A Guide to the Franchise Business Model

Singapore / FLAsia 2027 / 

What is franchising?

Franchising is a business growth model that allows an established business (franchisor) to expand by giving another party (franchisee) the right to do business using its brand, utilising their business system and know-how, in return for a fees.

Common rights that franchisees are entitled to:

  • Brand names and trademarks
  • Business systems and operating processes
  • Products or services
  • Know-how and training
  • Marketing and brand guidelines
  • Ongoing operational support

In simple terms: The franchisor provides the business system. The franchisee invests in and operates the business.

How does franchising work?

Typically, a franchise relationship starts with a business that has been developed from a concept that can be duplicated at scale.

The process can be:

1

Develop the business concept

Build its product and services, customer proposition, operating process and brand identity.

2

Build a repeatable system

The ability to document systems, standardization and know-how to operate the concept consistently.

3

Offer franchise rights

Franchisor decides on the markets, commercial terms, support structure and other conditions which allows the franchisee to operate the franchise.

4

Select a franchise partner

Franchisor will identify an individual or a company (master franchisee) that has the resources, capability and suitability to operate the business.

5

Launch and operate

Franchisee will then start to run the business following the agreed franchise system.

6

Support and grow

Franchisor may provide ongoing training, marketing and operational assistance and other support while the franchisee develops the business.

What is a franchisor?

The franchisor typically develops and maintains the brand, operating model and standards that franchisees use.

The franchisor may be responsible for:

  • Brand Management
  • Business systems
  • Marketing support
  • Operational support
  • Network development

What is a franchisee?

A franchisee is the individual or company that receives the right to operate a franchise under the franchisor's brand and business system.

A franchisee typically contributes the capital and resources needed to establish and operate the business.

Depending on the agreement, the franchisee may be responsible for:

  • Ongoing operational support

  • Investing in the franchise

  • Recruiting and managing employees
  • Running daily operations
  • Serving customers
  • Meeting brand and operational standards
  • Paying agreed franchise-related fees
  • Following the terms of the franchise agreement

In other words, franchising does not mean that the franchisor runs every location directly. The franchisee operates the business within the framework established by the franchisor.

What makes a business suitable for franchising?

Franchising works best when a business has a concept that can be replicated and supported across multiple locations or markets.

A business considering franchising should think about whether it has:

A proven concept

There is evidence that customers value the product, service or experience.

A repeatable operation

The business can be operated using defined systems rather than relying entirely on the founder.

A recognisable proposition

The brand has something distinctive that can be consistently represented in different locations.

Documented know-how

Important processes, standards and operating knowledge can be transferred to another operator.

A support structure

The franchisor has the resources and capability to support franchise partners.

Expansion potential

The concept can potentially work in additional territories, locations or market segments.

What are the different types of franchising?

There is no single franchise structure. Businesses can use different models depending on their products, markets and expansion objectives.

Single-unit franchising

A franchisee operates one franchise location or business unit.

Multi-unit franchising

A franchisee develops and operates more than one location under the same brand.

Master franchising

A master franchise arrangement may give a partner rights to develop a brand within a specified territory and, depending on the agreement, recruit or support additional franchisees.

Area development

A development arrangement may give a partner the right or obligation to develop multiple locations within an agreed territory and timeframe.

International franchising

A franchisor works with partners to introduce its business model into markets outside its home country.

The exact rights and obligations depend on the franchise agreement and applicable laws in the relevant market.

Why do businesses franchise?

For an established brand, franchising can provide a way to grow its network by working with partners who invest in and operate businesses within the brand's system.

A franchisor may use franchising to:

Enter new markets

Local franchise partners may bring knowledge of customers, locations and business conditions in their markets.

Develop a wider network

Franchising can allow a brand to build additional locations without directly operating every outlet itself.

Work with entrepreneurial partners

Instead of expanding entirely through company-owned operations, a brand can build relationships with local business owners.

Extend an established business model

A proven concept can be adapted and replicated across suitable locations or markets.

What is franchising in Singapore?

Singapore is an important meeting point for businesses exploring franchising, licensing and regional expansion.

Franchising and Licensing Asia (FLAsia) is a physical event held in Singapore that brings together brands, entrepreneurs, investors, and business professionals exploring franchise and licensing opportunities across Asia.

For brands considering international expansion, Singapore offers an ideal platform to connect with potential business partners and serves as a launchpad for exploring opportunities across the region.

For entrepreneurs and existing business owners, franchise exhibitions can provide a way to compare concepts, meet franchisors and understand different business models in one environment.

Frequently Asked Questions About Franchising

Franchising is a business arrangement in which a franchisor allows a franchisee to operate using its established brand, business model, systems and associated know-how under agreed terms.

A franchise is a business operated by a franchisee using the franchisor's established brand and business system under an agreed franchise arrangement.

A franchisor is the business or brand owner that develops and provides the franchise system.

A franchisee is the person or company that operates a business under the franchisor's brand and agreed franchise system.

The franchisor provides an established business system and agreed support, while the franchisee invests in and operates the business according to the franchise agreement.

Licensing focuses on granting rights to use intellectual property. Franchising involves a broader business system that may combine brand/IP rights with operating know-how.

A master franchise is an arrangement under which a partner may receive defined rights to develop a franchise brand within a particular territory and, depending on the agreement, may also work with other franchisees in that territory.

There is no single franchise cost. Investment depends on the brand, business format, location, territory and other commercial terms.

Not necessarily. A business generally needs a repeatable model, suitable operating systems, a transferable proposition and the ability to support franchise partners.

Start by assessing whether your business model can be replicated, whether your systems and know-how can be transferred, whether your brand/IP is suitably managed, and whether you have the resources to support franchise partners.

Franchise exhibitions like FLAsia, industry networks and direct engagement with franchisor are common ways to research franchise opportunities. FLAsia provides a platform in Singapore to allow interested parties to discover franchise brands and licensing opportunites across Asia.

International franchise expansion involves identifying suitable markets, understanding local conditions and finding the right partners to operate and develop the brand. FLAsia provides a platform for brands and potential expansion partners to connect.