The Malaysian Journal of Social Administration

2022, 16, 156-172

SUCCESS FACTORS OF MICRO-FRANCHISE BUSINESSES IN MALAYSIA

Nurbani Md.Hassan1, Ummu Fatimah Al-Zaarah Zulkifli1, Noor Ashikin Mohd Rom1,
Mohamad Shaharudin Samsurijan2

Abstract

The traditional franchise business normally requires a huge amount of investment that
will only provide opportunity to the middle and high-income group. However, micro-
franchise which based from the traditional franchise has proven to be a successful
method of owning a business and contributes to positive economic growth for the
low-income group. Malaysia has replicated the concept and launched the micro-
franchise business in year 2012 with the aim of giving low-income and poor people the
opportunity to own a business with affordable start-up costs. Since then, the low-
income group has embraced the micro-franchise business model as the source of
income generation. While micro-franchising has been around in other parts of the
countries for so many years, remarkably, very few studies on micro-franchise business
model has been published, let alone, in Malaysia. Therefore, this research attempt to
identify the success of micro-franchise business in Malaysia, particularly in the state of
Selangor. This research employed an explanatory case study method, using the semi-
structured interview to collect the data on 11 micro-franchise enterprises. The findings
of this research have shown that the low-income people are able to keep-up and
embraced the model successfully. Among the success factors highlighted were
product continuity and consistency, brand reputation and credibility, strategic business
location, high profit margin and faster break-even and franchisees’ personal traits and
characteristics.

Keywords
Business, franchise, micro, model, success
______________________________
1
Multimedia University, Cyberjaya
2
School of Social Sciences, Universiti Sains Malaysia

Corresponding author:
*

Email: [email protected]

Introduction

Franchising in Malaysia has grown rapidly since it was introduced in 1940s, with the first
franchise businesses introduced were “Singer” an American manufacturer of consumer

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sewing machine and “Bata”, a Czech Republic manufacturer and retailer of Swiss-domiciled
multinational footwear and fashion accessory (Malaysian Franchise Association, 2018).
Approximately 20 years after the introduction of “Singer” and “Bata”, the food and
beverage- based franchise businesses such as A&W, KFC and McDonald entered the
Malaysian market and have grown rapidly ever since. Though the franchise businesses in
Malaysia were started with the international franchise, similar concept was long practiced by
Malaysia using the concept of “pawah” in which the landlord or the owner of the agriculture
land grant rights to farmers to breed livestock or grow vegetables/crops, in exchange for
profit sharing (Malaysian Franchise Association, 2016). Over the years, Malaysia has
developed its own home-grown franchise businesses especially in food and beverage
sectors such as “Sate Ria”, “Marry Brown”, “Manhattan Fish market”, “Tealive”, “Coolblog”,
“Old-town white coffee”, and started to develop franchise businesses in other sectors such
as oil and gas (Petronas petrol station), Automobile (EON), craft/gifts (Royal Selangor).
Nevertheless, the franchise concept is only available to those with a large amount of
capital, as franchises typically require a large initial investment. The concept has ‘excluded’
those in low income group who want to be entrepreneurs but unable to do so due to the
high initial investment requirement. In order to bridge the ‘gap’, the government of Malaysia
has introduced the micro-franchise concept in 2012 which offers opportunity to the low-
income group to operate and own a business with low initial capital. Micro-franchise has
helped the low-income and poor people to climb out of poverty and it was suggested that
micro-franchising could help people with low educational background to get out of poverty
much more easier than traditional business approach (Hürlimann, 2011). In Malaysia, The
Ministry of Domestic Trade and Consumer Affairs has been actively promoting the micro-
franchise business to B40 and even to M40 groups (Bernama, 2020). Micro-franchise is a
subset or replication of the franchising concept, that distributed standardized products and
services but in small scale (Runde, 2016). Similarly, franchise is "characterised by an ongoing
business relationship between franchisor and franchisee which includes not only the product,
service and trademark but the entire business format itself like a marketing strategy and
plan, operating manuals and standards, quality control and continuous two-way
communications. Micro-franchises exist within Bottom of Pyramid (BOP) rather than
developed markets and the meaning of “micro” indicates the social environment of the
business model that includes an ambitious objective on well-being and welfare of the micro-
franchisee community in rural area (Fairbourne, 2007).
Micro-franchising is a phenomenon that inspires the entrepreneurs at the bottom of the
pyramid to have a greater opportunity in the business sector. It is a business model that
meets the needs of small and medium-sized enterprises and is well accepted as a
replicable business model (Christensen et al., 2010; Lehr, D, 2008) and have a systematic
system such as a mentoring system and an efficient operational concepts to be followed by
those who wants to engage in entrepreneurship especially those who lives in subsistence
market. While micro-franchising has been around in other parts of the countries for so many
years, remarkably, very few studies on micro-franchise business model has been published,
let alone, in Malaysia. Therefore, this study attempts to identify the success of micro-
franchise business in Malaysia, particularly in the state of Selangor. The literature reviews are

