Franchise Viewpointhistory comes with higher credit score which correlates not onlyto interest rates for your business loan, but also higher chancefor application approvals from government funding agencies,financial institutions, venture capitalists or angel investors.You can get a copy of your credit score report from the BankNegara Malaysia (BNM)’s Central Credit Reference InformationSystem (CCRIS) or other locally well-established credit reportingcompanies such asRAM Credit Information and Credit Tip-OffSdn Bhd (CTOS).Various Franchise Financing Options(a) Financing from Bank SourcesCommercial BanksAlthough securing funding from commercial banks remainchallenging in Malaysia, specifically to those who have lessthan two years of business operations. Even so, most of thecommercial banks have special sections that deal with SMEfinancing or business loan which is avaluable source of freeadvice for your franchise business particularly if you are abudding franchisor (not in favour of franchisees). They providecrystal-clear financing features and requirements aboutSME fundingwhich can help if you intend to build a franchisebusiness. Lending rates would range from a certain percentageper annum, based on the funds approved. So, you may starttalk to a bank though there is never a guarantee that you will beapproved for funding.(b) Financing from Non-Bank SourcesEquity Crowd Funding (ECF) & Peer-to-Peer (P2P) FinancingAs the first country in ASEAN introducing a regulatory frameworkto facilitate equity crowdfunding (ECF) in 2015, startupentrepreneurs who do not have access to traditional financingmethodsare now accessible to alternative mechanism for capitalraisingto their innovative new franchise businesses. The ideaof ECF fundraising is that allows startups and small businessto obtain funding through small equity investments from aconsiderable number of investors by using online portals tofacilitate transactions of investments. The six officially registeredECF platform operators including FundedByMe, Ata Plus,Crowdo, Eureeca, EquitypitchIN and Crowdplus. Asia have fullyoperationalized in 2016. Furthermore, there is a tremendousgrowth of business mentoring programmes in Malaysia, andstartup franchisors and franchisees may consider participatingthe programmes.Government Initiatives for Startups & Small BusinessesIn Malaysia, there are quite number of government loansavailable in recent years, to help the SMEs to start or growtheir businesses. The Malaysian government has pledgedseveral beneficial financing schemes on the startup costs fornew businesses. There are several types of Government loanscurrently open for application currently including GraduateEntrepreneur Fund, Young Entrepreneurs Fund, ShariahcompliantSME Financing Scheme (SSFS), Fund for Small andMedium Industries 2 (FSMI2), Green Technology FinancingScheme (GTFS), and Intellectual Property Financing Fund etc.ConclusionAll in all, there are plenty ways to finance a new franchise. Let’sbe creative, and be prepared for some careful research whileexploring the financing options that best suit you and yourbusiness model. Although the financing climate has becomemore challenging and difficult due to softening global economyand tightening credit cycles, there are still funding optionsavailable for the right person. Let’s ask anyone you think mightbe helpful in your franchise research counting the franchisoror franchisees in the same segment for any recommendationsand options that might be useful to you. Start planning earlyis essential while constantlyadjusting your action plansbeforedeciding on a franchise opportunity. Have fun and good luck.FranchisorsIf you are securing a franchisee opportunity, your potentialfranchisor will undeniably be a good stop for your considerationin terms of financing options as many franchisors have ongoingbusiness relations with fewer banks. Moreover, they may havefavourable relations to shorten the application process, enablingyou to start operations sooner. In recent years, as credit facilitiestightened, I have seen many local franchisors started to offerincentives to help local entrepreneurs get funded throughvarious helpful initiatives including discounted or deferredfranchising fees, options to buy-back after 12 months ofoperations, debt financing and many more – in a way reducingyour upfront costs on franchise setup, offering peace-of-mindcash flow to keep your business operations running.Fred Wu is the CEO of GE Consult and Editorof GEC Business Review, with over 13 years ofSME consulting and business plan experiencein Malaysia and Asian regions. Prior joining GEConsult, Fred held several senior managerialpositions in large corporations such as Head ofMarketing Communication for Eastern DecoratorGroup where he managed extensive brandsinclude AKEMI, Cannon, ELLE, Angry Birds,Hello Kitty, FIFA World Cup etc.EMAIL fred@geconsult.orgHP: 012-339 8449BLOG: www.geconsult.asiaTWEET www.twitter.com/fredwvictorLINK www.linkedin.com/in/fredvictor8 Franchise Asia • 2017 Vol 33
InterviewThe Key Success FactorsIn Sustaining An Eye LevelFranchise BusinessAt Eye Level, helping children learn isn’t just good business, it also empowers the nextgeneration for a truly bright future. Eye Level offers excellent business opportunities in morethan 22 countries to those who have passion and ambition in education! What does it hold forEye Level franchisees in Malaysia? Joseph Lee, Eye Level Country Manager elaborates.Franchise Asia • 2017 Vol 339
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