Branding, business identity, and initial costs are the biggest challenges new business owners face in Singapore before having their own business success. Thankfully, franchise fees and deals make it easy for anyone with nearly zero business experience to operate and invest in a business with enormous potential growth.
Franchising is the process of aggregating a company’s business operations into an agreement to provide products or services to customers, whereby a franchisor grants a franchisee permission to use its marketing, distribution, and sales support.
This means you are a business partner who owns a brand’s branch or outlet. For example, instead of opening a custom cosmetics line, you can franchise an international brand. Doing so gives you full access to their supplier network, marketing tools, operational training, and more.
Singapore has plenty of franchisors willing to include you in the economic market growth of their brand in the coming years.
Here’s a beginner’s guide to help you start a business franchise in Singapore in the smoothest possible way.
The Pros and Cons of Franchising
Franchising sound great on paper because you won’t have to worry about marketing, branding, and supplier sourcing. It’s perfect for beginning businesses who want to profit or have experience with business ownership and management. However, it does come with some unappealing cons and challenges. Here’s a list to help you learn about the best options and decisions.
1. Ready-Made Business Plans
Franchises have tried-and-proven business models many banks and investors recognize as successful. With this in mind, investing in a franchise has the lowest failure risk because you’re using the same successful framework tested and proven in various economic environments multiple times.
2. Easily Get Financing
Being a franchise business owner gives you access to investor funds from the brand’s local arm. For example, franchising a Subway in Singapore gives you access to Subway’s in-house financing custom-made for the various business stages your new branch will pass through. In short, you get custom financing deals with enough space to let your business grow and manage returns.
3. Good Data and Track Record Analysis
Successful franchises like Lululemon have data of best and worst branch performances spanning decades after their establishment they can use to train you and your team about the best practices, common pitfalls, and troubleshooting of specific business problems. You can use these guidelines to achieve a good business track record and have access to supplementary business-enhancing workshops.
4. No Experience Needed
Any prospective business owner doesn’t need previous experience owning a branch if they have enough capital or can use in-house financing. Franchisors are willing to educate, train, and operate alongside new business owners to give them an essential grasp of operating and managing the business.
1. High Acquisition Costs
While you can afford in-house financing, franchising requires high upfront costs in most cases. Convenience stores such as 7-Eleven have much more accessible initial costs at less than S $100,000, but you will find brands requiring more than S $200,000 to start doing business. Additionally, the franchisor pegs your in-house financing interest rates based on historic data anchored on your business’s current stage.
2. Zero Flexibilities
Retail franchises limit a business owner’s unique ideas. Non-franchise owners can use unique strategies without requiring approval. A franchise owner must comply with all brand manager’s strategies. Brand managers need to approve any suggestions owners might have, about advertisements and other marketing strategies.
3. Less Than 100% Control
Successful franchisee applicants have no complete control over their business operations. They will enjoy exceptional franchise support opportunities and leadership in their respective branches. However, compliance with the new guidelines on various aspects by their respective international franchises overrides their decision-making.
4. Ready-Made Branding
A franchise opportunity’s advantage and disadvantage is simultaneously its ready-made branding. Having ready-made branding gives you a proven franchise model, marketing strategy, and data-backed logistics to maintain your business. However, you will never have 100% control over the business’ direction and will need frequent consultations with your regional brand managers. If you can commit to these conditions, you can make your first franchise business successful.
Should You Start Franchising As Your First Business?
Any business decision-making phase is a huge commitment from start to finish. With this in mind, franchising as a business is a huge step toward your business’s success. Here are a few factors to consider before starting a franchise.
Location is one of the biggest factors in your customers being able to find you, and it can have a significant impact on your sales and revenue. For example, starting a pizza franchise in your area’s highly competitive pizza market is not a good idea. Instead, it’s best to introduce something different in your location.
A unique selling point (USP) is a product or service’s distinguishing characteristic that sets it apart from others in the market, making it stand out. It could be something as simple as a catchy slogan or a unique design, but what makes the USP for your business unique are the different aspects of your product and the benefits your consumers get from it.
Evaluating your local environment allows you to discover whether a franchise has a unique selling point to offer customers.
