Master Franchise??

Discuss your views about Singapore business & economy, current policies & issues, starting a business in Singapore.
Post Reply
Rayofhope
Newbie
Newbie
Posts: 3
Joined: Sun, 24 Jul 2011 5:27 pm

Master Franchise??

Post by Rayofhope » Sun, 24 Jul 2011 5:39 pm

Hi all,

I am new here and would like to seek some advice on business in Singapore.

I got a lead from friend to takeover his master franchise rights of a retail brand dealing in female products in singapore. He is leaving singapore to setup other countries. I have visited his store and thinks his business is brisk.

Do you guys think its a good idea to pay $200K for 9yrs exclusive licence and takeover existing operation with a 29% net profit plus able to subfranchise it?

I am very tempted and my wife love his products.

Pls advice.

Thank you.

User avatar
sundaymorningstaple
Moderator
Moderator
Posts: 40002
Joined: Thu, 11 Nov 2004 1:26 pm
Answers: 11
Location: Retired on the Little Red Dot

Post by sundaymorningstaple » Sun, 24 Jul 2011 8:33 pm

Have you bother to look at his P&L & Balance Sheets for the past 3 years or so? Looking a traffic doesn't always lead to sales. Depending on the percentage that rental consumes of his turnover will make a big difference.

29% of 10K turnover isn't much.
SOME PEOPLE TRY TO TURN BACK THEIR ODOMETERS. NOT ME. I WANT PEOPLE TO KNOW WHY I LOOK THIS WAY. I'VE TRAVELED A LONG WAY, AND SOME OF THE ROADS WEREN'T PAVED. ~ Will Rogers

User avatar
ksl
Governor
Governor
Posts: 5989
Joined: Mon, 19 Jul 2004 8:52 pm
Location: Singapore
Contact:

Post by ksl » Sun, 24 Jul 2011 10:54 pm

I got a lead from friend to takeover his master franchise rights
If he's selling you the Master Franchise rights, it's probably because its not profitable!

If the franchise hasn't been managed correctly, they are better off dumping the lot for 200k and letting some poor sucker take the fall.

My guess is that other franchisees' if there are any, are not doing well, you maybe held liable. You need to read everything more closely looks very suspicious to me, though I'm ultra careful.

PM me the name and i can do some research for you within minutes.

Though like SMS said, look at the books very carefully and discuss with those holding the franchise units, could be a lack of support for them and now he's wanting out

Rayofhope
Newbie
Newbie
Posts: 3
Joined: Sun, 24 Jul 2011 5:27 pm

Post by Rayofhope » Mon, 25 Jul 2011 8:49 pm

sundaymorningstaple wrote:Have you bother to look at his P&L & Balance Sheets for the past 3 years or so? Looking a traffic doesn't always lead to sales. Depending on the percentage that rental consumes of his turnover will make a big difference.

29% of 10K turnover isn't much.
thanks replying.. i've read his p&l and saw the numbers. definitely not 10K.. haa.

actually its more than 200k/outlet for 6 months.

his rental component is about 25% of gross turnover.

thanks for advicing.

Rayofhope
Newbie
Newbie
Posts: 3
Joined: Sun, 24 Jul 2011 5:27 pm

Post by Rayofhope » Mon, 25 Jul 2011 8:52 pm

ksl wrote:
I got a lead from friend to takeover his master franchise rights
If he's selling you the Master Franchise rights, it's probably because its not profitable!

If the franchise hasn't been managed correctly, they are better off dumping the lot for 200k and letting some poor sucker take the fall.

My guess is that other franchisees' if there are any, are not doing well, you maybe held liable. You need to read everything more closely looks very suspicious to me, though I'm ultra careful.

PM me the name and i can do some research for you within minutes.

Though like SMS said, look at the books very carefully and discuss with those holding the franchise units, could be a lack of support for them and now he's wanting out
Thanks for replying.. Actually he didn't say he is selling to me. I sound him out cos he told me he might not be able to manage two countries at one time. He roughly quote 200K. I dont know if its the final.

Thanks for your advice.

ausinsg
Regular
Regular
Posts: 90
Joined: Mon, 02 May 2011 3:51 am
Location: Singapore

Post by ausinsg » Tue, 26 Jul 2011 2:11 pm

The cashflow statement is the third financial statement that you want to look at. It lets you see if the sales are able to support all the bills, or if he has had to take loans or get in new investors to finance the business.

Additionally, don't just look at balance sheet. Ask for an aged Accounts Payable and Accounts Receivable schedules so you can see if he is paying his bills, and if his customers are paying theirs.

From a lifestyle point of view, get an idea from him about how many hours a day are needed to keep things as they are, and how much more is needed to expand.

You don't want to risk your marriage because you are never home just to keep the business running.

User avatar
shameenali
Regular
Regular
Posts: 71
Joined: Tue, 23 Feb 2010 4:04 pm

Re: Master Franchise??

Post by shameenali » Tue, 26 Jul 2011 3:59 pm

Rayofhope wrote:Hi all,

I am new here and would like to seek some advice on business in Singapore.

I got a lead from friend to takeover his master franchise rights of a retail brand dealing in female products in singapore. He is leaving singapore to setup other countries. I have visited his store and thinks his business is brisk.

Do you guys think its a good idea to pay $200K for 9yrs exclusive licence and takeover existing operation with a 29% net profit plus able to subfranchise it?

I am very tempted and my wife love his products.

Pls advice.

Thank you.
200k for a 9 yr licence is quite steep indeed. If you are talkin abt female beauty products the market as it is is quite competitive here with very low margins. I can say that quite confidently from the book-keeping services that i provide to my clients in the beauty products supply market. You have also got to factor in how much you might have to pay in order to renew the franchise (normally its done @ a nominal fee) positive cash flow as always is king. Huge paper profits with big receivables = zilch! Ask for his latest management / audited accounts sit & scrutinize diligently. You could also ask for his ACRA profile in order to check if there are any charges listed currently against his co. If he provides you with his audited statements that would be the best coz that should reflect a true & fair view of how the business has been doin recently. :)

User avatar
taxico
Director
Director
Posts: 3301
Joined: Sat, 10 May 2008 6:05 pm
Location: Existential dilemma!

Post by taxico » Tue, 26 Jul 2011 4:27 pm

there's a chinese proverb which goes (something like)...

"one would never sell a goose that can lay golden eggs"

which goes against the western adage of "everything has a price..."

but i can only quip "if it's too good to be true..."
Aut viam ad caelum inveniam aut faciam

Mr Tan
Regular
Regular
Posts: 70
Joined: Fri, 08 Apr 2011 11:22 am

ree

Post by Mr Tan » Thu, 15 Sep 2011 11:37 am

if it is a golden goose it will not cost just 200k. end of day its still the ROI. how long will it take for you to recover this 200k ? a reasonable profit return should be at least 12k, else u might want to invest in other means which generates greater returns .

taxico wrote:there's a chinese proverb which goes (something like)...

"one would never sell a goose that can lay golden eggs"

which goes against the western adage of "everything has a price..."

but i can only quip "if it's too good to be true..."

Post Reply
  • Similar Topics
    Replies
    Views
    Last post

Return to “Business in Singapore”

Who is online

Users browsing this forum: No registered users and 2 guests