The Law and Regulation of Franchising in Malaysia’s Islamic Finance Industry: Problems, Prospects and Policies

Abstract

With the increasing expansion of the global Islamic finance industry beyond its traditional strongholds, there is a gradual increase in the global franchising opportunities in Islamic finance. As one of the pioneering studies on franchise in Islamic finance, this paper examines the Malaysian legal framework on franchising within the Islamic finance industry. Over the years, there has been tremendous growth in the franchise industry in Malaysia and the Islamic financial institutions are not left out in this welcome development. While the franchise industry contributed RM24.6 billion or 2.8% to the Malaysian GDP in 2013, it has been projected that such contribution will reach RM25.4 billion by the end of 2014. The study adopts a qualitative legal method in analyzing the relevant legislations, as they are applicable to Sharī'ah-compliant business of Islamic financial institutions. The study finds that there is no specific framework for Sharī'ah-complaint business in Malaysia, including Islamic finance business. Malaysia has vast opportunities in expanding its franchise industry through the amendment of the relevant legal framework to cater for Islamic finance business. This is expected to project Malaysia as a global hub for Islamic finance products and a destination for Sharī'ah-complaint franchise businesses at the global level.

Legal and Regulatory Issues of Islamic Finance in Turkey: A Qualitative Discussion

“…Semi-structured questions were utilised during the interview sessions to explore the roles and functions of Participation Finance Regulations in Turkey. Similar methods have been employed by Alam et al 24 , Taktak and Zouari 25 , Kok et al 26 , Oseni 27 , and Uddin and Mohiuddin 28 to investigate issues and challenges related to Islamic finance standards and regulations. The semi-structured questions focused on issues and challenges regarding the legal and regulatory framework for the Participation finance industry, regulatory governance, and relations with international standard-setting bodies.…”