2. Financial Stability
Financial stability ensures that the franchisee can cover the initial start-up costs and ongoing operational expenses. The initial start-up costs include the franchise fee, rent or lease, building improvements, and inventory. Without the means to initial capital investment, it’s nearly impossible to have your first franchised store unless you use the franchise’s in-house financing.
3. Organizational Capacity
Organizational capacity refers to your ability to manage the workload and personnel of your own business. You must be able to manage the hierarchy, budgeting, sales, marketing, management, and human resources. Preparing this social and technical infrastructure plays a key role in implementing your business operations, supplier relations, negotiations, and regulatory compliances.
4. Market Potential
Market potential, also known as market demand, is a term used in franchising. It is a potential for growth of the market for a product or service. The market potential can help determine the viability of a franchising opportunity. The market potential for a product or service can be determined by analyzing factors such as the population of the city, the number of people who are targeted customers, and the amount of competition (in terms of similar products or services).
With all of these details considered, here are 10 of the best franchises in Singapore to start a successful business with.
10 Popular Businesses to Franchise in Singapore
1. Ya Kun Kaya Toast
Kaya toast starts every Singaporean’s morning right. Ya Kun Kaya Toast is well-known for its world-class, excellent toasts, soft-boiled eggs, and brewed coffee selections. This local brand goes beyond Singapore’s borders with 70 active outlets in Malaysia, Taiwan, and South Korea. Ya Kun Kaya Toast combines the best of Singaporean Hainanese breakfasts and sees consistent exponential growth yearly.
|Key Service/ Products Offered||Singapore breakfast food|
|Initial Investment||Approximately S$250,000|
2. Subway Singapore
Subway Singapore is one of the country’s strongest brands. The franchise may have strict requirements and SOPs, but its world-class sandwiches have the same consistency. This means your Subway Singapore branch is on par with other Subways worldwide.
While thousands of Subways exist globally, you’ll be part of this constellation once you start franchising.
|Key Service/ Products Offered||World-renowned Subway sandwiches|
|Franchise Fee||USD $10,000 – USD $15,000|
|Initial Investment||Approximately S$250,000|
3. Shihlin Taiwan Street Snacks
Many Singaporeans can’t get enough of Shihlin’s signature Taiwanese fried chicken. This on-the-go Taiwan street snack frequents hawker stalls in shopping mall food courts and basements. Shihlin franchises can be kiosks, hawker stalls, or shop lots, depending on your capital. In addition, it’s one of the most affordable stalls with a high potential to increase in high value in the future.
|Key Service/ Products Offered||Taiwan Street Snacks|
|Initial Investment||Approximately S$120,000 – S$150,000|
LiHo, formerly known as Gong Cha Bubble Tea in Singapore, is still in high demand because of its unique taste and as one of the world’s bubble milk tea pioneers. The options for salt and cream cheese continue to popularize the great flavor and value for money. Gong Cha remains a global brand in Southeast Asia with thousands of branches nationwide.
|Key Service/ Products Offered||Specialty Tea|
Every Singaporean family knows that MindChamps is the best educational enrichment programs in the country. The hundreds of MindChamps centers nationwide is a testament to their teaching methods, training, and educational material quality control. Many parents are owners or partners of MindChamps franchises, making it a viable, long-term investment with huge growth potential.
|Key Service/ Products Offered||Schooling and Enrichment Programs|
|Franchise Fee||Approximately S$200,000|
|Initial Investment||Possibly S$250,000|
7-Eleven is a globally recognized convenience store chain with more than tens of thousands of outlets. Every Singaporean trusts the product and service quality of 7-Eleven convenience store chains. Plus, you have access to their global supply chain by franchising a 7-Eleven establishment and only need a small initial capital to start.
|Key Service/ Products Offered||Global Convenience Store Chain|
|Initial Investment||S$30,000 – S$40,000|
7. BreadTalk and Toastbox (BreadTalk Group Private Limited)
BreadTalk is a community-owned grocery store in the San Francisco Bay Area focusing on organic, locally sourced food and natural goods. Its mission is to provide fresh, local food access to everyone. Breadtalk was founded in 2008 by visionary founders who wanted to make local food more available to everyone. Franchising Breadtalk in Singapore is relatively affordable, but the chain does not publish its franchising and initial investment costs.