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discussed in the next section, followed with data analysis and results, explanation of the
findings and its implications before concluding the whole study.

Literature Review

Successful Micro-Franchise Programme outside Malaysia

Micro-franchise has been established for quite some time in other countries outside
Malaysia, such as in India, Mexico, Kenya and has proven to be successful in eradicating
poverty. In Kenya, East Africa, many people live in a remote rural area where proper medical
care is difficult to find and due to this, the Health Store Foundation (HSF), a United States
based foundation has set-up a programme designed to provide easy access to drugs for the
sick people (Illetschko, 2011). In this programme, the foundation provides micro loans to the
health-care workers to start their own for-profit child and Family Wellness Shop (CFWshops).
CFWshops was founded in 1997 with the goal of providing good healthcare at affordable
and reasonable cost and it has been a huge success. The CFWshops are currently operating
via 85 stores and through continuous expansion has kept the prices affordable while also
providing a good life for its micro franchisees, proving that the business is viable (Illetschko,
2011).
A large plumbing company in South Africa has developed a micro-franchise business
concepts with the assistance of the local municipal to provide plumbing services in low-
income areas with high population density. The micro franchise business flow can be best
described via the diagram shown in Figure 1 below:

Franchisor Training to Selected Residents purchase Collect

applicants micro repair vouchers for repair
franchisee plumbing services vouchers

Payment made Residents Provide

to micro sign service services
franchisee worksheet

Source: Modified from Illetschko (2011)

Figure 1: Micro franchise business flow: A Plumbing Company

The Honey Care Africa (HCA) in Kenya is also of the successful micro franchise
programme which helps the small farmers to become commercial producer of honey. HCA
was founded in year 2000, to provide honey on a contract basis at a fixed and competitive
purchase price. It provides part-time beekeepers, highly productive beehives, equipment
and training, and purchases all of their production at reasonable prices (FUNDES, n.d.). The
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HCA business model is unique in that it incorporates the low-income people as producers,
employees and consumers throughout its value chain (Hofling, 2017). The HCA’s honey
production value chain and its innovative business model have aided the programme’s
success. Figure 2 depicted the business model of HCA and its key actors, which included the
micro franchisees (the small farmers), the franchisor and the clients.

Source: Hofling (2017)

Figure 2: Honey Care Africa (HCA)’s business model and key actors

The Shakti Amma project in India exemplifies the success of the micro franchise
programme. In year 2000 Hindustan Unilever (HUL) launched the Shakti Amma project and
by 2004, the project managed to break even and the company has continued to scale-up the
project (Scheffler, 2010). The objective of the project is to reduce the distribution costs while
also teaching poor consumers the benefits of using soap and iodized salt which have long
been taken for granted. Instead of distributing the products to remote outlets, HUL
appointed the micro franchisees who are in charge of doing so. The micro franchisees also
sold the product directly to consumers in order to earn better profit margin. HUL regarded
that Shakti Amma is their best-known delivery model micro franchisees helped HUL to
overcome their problem in distributing the goods to remote outlet (Scheffler, 2010). Shakti
Amma project has no fees and the model was based on profit margin and this might also be
the reason that contributes to the success of the project. Nevertheless, the micro franchisees
are required to pay for the initial stock costing USD220-USD330 and this were funded by
Self Help Group (SHG) or micro finance by provided by HUL. Shakti Amma is a win-win
project because not only does HUL have decent products, but it also has a specific network
in place created by its trusted micro franchisees and this is regarded as a strong system for
franchise business structure.
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In Mexico, a multinational company supplying construction materials, called Cemex

