Business & Economy Personal Finance How Real Is Your Franchising Dream In Singapore?

How Real Is Your Franchising Dream In Singapore?




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Not long ago, I overheard an interesting conversation over breakfast at the coffee shop that got my hopes up high on an early retirement plan.

The conversation was between two elderly men on how much money they could be making should they own of any Singapore Pools outlet. In a sense, being an owner of a Singapore Pools outlet is like running your own business, except that you are adopting a “sure-win” formula.

Is It 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 (if the option is available). 

Typical Franchise Characteristics:
  • An established reputation and image (which Singaporean do not know Singapore Pools?)
  • Proven management and work practices (every outlet looks exactly the same!)
  • Access to national advertising (the yearly Ang Bao draw)
  • A good system that can be replicated almost anywhere around Singapore
  • Most important of all, a proven track record of reasonably high returns and fast Return On Investment (ROI)

The Singapore Pools Dream – No Longer An Option

Determined to set up my very own Singapore Pools outlet, I ran a quick search online only to find that the last time Singapore Pools was open for application was more than a decade ago.

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True enough, they replied to my Email within a day to state that they do not have plans to invite applications from the public, which meant 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 a research on some of the more known brands in Singapore that are also profitable. From there, I reached out to some of them to find out the cost of franchising.

Initial Set-up Cost:

On top of these set-up costs, 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 claim that their powerful brand allows many stores to earn over $2 million in sales annually, it is ultimately not a sure-win formula. We do witness some of these brands’ outlet closing down due to unprofitability. Hence, we suggest we stick to the life stage table to find out the best time to franchise should one has the intention to.
Life stage and risk return
Harsh Truths Of Franchising:
  • Moderately high to high returns expectation
  • Moderately high to high-risk appetite
  • Generally low liquidity

Conclusion: Best Time To Start A Franchise – Between 20 to 40 Years Old

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

The average age amongst Singapore entrepreneurs is at 39, which is 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 in one basket. For the same amount, one can build a rather diversified portfolio.

Source: Seedly
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