|Key Service/ Products Offered||Food and Beverage|
8. Thai Express
Thai Express is a popular Thai cuisine restaurant in Singapore and offers a variety of dishes for the local market, such as Thai fried rice and beef satay skewers. The business began in Holland Village, Singapore, rapidly expanding nationwide because of its exciting and natural flavors.
|Key Service/ Products Offered||Thai specialty dishes|
|Initial Investment||Approximately USD $3 million and up|
9. Old Chang Kee
Old Chang Kee became a Chinese coffee shop before it evolved into one of Singapore’s biggest Chinese dining chains. The restaurant sells dim sum, noodles, and specialist Chinese restaurants in Singapore. Old Chang Kee has branches worldwide, giving franchisees access to Old Chang Kee’s products and branding kits, training, and operational best practices.
Its startup costs are higher than average, but you have an excellent fried and street Singaporean and Chinese food joint with high growth potential.
|Key Service/ Products Offered||Fried and Street Singaporean food|
|Initial Investment||S$200,000 – S$300,000|
Pezzo is a pizzeria in Singapore that specializes in Neapolitan-style pizzas. You can get cheese, pepperoni, Hawaiian, chili, and barbecue flavors. Pezzo continues to evolve as its pizzas and dishes continue to become popular. Plus, Pezzo has a very low initial investment cost, making it easy to enter the franchise chain.
|Key Service/ Products Offered||Unique Malaysian Pizza|
|Initial Investment||Approximately S$63,000|
Other Notable Mentions
- Modern Montessori International: Modern Montessori International (MMI) Group began in 1989 and continues to be an early childhood education brand in Singapore and Asia Pacific. MMI is well-known for its exceptional educational methodology that encourages learning through play. Its franchising continues to remain strong among many Asian and Western educators. However, MMI does not publicly publish its franchising package details.
- Wee Nam Kee: Wee Nam Kee Hainanese Chicken Rice began in Singapore’s Novena in 1989. This small restaurant gained fame because of its amazing flavor and serving portions. It began expanding in nearby countrys including the Philippines, Indonesia, Thailand, Malaysia, and others.
Franchising FAQs to Know About
1. Does Franchising a Brand Guarantee More Success Than Otherwise?
Many people think that franchising a brand is easy to guarantee success. However, this isn’t always true. A franchise needs to be able to compete with other brands in the same industry and region to succeed. A brand with a significant market share will be able to amass a large enough base of customers for the franchisee to make a profit on the investment.
2. Can I Use Third-Party Financing in Franchising?
Yes. Aside from in-house franchising financing, you can also use a bank loan, money lender personal loan, or credit card with sufficient amounts.
3. What Are Franchise Royalties and What Do They Usually Cover?
A franchise agreement typically has an initial fee and a royalty fee that the franchisor charges annually for exclusive rights over the use of their brand and intellectual property, including logo and trademarks.
4. Do Franchise Owners Have a Say in Employee Hiring?
Franchise owners have a say in the hiring process of their franchise. This is because they are the ones who are responsible for hiring, training, and managing the employees of their business. However, the franchisor can set certain criteria that must be met before an employee is hired. For example, it could require that applicants have experience in a specific industry or even a specific job title.
5. What is a Franchise Lawyer and What Are Their Roles?
Franchise lawyers are the ones who will be responsible for drafting, negotiating, and advising on all aspects of a franchise agreement. They make sure all agreements comply with Singapore’s business laws and help franchisees prepare for any legal issues. They would also help with the day-to-day operations of a franchise by guiding everything from accounting to marketing.
Find out more on Loan Advisor’s guide for business loans.
Singapore’s franchising industry is one of the most successful brands you can find worldwide. Consider investing in a franchise if you have enough capital and believe in the brand’s success. These franchises in Singapore give you the best chance to start your business even if you have zero experience in the industry.
- Franchising uses a successful business’s business plans, assets, and trademarks.
- With franchising, business owners have access to in-house financing, supply lines, and logistical plans.
- Franchising limits creative advertising and modifying a franchise’s unique selling points.
- You’ll need enough capital to start up a franchise you own in your area.
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