I was reading the Franchise Act 1998 as amended and in particular section 40 which speaks about an offence committed by a body corporate of the franchise.

It is important to note that the Franchise Act in general creates quasi criminal action against both franchisor and franchisees in many situations, such as the failure to file annual returns under section 16, failure to register a franchisee under section 6B(1), or the non-compliance of the Franchise Agreement under section 18, or giving misleading statements or omit any information under section 7, or the failure to deliver the franchise agreement and documents to the franchisee not less than 10 days under section 15  or even the failure to open up separate promotion fund account for the franchise and many others are deemed to be committing an offence under the Act.

As such it is important for franchisors to know section 40 Franchise Act (as amended) which is reproduced below:-

40. If an offence against any provision of this Act has been committed by a body corporate, any person who at the time of the commission of the offence was a director, manager, secretary or other similar officer of the body corporate or was purporting to act in any such capacity, or was in any manner or to any extent responsible for the management of any of the affairs of such body corporate, or was assisting in such management, shall be deemed to have committed that offence unless, having regard to the nature of his functions in that capacity and to all circumstances, he proves—

• that the offence was committed without his knowledge, consent or connivance; and
• that he had taken all reasonable precautions and had exercised due diligence to prevent the commission of the offence.

This particular section must be read carefully as it will be an offence committed by a body corporate, the person responsible shall be deemed to be committing the offence UNLESS he can proved that his action is done without his knowledge, consent or connivance and that he had taken all reasonable steps and exercise due diligence to prevent the commission of the offence.

In this regard, it is always good to appoint a franchise developer or a consultant or a franchise director to be responsible for the management of the affairs of the franchise so that the franchise will always be in good hands.

The below are a list of consultants recognised by the Malaysia Franchise Association.

http://www.mfa.org.my/newmfa/business-directory/wpbdp_category/consultant/