cooperative society participation in the franchising sector. I fully supported this initiative, as it represents a strategic opportunity to align two impactful systems—franchising and cooperatives—for mutual advancement and national benefit.
From a legal standpoint, this collaboration is entirely feasible. Section 4 of the Franchise Act 1998 defines a “person” to include:
“A natural person, corporation, partnership, association, firm, joint venture or trust.”
Given that associations and joint ventures are expressly included, cooperative societies—which are legally constituted entities—clearly fall within this definition. Many cooperatives operate with governance and financial structures similar to those of associations and firms. As such, there is no legal impediment preventing cooperatives from participating in franchising—whether as franchisors, franchisees, or joint venture partners.
The Case for Integration: Benefits and Opportunities
The integration of cooperative societies into the franchise ecosystem presents numerous benefits:
(a) Scalability and Professionalism
Cooperatives can adopt franchise models to expand efficiently, improve branding, and streamline operations, thereby enhancing their professionalism and operational consistency.
(b) Market Access and Reach
Franchisors can leverage the local networks of cooperatives—especially in rural and semi-urban areas—to broaden market reach and enhance customer engagement.
(c) Community Empowerment
This collaboration can generate entrepreneurial opportunities, particularly for youth, women, and underserved populations, aligning with the government’s inclusive economic agenda.
(d) Sustainable Growth
Franchise-cooperative partnerships can foster shared wealth creation, encourage community ownership, and promote long-term sustainability.
This strategic synergy represents more than just a legal or economic opportunity; it is a visionary approach to fostering a more inclusive, participatory, and resilient business environment in Malaysia.
Path Forward: Coordinated Stakeholder Support Needed
To realise the full potential of this partnership, coordinated support from all stakeholders is essential:
i) Policymakers should consider issuing guidelines or formal clarifications to facilitate cooperative involvement in franchising.
ii) Financial institutions should introduce targeted financing schemes to support cooperatives in franchising ventures.
iii) Training and capacity-building programmes should be made available to both franchisors and cooperative leaders to ensure effective implementation and sustainable collaboration.
iv) Private sector players and franchise consultants should explore joint ventures and pilot projects with cooperative societies to catalyse success.
As we look toward the future, it is imperative to recognise the immense potential of uniting the cooperative spirit with the structured scalability of franchising. Together, these two models can serve as powerful engines of economic progress, community empowerment, and national resilience.
The future of entrepreneurship in Malaysia lies not merely in building large businesses, but in cultivating inclusive, sustainable, and community-driven enterprises. The time is ripe for franchising and cooperatives to join hands for the benefit of the people, the economy, and the nation.
I sincerely hope that the Ministry will revisit this matter and explore effective mechanisms to facilitate the participation of cooperative societies in the franchising sector. I firmly believe that enabling cooperatives to engage in franchising will significantly contribute to strengthening Malaysia’s economy and advancing inclusive, sustainable growth nationwide.
#dslyfranchise #thefranchisecode
ps: I hope to add this area in my 2nd edition, The Franchise Code
