How Real Is Your Franchising Dream In Singapore?

How Real Is Your Franchising Dream In Singapore?

profileMing Feng

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 of any Singapore Pools outlet.

And it got me thinking…

Being an 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?

People Lining Up At Singapore Pools Outlet
Image Credit: Straits Times

Is Franchising Really A Source Of Passive Income?

Most Singaporeans see franchising as a source of passive income.

As for the Singapore Pools dream, the only way I can be the owner an outlet will be to franchise it.

Singapore Pools Outlet With People Inside

Typical Franchise Characteristics:

  • Access to national advertising (the yearly Ang Bao draw anyone?)
  • Established reputation and image (which Singaporean does not know Singapore Pools?)
  • Proven management and work practices (every outlet looks exactly the same!)
  • 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 fast Return On Investment (ROI).

Is Franchising Singapore Pools A Possible Dream? (Nope. Sorry…).

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 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!

All hope is not lost!

I went on to do some research on other equally (or more) profitable, well-known brands in Singapore. From there, I reached out to some of them to find out the cost of franchising.

Initial Setup And Franchise Cost Of Mcdonald’s, Manhattan Fishmarket, Subway, Ya Kun And 7-11

Ever wondered what is the setup and franchising cost of some of our favourite franchises?

Subway Sandwiches On Table
Image Credit: Subway

Here’s a look at the breakdown:

 FranchiseFranchise Fee
Liquid Capital Required
Estimated Total Cost (SGD)
$1.02 million
$1.65 million to $3 million
2The Manhattan Fish Market$41,000
$0.71 million
$0.75 million
$0.41 million
$0.43 million
4Ya Kun Kaya ToastNANA$250,000
57-11$40,000 onwards$40,000$80,000

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.

Should Franchising Be Part Of Your Retirement Plan?

Despite McDonald’s claiming that their powerful brand allows stores to earn over $2 million in sales annually. It’s still not a sure-win formula.

McDonald's Marine Cove
Image Credit: McDonald’s

We’ve all seen firsthand some of these brands’ outlets closing down due to unprofitability.

Hence, we suggest sticking to the following life stage table to find out the best time to franchise:

Age RangeGoalsReturn ExpectationsRisk AppetiteLiquidity
20-30 Years OldEducation, Marriage, HolidayHighHighLow
30-40 Years OldChildren, Education, InsuranceModerately HighModerately HighModerately Low
40-50 Years OldChildren's Marriage, RetirementBalancedBalancedBalanced
50-60 Years OldRetirementModerately LowModerately LowModerately High
More than 60 Years OldHolidays, Estate PlanningLow LowHigh

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

Diversify Money

Due to high initial cost and uncertainty around the profitability of it, franchising is not suitable for all ages. 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?

About Ming Feng
A stint in Bloomberg gifted me with a beer belly, which only grew larger when I moved on to become a Professional Trader. Now I turn caffeine into digestible finance-related content.
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