Not long ago, I overheard an interesting conversation over my morning coffee that got my hopes up. The subject matter?
An early retirement plan.
The conversation was between two elderly men. They were discussing how much money they could be making should they own one of the many Singapore Pools outlets.
This got me thinking…
Being the owner of a Singapore Pools outlet is like running your own business. Save for the fact that you are adopting a “sure-win” business model. Isn’t it?
Is Franchising Really A Source Of Passive Income?
Most Singaporeans see franchising as a source of passive income.
But just like starting a business or investing in dividend stocks, there is still some initial work to be done.
Unlike a startup, however, you’ll have a head start in many aspects.
Typical Franchise Characteristics:
- Access to national advertising (the yearly Ang Bao draw anyone?)
- Established reputation and image (which Singaporean hasn’t heard of Singapore Pools?)
- Proven management and work practices (every outlet looks exactly the same!)
- A sound business model that can be replicated almost anywhere around Singapore
And perhaps most important of all, a proven track record of reasonably high returns and a fast Return On Investment (ROI).
Is Franchising Singapore Pools A Possible Dream?
Determined to set up my very own Singapore Pools outlet, I sent them an email enquiring about being a possible franchisee.
After I sent the email, I did a quick search online only to discover that the last time Singapore Pools was open for application was more than a decade ago.
True enough, they replied to the email within a day to state that they do not have plans to invite applications from the public.
This confirmed that franchising Singapore Pools was no longer an option.
Franchising Other Famous Household Brands – Not Cheap!
Luckily, all hope wasn’t lost!
I went on to do some research on other equally (or more) profitable and well-known brands in Singapore.
Franchise Cost Of Popular Brands: 7-11, Old Change Kee, Subway, Ya Kun, Koi and More
Ever wondered what is the setup and franchising cost of some of our favourite franchises?
Here’s a quick look:
| Franchise | Franchise Fee (SGD) | Liquid Capital Required (SGD) | Estimated Total Cost (SGD) |
|---|---|---|---|
| Cheers | $45,000 | $20,000 deposit | $65,000 |
| 7-11 | $30,000 | $40,000 + $5,000 Franchisee Training Program deposit | $75,000 |
| Shihlin Taiwan Street Snacks | NA | $120,000 - $150,000 | $120,000 - $150,000 |
| Subway | $20,609 (US$15,000) | $171,315 - $450,331 (US$$124,550 - US$327,400) | $191,924 - $470,940 |
| Old Chang Kee | NA | NA | $200,000 - $300,000 |
| Ya Kun Kaya Toast | NA | NA | $250,000 |
| BreadTalk/ToastBox | Not publicly available | ||
| LiHo | Not publicly available | ||
| Koi | NA | $412,659 (US$300,000) | $412,659 |
| The Manhattan Fish Market | $41,291 (US$30,000) | $385,396 - $674,443 (US$280,000 - US$490,000) | $426,687 - $715,734 |
| McDonald's (not available for franchising) | $62,000 (US$45,000) | $1.02 million (US$750,000) | $1.65 million to $3 million |
This list is not exhaustive and you can also look to franchise childcare centres, retail outlets and even petrol kiosks (if you’re filthy rich).
For a more in-depth look at what you can franchise in Singapore, check out iFranchise Singapore.
On top of these set-up costs, the owner of the franchise will have to pay a percentage of their outlet’s sales performance to the franchisor.
Is Opening a Franchise a Good Idea in Singapore?
Despite McDonald’s claiming that its powerful brand allows stores to earn over $2 million in sales annually. It’s still not a sure-win formula.
We’ve all seen first-hand how some of these brands’ outlets closed down due to unprofitability or pandemic woes.
Hence, we suggest considering where you are at in your life to find out the best time to franchise:
| Age Range | Goals | Return Expectations | Risk Appetite | Liquidity |
|---|---|---|---|---|
| 20-30 Years Old | Education, Marriage, Holiday | High | High | Low |
| 30-40 Years Old | Children, Education, Insurance | Moderately High | Moderately High | Moderately Low |
| 40-50 Years Old | Children's Marriage, Retirement | Balanced | Balanced | Balanced |
| 50-60 Years Old | Retirement | Moderately Low | Moderately Low | Moderately High |
| More than 60 Years Old | Holidays, Estate Planning | Low | Low | High |
Harsh Truths Of Franchising:
- Moderately high to high returns expectation
- Moderately high to high-risk appetite
- Generally low liquidity
The Best Time To Start A Franchise? Between 20 To 40 Years Old
Due to the high initial cost and uncertainty around its profitability, franchising may not be suitable for you.
Especially if you’re really young (not enough capital), or really advanced in years (just want to retire peacefully and gracefully).
The average age amongst Singapore entrepreneurs is around 39. Which is pretty much in line with the life stage and risk return.
Given the high cost involved in franchising, you may wish to reconsider putting all your eggs (literally) in one basket. And if you really wish to invest the same amount, why not consider a more diversified portfolio instead?
Have some insights into franchising in Singapore? Share your thoughts with the Seedly Community!
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