has created a micro franchise business under its subsidiary called Patrimonio Hoy (PH). PH
was launched to meet the needs of low-income clients looking to build or improve their
existing homes (Esper & London, 2013). The aim of this project is to improve home safety
and quality while also improving the client’s health, wealth and education (CEMEX, 2019).
Overall, PH provides low-income customers with construction materials, financing and
technical assistance that are tailored to the customer’s need and budget (Maguire, 2017). PH
is a 70-week membership programme with weekly payments that provides low-income
clients a home improvement services by supplying the building materials. When low income
clients want to build house, PH will conduct a thorough technical and financial evaluation
before offering the construction materials and goods to the clients or residents. When the
residents make the first weekly payment, then they become partners and the payment will
continue over the time, allowing the economies of scale to be transferred to clients, lowering
the cost of goods relative to purchasing retail (Maguire, 2017).
The micro franchise programme has long started in other part of the world and has
been very successful in helping the franchisees to increase their economic status. The model,
structure, scale and concept of micro franchising initiatives allow the local entrepreneurs to
actually respond better to the need of the local communities (Rogers et al., 2011).

Micro franchise Programme in Malaysia

The government has been actively supported the micro franchise programme since its
inception in 2012, especially for B40 and M40 communities. In so doing, the government has
allocated approximately RM5 billion in 2021 budget to the Ministry of Domestic Trade and
Consumer Affairs (MDTCA) to implement the micro franchise and affordable franchise
programme (MDTCA, 2021). The Ministry has vigorously promoted the idea of micro and
affordable franchise to enable the business owners to expand their business and to build
more franchise entrepreneurs among the younger generation. Micro franchises, according to
MDTCA, begin with initial investment of RM50,000 or less and are aimed at people in the
B40 and M40 groups who want to start their own business as franchisee. On the other hand,
affordable franchise starts with investment of RM100,000 or below and its open to all
income group who want to become the franchisee. The success of the micro franchise
programme in Malaysia were hardly discussed and published and therefore, this study
attempts to find out the factors that contribute to the success of the micro franchise
businesses in Malaysia. The micro franchise businesses in Malaysia are mostly from the
home-grown brands as it is low cost and more affordable. Table 1 shows the list of home-
grown brands that offer the micro and affordable franchise package.
Table 1 shows that the affordable franchise package is more than the micro franchise
package and to encourage more people to become micro entrepreneurs, more micro
franchise package needs to be offered.

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Table 1: Micro and Affordable Franchise Package

No. Brand Sector Investment Package
(RM)
1. ELV Clothing 28,000 Micro
2. Ani Sup Utara Food & 22,000- Micro
Beverage 35,000
3. MD Putu Bambu Food & 50,000 Micro
Beverage
4. Taska Bonda Education 50,000 Micro
Mama
5. Ayam D’Penyet Food & 68,000 Affordable
Beverage
6. Global Art Education 79,840 Affordable
7. Arjuna Village Food & 80,000 Affordable
Beverage
8. Home: Math Education 85,500 Affordable
Therapy Centre
9. KopieSatu Food & 85,000- Affordable
Beverage 95,000
10. V-Agromart Retail 89,701 Affordable
11. Q-Dees Education 95,000 Affordable
12. Liviva Consultation 40,000 Micro
100,000 Affordable
Source: MDTCA (2021)

Success Factors of Micro Franchise Programme

Previous literatures revealed that there was little discussion on micro franchise businesses in
Malaysia, particularly on their success factors. The discussion of the success factors in the
literatures are mainly from the countries outside Malaysia. As such, Table 2 summarized the
success factors of micro franchise programme as discussed in the previous literatures. The
success factors will be the parameters of the study in determining the success factors of
micro franchise businesses in this study.

