A Guide to the Franchisor Start-up Kit

Franchising is an exciting yet complex method of doing business. However, there are some specific guidelines that should be followed to develop a strong and successful franchise system. 

Within a Franchisor Start-Up Kit are 4 essential tools you can use to build the foundation of your franchise business growth in Singapore.  

The basic steps for a franchise development start-up are placed into four broad classifications: 

(1) Franchise Strategy 

(2) Operations (including Manual) 

(3) Marketing (including Brochure) 

(4) Legal (Contractual agreements) 

A successful franchise program will include the development of the operational systems, the market entry marketing programs, and the provision of legal franchising contracts that protect the business. 

franchise strategy

(1) Franchise Strategy 

This is the foundation upon which the entire franchise system is built upon. The first step to business growth through franchising in Singapore or wherever your brand may be, is to establish a customised franchise strategy. It is important to be able to identify and protect a business’s Intellectual Property, how to effectively leverage it and how franchising can add to a business’s Net Profit Value as a whole. To start off on the right foot, get in touch with a franchise consultant. Singapore has a certified list that includes Astreem Consulting.

The franchise strategy which encompasses a unique franchise model and detailed business plan, serves as the cornerstone of all future growth and must reflect your organisation’s goals and objectives, may it be for within Singapore, in Asia, or beyond. 

Also, it is important to address your business’s plan for resource allocation including supply chain development and how to protect the Intellectual Property of the company whilst effectively replicating the success and growth of your business. 

(2) Well-documented Franchise Standard Operations Protocols 

In order for the franchising system to replicate the Franchisor’s business, the franchisor is required to develop extensive operation techniques and to provide a manual explaining these techniques and functions to the new franchisee.  

You need to be able to understand how to put together the various processes of both a prospective franchisee’s business as well as the operations of the franchisor’s headquarters. 

 The success of franchising has been based primarily upon the ability to replicate the franchise’s success factors in order to satisfy the customer wants and needs. This is generally done through the successful replication of single-unit store operations.  

If a Singapore franchisor intends to expand overseas and is more than a single unit franchise, there will also be a need to document how the franchise system is run at a multi-unit level. 

In addition, the various franchise operating manuals at their different levels need to document all processes and workflows. 

franchise SOP

(3) Franchise Marketing 

The key to the success of any Singapore business is the successful management of its brand and marketing programs. To develop a sustainable franchise system, there are two key areas the franchisor must be aware of: (1) how to recruit franchisees so that the franchise system can grow and (2) how to assist the franchisees in marketing the brand to recruit customers to their franchise units. 

This means the franchisor needs to be targeting two primary stakeholder targets namely: the prospective franchisees market and the franchisee’s customer market. 

A. Marketing for prospective franchisees 

For a franchise system to be successful, the franchisor needs to develop franchise opportunity  marketing programs that include off line and online digital avenues, and manage public relations aimed at prospective franchisees. 

Many franchisors wait for the franchisee to knock on their doors or send in a request. Whilst this could happen, the franchisor may be losing out on one of the key benefits of franchising which is quick scalability and economy of scale. The efforts required to manage 4 franchisees are often not so different from managing 20 franchisees. However, in order to achieve a significant franchisee network, the franchisor needs to wholeheartedly build a brand marketing program around franchisee recruitment. 

Often, a franchisor may not have the physical resources to have a sales team dedicated to franchising. In these cases, it is advisable for the franchisor to consider securing the services of a consultant or franchise broker. 

B. Marketing for the Franchisee’s customer 

The franchisor will also need to develop the marketing and advertising necessary to promote the products and services to the end consumer to ensure the success of individual franchised units. A systematic marketing campaign for customer recruitment is important so as to keep the franchisee units profitable. Ultimately, Franchise units with healthy turnover will determine the overall success of the franchise systems. 

The advertising campaign will change depending on the target market.   Your Franchisee’s customers from Singapore will respond differently to a marketing strategy conceived and implemented in another country. 

Franchise Marketing

(4) Legal documents 

The franchise agreement is the document that describes the legal relationship between the franchisor and franchisee and should be carefully managed, especially in Singapore. 

Business legal contracts like franchise agreements are best done by outside legal consulting firms who are experts in the field of franchising. This outside counsel will help franchisors develop their programs in compliance with franchise laws, rules, and regulations in Singapore or wherever the business intends to expand. 

There are certain do’s and don’ts which will enhance the franchising opportunity for Singapore franchisors if they understand the legal requirements necessary to start and correctly operate an ongoing franchising system. Issues like trademarking can be either done by consulting the same legal counsels or a trademark specialist can also be retained. This is not an area where the franchisor should seek to save resources on as it is the document that can be of great protection in the event that something happens between the franchisor and franchisee relationship. Money invested for legal counsels and franchising consultants is certainly money well spent. 

To help the Franchisor negotiate and confirm the interest of the franchisee, a franchise agreement highlight document that outlines the main commercial terms of the franchise arrangement can be drafted ahead of the franchise legal document. This document will allow the franchisor to be able to sign a letter of intent on the franchise agreement highlights. 

Astreem has helped countless Singapore franchisors to secure their franchisees by ensuring letters of intent are signed off to seal the deal and reduce the risk of the potential franchisees changing their minds or having buyers remorse.

franchising legal documents

Start Franchising on the right foot 

A strategic and well-thought-of Franchisor Start-Up Kit is a cornerstone to long-term growth and success, not just for the brand but for the franchisees as well. Remember that a successful Singapore franchise program geared for growth will include the development of operational systems, strategic marketing programs, and the provision of legal franchising contracts that protect the business. 

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