Evaluating the Impact of Regulatory Frameworks on Franchise Industry Sustainability: Empirical Evidence from Malaysia with International Benchmarking.

Abstract

The objective of this study is to examine the degree to which Malaysia's franchise regulation impacts the sustainability of its franchise industry. As franchise networks increasingly demand regulatory clarity, legal predictability, and digital connectivity on a global scale, the Malaysian context offers a critical example of how policy levers in emerging economies can be calibrated with sustainable business models. Employing a mixed-method approach, the research integrates qualitative results of semi-structured interviews with franchisors, regulators, and policymakers as major stakeholders under qualitative findings, and quantitative results of a national survey of franchisees under quantitative findings. Thematic analysis was employed in the qualitative stage to condense regulatory perceptions and enforcement challenges, and structural equation modeling (SEM) was employed in the quantitative stage to examine relationships between regulatory quality, enforcement, e-compliance, and franchisee trust. The findings of the study show that legal certainty, regulatory enforcement, and electronic compliance procedures significantly influence franchisee confidence and industry resilience. Weaknesses in administrative enforcement and delayed policy responses were found to undermine stakeholder confidence and business continuity. Conversely, conformity with international best practice such as in the United States and Australia can reinforce investor perception and facilitate sustainable franchise growth in Malaysia. This study contributes to franchise regulation, institutional governance, and sustainability in emerging markets literature using a new empirical approach combining stakeholder feedback and cross-national benchmarking. The findings resonate with Malaysian regulators who are interested in modernizing legal instruments, enhancing the effectiveness of enforcement, and creating a more sustainable and future-oriented franchise environment.