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Table 2: Success Factors of Micro Franchise Programmes

No Authors Success Factors
1. Lehr (2008); Rigter et al. (2014); Hofling Simple & unique business
(2017) model
2. Hürlimann (2011); Rigter et al. (2014) Trusted Brand
3. Lehr (2008) Strategic location
4. Magleby (2007); Pratt, A (2009) Continuous training & support
5. Hofling (2017); Lehr (2008) Efficient supply chain
6. Scheffler (2010); Rigter et al. (2014) Distribution network
Source: Compilations from various authors

Methodology

The aim of the research methodology outlined and addressed in this section was to provide
and clarify the methodology used to achieve the study's objectives. In order to do so, the
fundamental principles of methodology must be fully understood, particularly in qualitative
research. These principles include a belief in multiple realities, a situation or a phenomenon,
commitment to the participants' viewpoints, conducting interviews or inquiries within the
natural context of the phenomenon, and, last but not least, reporting findings based on the
rich data extracted from the participants' comments and feedback (Streubert & Carpenter,
2011).
This research sought answers about how micro franchise businesses were able to adopt
the micro franchise successfully, and it would be too complicated to find out the answers to
the research question by survey and experimental strategies. As a result, the use of an
explanatory case study research method is fitting for this study, as explanatory is a research
method that attempts to clarify the knowledge phenomenon in order to make it more
understandable (McNabb, 2015). Simply put, the term explanatory means that the researcher
is attempting to clarify rather than simply identify the phenomenon under investigation
(Given, 2008).
Purposive sampling was used to choose the participants, as in qualitative analysis, the
qualitative investigation focuses on a relatively limited, in-depth sample that is intentionally
chosen (Patton, 1990). The participants were chosen based on two factors, namely that the
business had reached break-even and had been in business for at least two years, in order to
ensure that the participants matched the study objectives. In general, a qualitative
researcher faces difficulties in deciding the sample size for their study, but there are
methods that can be used to justify the sample size (Marshall et. al., 2013).
The sample size in this study is justified based on the data set saturation, as saturation is
commonly used by the researchers as a guiding principle during the data collection (Mason,
2010). Initially, the sample size selected was 20 micro franchise business from food and
beverage sectors. To reach data saturation, the data was collected and analyzed in steps,
rather than waiting until all the participants have been interviewed. After the data has been
collected from the 8th participants, the analysis was carried out to find out of the data has
reached saturation. The process was repeated a few times before the fifteenth (15th)

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participant, at which point it was noticed that the feedback was nearly identical to that of
previous participants, and data analysis showed no new codes or themes.
Semi-structured interviews were conducted to collect the data on 15 participants
comprised of micro-franchise businesses (franchisees) in the State of Selangor. The list of the
participants as enclosed in Table 3.

Table 3: List of Research Participants

No. Participants Gender Years in Business set-up
business
1. P1 Female 6 years Food Court in Supermarket
2. P2 Female 5 years Food Court in Government
Building
3. P3 Male 8 years Food Court in Mall
4. P4 Female 2 years Food Court in Mall
5. P5 Female 6 years Food Court in Mall
6. P6 Husband & Wife 6 years Food Court in Mall
7. P7 Husband & Wife 6 years Food Court in Supermarket
8. P8 Husband & Wife 5 years Food Court in Supermarket
9. P9 Female 7 years Food Court in Supermarket
10. P10 Male 4 years Food Court in University
11. P11 Male 3 years Food Court in Mall
12. P12 Female 2 years Kiosk in Mall
13. P13 Male 7 years Food Court in Mall
14. P14 Female 3 years Kiosk in Supermarket
15. P15 Male 6 years Food Court in Mall

