Singapore Franchising: Approve Sites Before Signing Leases

A successful existing outlet does not prove that every available unit will suit your franchise. Before expanding your Singapore franchise community, create a site approval process that separates commercial potential from legal and operational suitability. The aim is simple: stop a franchisee committing to premises that cannot support your business model, even when the location looks attractive.

1. Turn your existing outlet into a premises specification

Start with what your business actually needs, rather than a description such as ‘busy neighbourhood location’. Examine your existing premises and identify which physical features make the operation work.

Your specification should distinguish between essential requirements and preferences. Depending on the business, essentials might include sufficient electrical capacity, water and drainage connections, ventilation, storage, delivery access or an accessible customer entrance. Preferences could include frontage width, proximity to complementary businesses or a particular unit shape.

Record requirements under three headings:

• Operational necessities: features without which the approved service or production process cannot function.
• Customer requirements: visibility, access and surroundings appropriate to the intended customer base.
• Adaptable features: elements that can change without undermining the model, such as decorative finishes or furniture arrangements.

Do not copy your current floor area into a universal rule without examining how the space is used. A smaller unit might work with a different layout; a larger one might add rent without adding useful capacity.

Give each requirement an evidence source. Plans, equipment specifications and observations from your existing operation are more useful than a founder’s recollection.

2. Require evidence before granting site approval

Ask prospective franchisees to submit a standard site assessment file before making binding commitments. It should include a floor plan, photographs, proposed use, landlord particulars, draft commercial terms and details of existing building services.

Assess the location at different times, not just during a landlord’s viewing. Observe customer movements, delivery constraints, neighbouring activities and access outside normal shopping hours. Distinguish observations from assumptions: passing pedestrians are not automatically potential customers.

A site visit should test the operating process. Where will goods arrive? Where will staff change or store belongings? Can customers queue without obstructing shared areas? Can equipment be installed and maintained safely?

Use three possible decisions:

• Rejected: an essential requirement cannot reasonably be met.
• Conditionally approved: the site could work, but specified evidence or changes remain outstanding.
• Approved: the agreed site checks have been completed, subject to clearly identified limitations.

Name the person authorised to issue each decision. A salesperson’s encouraging message should not become accidental approval. Set an expiry date or review trigger so that changes to layout, rent or permitted use prompt reassessment.

3. Check the Singapore legal and leasing position

Singapore has no dedicated franchise statute, franchise registration system or statutory franchise-specific pre-contractual disclosure regime. General contract law governs the franchise relationship, alongside legislation such as the Misrepresentation Act and the Unfair Contract Terms Act where applicable. Site approval statements should therefore be accurate and carefully qualified, not presented as guarantees of profitability.

Premises bring separate obligations. Confirm that the proposed activity is permitted and whether planning permission, change-of-use approval, building works approvals or business licences are required. Landlord consent alone does not establish regulatory permission. For example, a food business may need Singapore Food Agency licensing, with requirements depending on its activities.

For qualifying retail leases, the Lease Agreements for Retail Premises Act 2023 requires compliance with the applicable leasing principles in the Code of Conduct for Leasing of Retail Premises in Singapore, subject to the statutory framework for permitted deviations. Have a Singapore leasing lawyer check whether the proposed lease falls within scope and how the requirements apply.

The lease review should also examine the permitted use, fit-out obligations, reinstatement, guarantees, assignment restrictions and renewal provisions. These are separate questions from whether the franchisor likes the location.

4. Align approval, lease commitments and opening plans

Create a written responsibility schedule showing who checks planning status, commissions technical surveys, negotiates the lease and obtains licences. Franchisor approval should not obscure the franchisee’s responsibilities as tenant and business operator.

Compare the lease term with the franchise term. If they differ, document what happens when one expires first. Check whether renewal options depend on conditions and whether the landlord must consent to any proposed transfer.

Where feasible, obtain advice on making commitments conditional on essential approvals. Do not assume that a letter of intent, deposit or preliminary document is non-binding. Have it reviewed before signature or payment.

Finally, document unresolved conditions, their owners and completion deadlines. Do not let a target opening date override an unresolved permission or technical constraint.

Practical takeaway: before offering your first franchise, build one premises specification, one evidence checklist and one written approval form. A repeatable process protects both the franchisee’s investment and your franchise community’s operating standards.