Japan Home Singapore Franchise Terms Set Out Store Costs

International Housewares Retail has disclosed further financial and operational terms for its Japan Home master franchise arrangement in Singapore, covering a handover of 30 stores. The supplementary announcement, issued on 29 October 2026, sets out minimum royalties, asset payments and the transfer of purchasing, lease and employment obligations to the master franchisee.

Minimum royalties accompany a wholesale supply model

According to QFA’s Hong Kong report on the announcement, the annual royalty for each of the first two years will be S$100,000 or 0.35 per cent of total sales, whichever is higher. From the third year onwards, the royalty will be calculated at 0.35 per cent of total sales.

The distinction matters for operators assessing the arrangement: during the first two years, the royalty cannot fall below the stated annual minimum, even if the percentage-based calculation produces a lower amount. After that period, the disclosed royalty formula is tied to sales without that minimum.

International Housewares Retail, which is listed in Hong Kong under stock code 1373, will also remain a core supplier to the Singapore business. It will provide household goods and fast-moving consumer goods to the master franchisee on a cost-plus basis.

The brand owner’s revenue model after the transition will therefore combine wholesale product supply with royalties. For Singapore’s franchise community, the arrangement illustrates why a royalty percentage alone does not describe the full commercial relationship between a brand owner and its operating partner.

Thirty stores bring operating and staffing responsibilities

The 30 stores involved generated approximately HK$201 million in revenue for the financial year ended 30 April 2026. That represented around 72.8 per cent of the Singapore business’s retail revenue.

During the same financial year, the franchisor incurred approximately S$13 million in operating expenses for those stores, equivalent to around HK$75.4 million. These are historical figures for the stores concerned, rather than a forecast of the incoming operator’s costs or returns.

Once the handover is complete, the master franchisee will bear purchasing and operating costs. Associated direct lease liabilities will also transfer, placing responsibility for both stock procurement and day-to-day store operations with the incoming operator.

Before the transition, the franchisor directly employed more than 200 store-level and operations staff in Singapore. Following completion, the master franchisee will take responsibility for all store operations staff, sales teams and related employment obligations.

The disclosed obligations include salaries, Central Provident Fund contributions, allowances and statutory holiday entitlements accrued after 19 August 2026. International Housewares Retail will retain a small local support team responsible for product sourcing and logistics, quality control, brand compliance and audit oversight.

Asset payments and existing stock have separate terms

Alongside recurring royalties and operating expenditure, the announcement sets out payments for assets and deposits. These comprise a one-off S$39,000 payment for store and warehouse shelving, S$325,000 for fit-out costs, and full reimbursement of lease deposits of up to S$2 million.

Existing stock is covered by a separate sales proceeds allocation mechanism. The relevant annual cap is calculated using the audited cost value of stock held in the existing stores on 19 August 2026, multiplied by the franchisor’s 66 per cent share of sales proceeds.

The announcement expects that stock to be cleared by 31 December 2026. That is an expected clearance date, not confirmation that the inventory has already been sold.

Taken together, these terms distinguish the ongoing cost of running the stores from the payments and settlement arrangements associated with the handover itself.

Brand-owner expectations differ from operator returns

International Housewares Retail said its Singapore retail business had recorded persistent net losses over several years because of substantial operating overheads.

The company expects the reduction in direct retail revenue to be offset by product supply sales, royalty income and the transfer of associated lease liabilities and operating costs. Its board considers that the transaction will not have a material adverse effect on the group’s overall net assets or earnings.

That assessment concerns the listed group’s financial position. It should not be read as a projection of profitability for the master franchisee, which will assume the disclosed store-level costs and responsibilities.

Practical takeaway: Operators assessing a master franchise should review minimum royalties, supply terms, lease liabilities, employment obligations and handover payments together—not treat the headline royalty rate as the total cost of participation.