Results and Discussion

The objective of this study is to identify the success factors of micro franchise businesses in
the State of Selangor and thus 15 participants have been interviewed to obtain the data. The
interviews were audio recorded, transcribed verbatim and then coded accordingly. The data
obtained from this study was analysed using content analysis. Content analysis is a research
technique for making replicable and valid inferences from texts (or other meaningful matter)
to the context of their use (Krippendorff, 2013). The codes and themes that emerged from
the data analysis are shown in Table 4.
The results showed that the success factors for micro franchise businesses in the food
and beverage industries are nearly identical to those in franchise business other than food
and beverage. Product consistency and quality, brand reputation, clear and simple business
model, a strategic business location, high profit and faster break-even were among the
success factors discovered. In addition, the business owners’ personal traits and
characteristics such as hard work, committed, proactiveness, and strong perseverance also
lead to the success of micro franchise business owners.

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Table 4: Codes and themes

Codes Themes
Tasty Food
Food Quality
Follow recipes
Simple preparation Product continuity
Consistent taste & preparation and consistency
Food Styling
Food portion/serving
Fast preparation

Customer recognize brand

Signage & logo
Trust the brand Brand reputation
Loyal customer
Well know brand
Average brand
Long establishment of brand

Easy procedure
No skills needed
Low investment cost Clear and simple
Short training business model
Flexible operation
Easy and simple guideline
Full ownership of business
Work independently
Understandable standard operating procedure

Convenient location
Location in high-foot traffic
Preferable in Mall/Food Court
Prefer government offices Strategic business
High walk-in customers location

Recoup investment in 1 year

Profit of 30% to 50%
Sales increase High profit margin
Business is profitable and faster break-even
Raw material cost
Profit of 50% to 60%
Able to sell products daily

Effort
Commitment
Good Public Relation
High perseverance Franchisees’ personal
High learning traits and
Ambitious characteristics
Focused
Capable
Determined
Teamwork

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Product Continuity and Consistency

It is vital to ensure customer satisfaction in the food and beverage industry, especially in the
franchise market, by preparing food that meets the necessary standards. The franchisor
provides the guidance on the meals prepared, the ingredients used, the presentation, the
portion size, and the serving style, which ensures consistency and quality in terms of taste
and style. Nevertheless, the consistency and the quality services of the brand is the key to
success in establishing the brand (Pratt, 2009). In this regard, P3 shares his feedback as
follows:

The procedure to prepare the meal is very simple, as long as you do not break the
rule, do not modify the original recipe and follow the exact measurement in making
the soup. It depends on us, the franchisee to follow strictly because if not, it will affect
the meals and the customers might not want to come again.

Brand Reputation

The brands associated with the franchise business are well-known and well accepted
by the customers. To put it another way, a reputable brand is required in order for a
company to thrive. The franchisor is responsible for the brand’s name growth so that
franchisees can easily market the product. In addition, the brand reputation is also one of
the factors that influence the franchisees to venture into the franchise business. P2 shares
her opinion with regards to the importance of having a reputable brand:

Our franchise brand is well-known and customers are familiar with our brand,
especially among the Malays.

On the other hand, another participant P7 responded as follows:

Our brand is an ordinary brand with the target customers that does not include
people of all ages. For example, the youth do not care for our noodles and prefer
sizzling. However, since our brand has its own target customers, we continue to exist
in the industry.

This finding seems to correspond with Chen and Dimou, (2005) who stressed that
brand name and reputation as one of the influential factors that influences franchisees to
embark in the business opportunity.

Clear and Simple Business Model

One of the success factors that leads to the success of the micro franchise business is a
business model that is easy to understand and execute, as well as simple to adopt. In
general, a business model explains how an organization generates, delivers, and captures
value (Osterwalder & Pigneur, 2010). Clear and simple business model also influence the
franchisees to actually venture into the franchise business and subsequently managed to
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steer the business into greater height. It was found out that all the participants agreed that
franchise is an easy concept and simple system that makes almost every participant have no
problem in managing the business. Training provided also very helpful to the participants to
fully understand the whole system of the business model and everything is tailored
accordingly. P3 shares his opinion as follows:

So far, it has been a very rewarding and successful 8 years with my franchisor and just
follow the guideline provided by them, you can run the business already. But of
course, to sustain, you need to work hard too.

