Author’s Blurb: The only knowledge I have about franchise businesses is that many of the big brands we know and love like McDonalds, KFC and Subway are franchises. As a consumer, these franchises usually have their pros and cons, but I’ve never thought about the business aspect of them before.
Muhammad Abdul Haiy, on the other hand, always had a dream to own one of the reputable franchises.
He’s interested in how organised the operation of the business is and how well they usually do. Unfortunately, the reality of franchises is that they’re too expensive to be owned by a single person.
“At that time, there was the concept of crowdfunding raised among startups. And I started thinking, ‘Why don’t we apply the same concept to the franchise industry?’” Haiy said.
So he roped in his brother, Muhammad Abdul Al-Fateh, to start up JomFranchise.
The Power Of Numbers
JomFranchise is an online platform where people can raise funds together to crowd-own a franchise business. The platform is also open to any franchise brand that is willing to expand with crowd capital.
For now, they’re focusing on growing a listing of franchises in the F&B industry, but might move on to other industries that have larger potential in the future.
They’re also focused on small local franchise businesses first which cost about RM5,000 to RM15,000, and as they grow, they plan to open more premium franchise brands that’ll cost around RM500,000 up to RM3 million, regardless of whether they’re homegrown or international brands.
Regardless, Haiy told Vulcan Post that they would need to analyse each individual business’ performance and find what they can improve before advertising it on their platform for investment.
“As any branch that raises through the JomFranchise platform will be managed by JomFranchise personnel, and the brand needs to have a specific SOP in order to ensure the smoothness of transition between the owner and JomFranchise management,” Haiy shared.
For now, they are using cooperative organisations as a starting platform.
The cooperative organisation will be the main holder for a specific branch. So, if someone wants to invest in any franchise listed on the cooperative portfolio, JomFranchise will register their details into the cooperative organisation in order for them to become a member of it.
Haiy gave us an example of how this would work.
JomFranchise would like to open a franchise outlet of ABC brand, so they’ll form an alliance with Koperasi Mesra. The former would engage the latter as a platform for investment.
Koperasi Mesra will be the main holder of the ABC brand branch, and all the profit would go to their account.
As Koperasi Mesra is owned by several investors, they will make a dividend pay to those investors based on their branch performance and holdings.
The management of the branch will be done by JomFranchise and Koperasi Mesra will have to pay the management fee to them.
Ambition Is The Path To Success
Since JomFranchise is using cooperative organisations as a platform, this allows investors to invest as low as RM20 to co-own the business, though it does depend on the franchise’s value.
The higher the total franchise cost, the higher the total floor price for investments.
“As the current process is quite complex, we are planning to develop a software application which will allow investors to register, track, and give feedback to their portfolio in the future,” Haiy said.
“This application will hopefully simplify the complexity of the process and embrace the transparency of the information for both investor and brand owner.”
It certainly sounds ambitious, but not impossible.
Haiy and Al-Fateh are actually still students in university, so while they’re building JomFranchise, they’re also juggling their studies.
A while ago, they participated in the “Creators of Tomorrow University Challenge” held by Tealive and HP, and emerged as the winners.
This has given them RM10,000 in capital to really work on their business idea and the opportunity to be mentored by Fayza Mohamad Amin, managing director of HP Inc. Malaysia and Bryan Loo, founder of Tealive for 3 months.
What they’ve learnt from the mentors is the importance of starting something.
“Ideas and pitching may be good to hear and articulate, but at the end of the day, the thing that you start and earn is the real measurement,” Haiy shared.
While there’s still more to be done to build JomFranchise to completion, Haiy and Al-Fateh already have big plans for where they’re headed.
“In the future, we plan to have a specific programme/academy with the government/private institutions for franchise development to upgrade their operations. This will let businesses perform well and gain higher trust from investors,” Haiy said.
Bottom Line: While the idea is definitely intriguing, there’s still quite a bit of work that they’ll have to do before they can officially declare that the platform is ready to use. Haiy and Al-Fateh’s passion in building their business is obvious, and I believe that their startup could cause quite an impact upon launching.
- You can read more about other Malaysian startups here.
Featured Image Credit: JomFranchise
