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Eastern Allure
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Eastern Allure

With its rising disposable income and political stability, Singapore has phenomenal franchising potential explains Albert Kong

The Singapore franchise sector has in excess of 900 franchise systems, with more than 3,000 franchisees operating with an annual turnover of around SG$6bn. The country was one of the earliest nations in Asia, after Japan, to fully embrace the franchising industry, and it’s set to expand its growth even further.

It all began in the 1970s when major western multinational companies such as Shell, Esso, Singer and Bata started operations in Singapore under licensing systems which bore characteristics similar to what we know today as franchising concepts. A decade later, cash-rich Singapore-based companies and individuals then began acquiring country rights to international franchises such as McDonald’s and ServiceMaster.

By the end of the 1980s, several local companies began launching their own franchise programmes; the main players were retail and provision stores, such as Econ Minimart and Happy Family. In the early nineties, others started to jump onto the franchising band wagon, including Factory Outlet, Prima Deli and Informatics. New master franchisee operators of brands like Hard Rock Café, Hardee’s and Baskin Robin’s also opened up outlets in the bustling Orchard Road vicinity to fight for a piece of the pie. While a few of the brands have since exited, some have re-entered with new franchisees, such as Wendy’s and Texas Fried Chicken.

Currently a large number of franchised brands are related to the food and beverages industry, but other sectors such as education, beauty and general services, such as headhunting and elderly care, are fast catching up.

Unlike the USA, China, Australia, Malaysia, Vietnam and many member nations of the European Union, there is no franchise-specific legislation in Singapore. Members of the national Franchising & Licensing Association (FLA) abide by a code of conduct, and the body thinks the self-regulatory system is still effective as far as preventing the public from unscrupulous franchises is concerned.

The Singapore Government recognises the benefits and potential of franchising, with one of its objectives being to develop Singapore into an international franchise hub. There are lots of economic spin-offs that can be engendered and in line with this goal, the government has undertaken a number of initiatives to promote the growth of franchising and international expansion in Singapore-based businesses. Even though Singapore is a small nation, its national franchise association (FLA) is considered a very active member of the Asia Pacific Franchise Confederation and the World Franchise Council and works hard to facilitate the growth of franchising locally and overseas.

There are a number of factors that contribute to the popularity of franchising in Singapore:

  • It’s located strategically, and equipped with one of the best infrastructures in the region, which includes state-of-the-art telecommunications and shipping facilities. Singapore has been very successful in attracting many multinational companies, and many of them intend to expand into neighbouring markets using Singapore as the springboard.
  • Singapore’s per capita income is among the highest in the region, and the rising disposable income has made the country an attractive market for many international companies. Rising income has resulted in Singaporeans hankering for high-quality goods and services. As a result, overseas franchise brands have rushed into Singapore, including fashion retailers Mango and Uniqlo, and food and beverage companies such as Ben & Jerry’s, Smoothie King and Pepper Lunch.
  • The last decade, and upcoming years, has been considered the golden era in the Asia-Pacific region; China and India are both expected to continue to register relatively strong growth rates in the coming years, and even ‘virgin’ markets like Cambodia and Myanmar are beginning to host franchise shows.
  • The political stability which Singapore has achieved is a great assurance to the private sector that their investments will be secure. The Singapore government has also been successful in its aim to create an ideal platform for potential franchise owners who seek security for their investments. It has proactively offered the franchise sector support, for example: eligible companies can tap on many assistance schemes ranging from franchise consulting, registration of trade marks, market surveys, and even overseas exhibition participation and match-making sessions.

A list of the local Singapore companies with franchise operations can be found in the inaugural edition of Asia Pacific Franchise Directory (2006) published by Asiawide Trends/ Asiawide Franchise Consultants www.asiawidefranchise.com.sg in association with the Franchising & Licensing Association, Singapore. Another resource is the website of the association www.flasingapore.org

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