Similar opinion was shared by P04, who mentioned the followings:

My franchise business model appeals to me, and having a structure, or standard

operating procedure, makes it simpler. Despite the fact that there are no monthly
payments or reports needed, I can easily monitor my financial flow and maintain
discipline. This is one of the benefits of working in a franchise system; everything is
pre-made and organized, unlike when I run my pastry company on my own, where
everything was out of order.

A transparent and simple business model is an important tool for the franchisee to run
successful business (Fairbourne, 2006; 2011).

Strategic Business Location

One of the factors that contributed to the success of the business was strategic location. A
business's location is critical, particularly if the company relies heavily on walk-in customers.
The research participants of this study consist of franchisees from food and beverage sectors
and thus, the businesses are often located in a mall or supermarket. P10 mentioned as
follows with regards to the importance of the strategic location:

The most important factor in achieving success, especially in the food industry, is
strategic location. And if we don't get any customers after we open the franchise
business, we still have to pay for operating costs. One of the reasons for the
importance of location is that it must be as strategic as possible. Once we've reached
an understanding with the landlord, we must make the agreed-upon deposit. If we
have chosen the incorrect spot, there is no other way to solve the problem. We can
only close the kiosk and try to find a more convenient spot.

In addition, P12 also shares the similar opinion as follows:

People come to NSK Supermarket to buy groceries, particularly on weekends, so it's a

busy supermarket. Furthermore, the Malay community makes up the bulk of the
clientele. As a result, my kiosk's sales are consistently strong. We also have a small
office space nearby.

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On the hand, P05 shares her opinion on the importance of having a good location for the
business:

Because of my kiosk is located indoor location and lack of traffic, my kiosk is

unsuitable. I still have some management concerns with respect to piping and
electrical issues.

Strategic or good location is important for the success and growth of micro franchise
business especially in high-foot traffic location (Fairbourne, 2006).

High profit margin and faster break-even

One of the factors that lead to the success of the company is a profitable business with a
strong profit margin and the ability to reach a faster break-even point. These factors are also
critical in ensuring the business's long-term viability. The majority of study participants
admitted that their franchise business venture is profitable and provides a healthy profit
margin, ranging from 30% to 50%. Furthermore, some participants were able to reach break-
even quicker, while others took between one and two years. P2 shares her opinion as follows:

Sales are high on weekdays and even higher on weekends and the business is
profitable. Profit margin for our product is ranging from 30% to 50% depending on
the price of the raw materials. For me, it is a healthy profit margin.

The above assertion was further confirmed by P10 who stated:

Business is profitable. Those days we can get up to 55% to 60% profit margin, but due
to the increase in raw material cost, the profit margin is getting slimmer, but we can
still sustain. But of course, business depends, there is time when students keep
coming because of the price is reasonable and affordable for them, and it is closer to
their campus. But there is time when our sales drop because the students is on
semester break.

In addition to the above, P03 confided that:

First 3 months was quite a struggle but in running a business, we need to enhance our
skills and be open to serve customers the best we can. Work hard until we succeed.
Before I opened the business here, the average daily sales of other kiosks here is
approximately RM250 to RM300 but when I started my franchise business here, my
daily sales reached RM1,000. Now, daily sales average RM800 to RM1000 including
beverages while soup related menu about RM600 to RM800. I can assure at least 40
bowls of soup is sold every day with 100 grams of vermicelli. Normally, Friday would
be the lowest sales of the week. Monthly sales average from RM16,000 to RM17,000
while raw ingredients cost me RM1,500 weekly or RM300 daily, which I will buy myself.
While other ingredients cost about RM350 weekly for or 5 days. Profit should be 30%
out of total sales to roll over for next month. With capital of RM1,000, the profit must
be RM300 or more back then when I started. After 3 years in business, I could even
reach profit of 50% from total sales but nowadays it is very challenging because price

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of goods has increased. I can recoup back my investment within 1 year of opening my
business.

