[June, 2010]

The word franchise, originating from the French language, means privilege or freedom. In this sense, franchising offers people the freedom to own, manage and direct their own business. It means "being in business for yourself but not by yourself".

It is often referred to as the "Best ambassador of free enterprise in the world". No wonder, franchising has become a global phenomenon. It has driven home the message and value of entrepreneurship. Also, franchising has underlined  the importance of the small and medium enterprises (SME) in the economic development of countries, stimulated job creation and encouraged skills development. Franchising has, in its own special way, has invented "universal" products and services and  made the world a global village.

Of course, the concept has to work to begin with. The franchise concept has to be replicable and preferably able to capture universal appeal. It has to provide adequate returns. It has to be differentiated from competing concepts both at a franchise and consumer level.

Virtually, every successful franchisor starts with a vision of the future and the role their company will play. A successful franchisor understands the dynamics of the marketplace, the competitive situation and where they fit into the marketplace. More important, the franchisor will have an intuitive grasp of where the marketplace is heading and how that'll provide the company with an opportunity for growth.

But having understood the market dynamics alone is not good enough. Franchising must also involve strong branding - not just to get consumers to buy your products or services but also to influence decision makers to buy your franchise concept in the first place. With the multitude of franchises out there, it is critical for the franchisor to have the right branding to carve its niche and attract and sustain their franchise businesses over the long term.

Indeed - strong brands have the ability to sway a consumer to purchase, give them comfort in that purchase, and remind them of the perceived quality of that purchase. So, while brand value in any business is important, it is almost fundamental in your decision to purchase a franchise business

Once a franchise concept takes off, it is also essential for the the company to ramp up its brand power, introducing new items with right fanfare while staying true to its brand promise by emphasizing high quality and attractive pricing points in the marketing its range of offerings. The constant innovation of offerings will allow franchises to stay fresh and relevant over time - to cater to constantly evolving market needs, preferences and tastes.

Successful branding ultimately helps to sell franchises, cost less to support and pay more in royalties

For Singapore, which already enjoys a strong brand name worldwide, franchising and making local franchises global is certainly a delectable business option with tremendous prospects.  

Our standards of quality, credibility and innovation are well-respected and these are already strong attributes for local franchises to succeed globally

Therefore Singapore franchisors who usually focused domestically or looked to neighboring countries to expand and grow, should target the World market for growth. In fact, they should look to expand in markets further afield, like Africa and Russia with large consumer populations and vast untapped potential.

According to data from BuyBrand Russia, the Russian Franchise Association estimates that there are around 5000 franchises in Russia. Annual sales of franchise enterprises amount to an estimated US$ 4, 5 billion.

According to the latest IC data "Troika Dialogue", by 2010-2011 Russia will become the largest European customer base. Already this year, there will be about 85 million Russians who will become active buyers/consumers. This figure will increase 5 million a year. The Ministry of Economic Development and Trade anticipates real income growth to be between 8-10 % a year for the next 3 years.. For the next 4 years consumer goods sales is expected to increase bv 20-30 % yearly. All this data reflects a fast growing middle class in Russia.

Modern Montessori International or MMI, a global pre-school franchise which I am Chairman and CEO of, has also taken the initiative to expand into Nigeria, Africa. From the first outlet opened last year, we have now opened our second outlet to cater to the growing demand for high quality global pre-school education among the rising middle class families in the country.

MMI has today expanded our presence to more than 70 locations worldwide.

Franchising is not just for consumer products or F&B - but for a broad spectrum of sectors - such as services, education, technology and even manufacturing.

I therefore strongly advocate franchising as a strategic marketing and expansion path for SMEs in Singapore to take - to propel their second or even third wings of growth.