New initiative to help SMEs run franchises overseas

Under the Franchise Competence Framework, a diagnostic toolkit will be developed to help a company to assess whether its franchising initiatives are ready to progress. PHOTO: LIN ZHAOWEI FOR THE STRAITS TIMES

A new programme has been launched to help small and medium-sized enterprises (SMEs) expand and run franchises overseas.

The Franchise Competence Framework was announced by the Franchising and Licensing Association (FLA) Singapore at a forum held yesterday at Marina Mandarin hotel.

It consists of building a competency framework that aims to assist SMEs in developing and improving their franchising and licensing capabilities, helping them to take their brands beyond Singapore through things like FLA mission trips.

The initiative is supported by the Local Enterprise and Association Development programme under Enterprise Singapore.

Enterprise Singapore deputy chief executive Ted Tan said: "Franchising and licensing are effective ways for business expansion and internationalisation. The key to a successful franchise or licensing business lies in the ability to differentiate its system of operations from competitors' and to guard the intellectual property.

"We are happy that FLA has taken the lead to develop the franchising and licensing competency framework. The capabilities built up through this framework will be critical for accelerating companies' market entry and overseas expansion."

Under the framework, a diagnostic toolkit will be developed to help a company assess whether its franchising initiatives are ready to progress.

Based on the assessment results, companies can then work out an action plan to address any existing gaps. Quality marks ranging from "starter" to "world" class will be awarded to assess the company's readiness.

The FLA, in collaboration with a group of certified franchise consultants, will certify companies and recommend them for the appropriate quality mark.

FLA independent board adviser Victor Tay said: "For decades, Singapore has been looking to internationalise SMEs overseas beyond our saturated domestic market, but with a lot of challenges.

"SMEs find internationalising to foreign markets resource-intensive and it requires a lot of market research. Many were daunted by the uphill tasks of competing beyond the comfort zone of the Singapore market."

Mr Tay noted that the process of moving overseas involves intense resources, market studies, recruitment of local managers and staff, and establishing facilities.

"These are tedious, financially draining and take a long lead time," he said, adding that many businesses found their resources were drained within the first two years, and they ended up "retreating back to Singapore".

He said: "Franchising and licensing have a set of quality processes which is scalable and replicable. It lowers the cost of entries and provides a systematic platform for accessing an international market."

Examples of firms that have successfully franchised overseas include BreadTalk, Tung Lok and Ya Kun.

The FLA also kicked off this year's Franchising and Licensing Awards at the forum. The awards were introduced in 2005.

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A version of this article appeared in the print edition of The Straits Times on June 05, 2019, with the headline New initiative to help SMEs run franchises overseas. Subscribe