Participating in the micro franchise business able to yield monthly profit and it may not
always high for micro franchise, but given the lower start-up cost, the return on investment
should be higher (Christensen et al., 2010).

Franchisees’ personal traits and characteristics

Personal traits and positive attributes of business owners are also one of the significant
drivers of success in micro-franchise business, according to the study of responses. Hard
work, commitment, proactiveness, and strong perseverance were described as personal traits
and characteristics among franchise business owners. In this regard, P2 stated:

When I wanted to start a business, I looked all over for a suitable location to open a
food and beverage business before I came across this location (food court at NSK
Kota Damansara). When the franchisor agreed to the place that I chose, my efforts to
find a good location for my company paid off.

In addition, P3 mentioned the following:

When we own a business, we must also be employees. We need to work closely with
our team, and we need to know what our customers think of our food.

Aside from putting in a lot of effort and being a hard worker, an entrepreneur must also be
dedicated and reliable once they own a company. As P5 said, their daily routine has
completely changed, and they must stick to the schedule in order for it to run smoothly
every day. Below is the feedback from P5:

Since the food is the brand's heart, an entrepreneur must work hard, be skilled in
financial management, and maintain the food's quality. When I first started this
company, my daily routine completely changed. I have to get up at 5.00 a.m, if I get
up late at 730 a.m., I won't be able to open the kiosk that day because there is a lot
that needs to be done before we open in the morning. Soup preparation and cooking
on a regular basis. We must prepare for the next day's preparations every evening
before closing the kiosk. It takes a lot of dedication and hard work to stay in this
company.

In addition, when it comes to surviving in company, high perseverance, determination, and a

strong-willed criteria(s) are critical. These were confirmed by P2 and P8 who confided as
follows:

One of the best ways to succeed in a franchise company, or any business, is to have a
high level of perseverance, complete engagement, and refusal to give up.

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Based on the findings above, the franchisor's designed franchise system, as well as the
franchisees' abilities, attitude, and personal characteristics, all contribute to the success of
the micro franchise business in Malaysia. The franchisor's franchise system, which includes
product continuity and consistency, brand recognition, a transparent and simple business
model, a high profit margin and break-even point, and a strategic business location, was
predetermined by the franchisor to ensure the business's success and profitability. The
franchise system, combined with the franchisees' positive personal traits such as hard work,
commitment, proactiveness, and high perseverance, has allowed the business to succeed.
Figure 3 demonstrates the success factors in a diagram.

Success Factors

Contributed by Contributed by
Franchisor: Franchisees:

-Product continuity -Franchisees

& consistency personal traits &
-Brand recognition characteristics
-High profit margin -Strategic business
& faster break-even location
-Strategic business
location

Figure 3: Success factors of micro franchise business

The success factors of the micro franchise business also suggest that the franchisees would
be able to embrace the micro franchise concepts for the first time and subsequently manage
to steer the business into greater heights. Micro franchise businesses in Malaysia are mostly
in the food and beverage industries, as the idea is simply a scaled-down version of the
franchisor's original concept. For example, a conventional franchise requires the franchisee
to operate from a brick and mortar restaurant, while a micro franchise requires the
franchisee to operate from a kiosk or food court.

Conclusion

Micro franchise is a low-cost franchise scheme that operates for disadvantaged people.
Through this franchise system, low income and poor people can gain a fixed income and, if
they put in more effort, they can obtain more. Micro franchise isn't a one-size-fits-all
solution. Nonetheless, micro franchises play an important role in the informal economy by

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providing business opportunities and jobs. Micro franchises allow franchisees to start their
own business without having to invest in costly back-end infrastructure. The success factors
highlighted in this study shows that the business concept is viable and profitable, however, it
requires continuous monitoring and supervision and franchisor should not neglect their
franchisees at any stage.

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