Austrade Senior Export Advisor on franchising in Singapore

Visiting Singapore last October/November for the Franchising & Licensing Asia expo, I was left with the impression of a vibrant, highly developed, competitive and promotion-driven market - a market that clearly wants the best, for the best price.

Not surprisingly, ‘me too’ concepts have little chance of success in Singapore, however those with solid value propositions can be assured of a supportive business environment, with low political risk, and where English is the accepted language of business.

Despite this, Singapore is not a ‘Western’ market – 76 per cent of its 4.4 million population is Chinese, with the remainder mainly Malay and Indian. This population makeup mirrors that of the region, and Singapore is therefore a natural ‘first base’ for Australian companies (including franchises) wanting to launch their concepts into the rest of Asia and the sub-continent. This idea is well supported by the Singapore government, which has a strong focus on developing Singapore into an international franchise hub.

Certainly, franchising as a business model is well established in Singapore, stemming back to the 1970s when companies such as Shell, Esso and Singer began operating under licensing arrangements similar to modern-day franchising.

During the 1980s, franchising of local concepts first began with the convenience store chains, such as Econ Minimart.

At the same time, Singapore based companies began to acquire rights over international brands such as the KFC franchise , the McDonald’s franchise , the Pizza Hut franchise and 7-Eleven.

By the 1990s, franchising had become widely accepted as an effective vehicle for small business growth and it was adopted by many companies, especially in the food service sector, to expand within the home market and overseas.

Today, Singapore is a mature franchise market with well entrenched local and foreign brands. There are now more than 380 franchise concepts active in the market - half of them international brands. Food service concepts tend to dominate, and Australian systems such as Dome Cafes and Gloria Jean’s Coffees have a presence in the market, alongside newer entrants like Hog’s Breath Café and Boost Juice. In the non-food sector, concepts like Action International, Video Ezy, and Cartridge World are well established, while Howard’s Storage World is a more recent arrival.

While opportunities for food and beverage franchises continue, there is also room for more service-oriented businesses with offerings that appeal to an increasingly sophisticated, cosmopolitan and wealthy consumer base.

Emerging market segments include lifestyle and entertainment, education and training, personal services and technology.

Retail will always be popular, as shopping is almost a national pastime in Singapore.

The retail sector is highly developed, with well-known international brands and chains competing alongside local hypermarkets and specialty stores.

Overall, Singapore is an attractive market for both experienced and first time franchise exporters - with its familiar business culture, transparent regulatory framework, strong enforcement of intellectual property rights and access to skilled English speaking staff.

Moreover, Australian concepts are highly regarded in the region, with the inaugural FLA International Franchisor of the Year award (2007) going to Australian coffee franchise, Gloria Jean’s. Concerning regulation, there is no franchising code or Act in Singapore. The relationship between franchisor and franchisee is governed by general contract law, which is based on English common law.

The Franchise Council of Australia is a not for profit membership organisation that is the peak body representing the franchising sector in Australia.

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