Buying a Singapore Franchise: Check Operating Licences

A recognised brand may have a proven operating system, but that does not mean your proposed outlet is authorised to open. Within Singapore’s franchising community, buyers should treat operating licences as a separate due diligence exercise. Before committing, establish which approvals your business needs, who must obtain them and what happens financially if approval is delayed or refused.

1. Separate franchise permission from regulatory approval

The franchise agreement gives you contractual permission to use a brand and its business system. It does not replace government licences, premises approvals or professional registration requirements.

Singapore has no dedicated franchise statute, compulsory franchise registration system or statutory franchise disclosure document requirement. There is no Singapore ‘Franchise Act 2020’. Franchise relationships are principally governed by common-law contract principles and relevant general legislation. The Misrepresentation Act 1967 may provide remedies for actionable pre-contractual misrepresentations; the Unfair Contract Terms Act 1977 controls certain exclusions and restrictions of liability, rather than making every unfavourable commercial term invalid.

Operating requirements apply separately. Depending on the business, these may include the Sale of Food Act 1973 or the Early Childhood Development Centres Act 2017, alongside applicable subsidiary legislation. Registering a business with the Accounting and Corporate Regulatory Authority does not itself authorise a regulated activity.

Consequently, a franchisor’s statement that its concept is ‘approved in Singapore’ is not enough. Ask what was approved, by which authority, for which premises and in whose name. Approval for an existing outlet may not establish that your proposed operation qualifies.

2. Build an approval checklist around actual activities

Start with what your outlet will do, not just the brand’s description. Two businesses marketed as cafés or learning centres may face different requirements because their activities differ.

Prepare a checklist showing:

• Activity: what you will sell, prepare, teach or provide.
• Authority: the regulator responsible for that activity.
• Approval: the licence, registration or consent required.
• Applicant: the business or individual that must hold it.
• Dependencies: premises, equipment, qualifications or inspections needed first.
• Timing: application stages and the earliest lawful opening point.

For example, a restaurant or café generally needs a Singapore Food Agency food shop licence. Selling liquor can require a separate liquor licence from the Singapore Police Force. An early childhood development centre requires licensing through the Early Childhood Development Agency; a tuition business should not simply assume the same rules apply to it.

There may also be requirements involving approved premises use, fire safety and particular staff qualifications. Confirm the exact position with the relevant authorities or qualified advisers rather than relying solely on another franchisee’s experience.

Request the franchisor’s Singapore approval checklist and sample documentation from comparable outlets. Treat these as starting points, not guarantees. If you are buying an operating outlet, establish whether each approval can continue following the transaction or whether a fresh application is needed. Do not assume a licence transfers with the equipment.

3. Check whether the brand’s model can meet the rules

A concept that works overseas may need changes before it can operate locally. Find out whether those changes are already built into the Singapore format.

Ask the franchisor to identify any mandatory design features, equipment specifications, staffing qualifications or operating procedures relevant to approval. Then have the appropriate local adviser check them against your proposed activities and premises.

Useful questions include:

• Has a comparable Singapore outlet obtained the approvals we need?
• Were alterations required before it could open?
• Does our proposed menu, service or age group change the requirements?
• Who supplies technical drawings and supporting documents?
• Who pays if a prescribed brand feature needs regulatory modification?

Obtain written answers and supporting evidence. A salesperson’s assurance that ‘head office handles everything’ should be converted into specific responsibilities, deliverables and deadlines.

Also investigate ongoing compliance. Licence renewal, inspections, staff certification and notification of operational changes may require continuing expenditure. The franchisee remains responsible for its own legal obligations even where the franchisor offers application support.

4. Allocate approval risk before committing expenditure

Add regulatory preparation to your opening budget. Include application charges, professional advice, inspections, necessary modifications and any training or certification. Use current official charges and written quotations, not an assumed standard allowance.

Prepare a delayed-opening cash-flow scenario covering payroll, financing costs and other committed expenditure while no sales are being made. Check when contractual fees start: signing, training completion or actual opening can produce very different cash requirements.

Ask a Singapore lawyer to document who applies, who assists and who bears each cost. Consider negotiating an approval condition, a realistic final deadline and clearly defined consequences if essential permission cannot be obtained. Any refund or cancellation rights must be expressly agreed; do not assume franchise-specific legislation supplies them.

Practical takeaway: Before signing, complete an activity-based approval checklist, verify the applicant for every licence and agree the financial consequences of delay or refusal. Brand permission and legal permission to trade are separate checks.