S'pore franchisers look for greener pastures in RI

Tony Sitathan, Contributor, Singapore

Who would have guessed that Singapore, known for its image as an international export, trading and travel hub is fast emerging as a regional franchise hub exporting its own delectable concoction of food and beverage franchises in Asia.

And there is no greater proof of success than looking at the number of Singapore franchisers that have quietly taken root in Indonesia.

In less than two years more than a dozen F&B franchisers have decided to tie the knot with entrepreneurial Indonesians by awarding them master franchisee contracts so that they can roll out several outlets in their designated territory within an acceptable timeframe.

According to Terry Wong, the General Manager of the Franchising and Licensing Association (FLA) Singapore, formerly known as Singapore International Franchise Association (SIFA) more than 40 percent of the existing franchisers of 160-odd members in FLA are in the F&B industry.

And in order to promote Singapore as the franchise hub in Asia, the FLA takes its role religiously and organizes events and trade shows like the Global Franchising Licensing seminars. "Franchising is much more than appointing the right franchisee. It is the active promotion and protection of intellectual property rights and working collaboratively where both the franchiser and the franchisee share equal responsibilities and risks as well as rewards. Hence branding, licensing and even joint ventures are considered part of the franchising experience," she revealed.

Like it or not the franchise arrangement is indeed a marriage of convenience for both parties. The franchiser does not have to worry about capital outlays to spread their brand name abroad. There is also reduced risks for the franchiser that is often unsure of the local market conditions or the inability to understand the local culture in a foreign country.

The local partner or franchisee on the other hand benefits by having a ready proven business or formula that actually makes money as well as benefiting from the technical know-how and expertise in setting up and running a business especially so if the entrepreneur is a rookie in managing their own business.

According to Jean Lee, the managing director from Cavana Chicken under the Carona Holdings Pte Ltd, the importance of having the right business partner cannot be underestimated when building or breaking a brand overseas.

"We have built a very strong foothold relationship between our master franchisee in Indonesia and it has developed beyond just a Master Franchiser and Master Franchisee relationship. We fully assist them in all areas of setting up their new restaurants. From site selection, design and renovation, menu planning and customization, advertising & promotion and all related training," she said.

It is this attention to detail and often visiting Indonesia has reinforced their strong business ties with their partners.

In less than a year their Indonesian franchisee has set up three restaurants in Indonesia and another one is on the drawing board. It took Jean a long time before selecting the right franchise partner in Indonesia.

"It was not an easy task but in the end we decided to choose someone who had little experience in the food and beverage industry or even in the retail business. What the partners lacked in skill was made up by their credibility and loyalty to the Cavana brand name," she revealed.

The one common thread that runs through any successful franchisee is the passion for excellence and an uncompromising attitude. Most of the Indonesian entrepreneurs who believed in an idea feel passionate about it.

When Breadtalk, a lifestyle boutique bakery that has taken Singapore by storm since it first opened in 2000, felt that there was no room for expansion after opening 24 outlets in Singapore. For its first expansion plan overseas it looked no further than Indonesia. It was snowed under with more than 500 enquiries interested in being the franchise holder.

According to Frankie Quek, the Group General Manager of BreadTalk Group Limited, now a publicly listed company in Singapore, it was a strenuous tasks selecting and prequalifying the applicants.

"We were, however, looking for like-minded individuals who shared our business philosophy, and dedicated to ensuring that BreadTalk would live up to its brand spirit. We finally decided on the Johnny Andrean Group, which is well-known locally in the fashion circles.

"It didn't matter to us that Johnny did not have any experience in the F&B industry. What impressed us was his relentless pursuit to take BreadTalk to a higher plane and his personal conviction to even do better than BreadTalk Singapore," he said.

True to his word, BreadTalk Indonesia since it opened last year has done roaring business; its best outlet does better sales than BreadTalk Singapore by a ratio of two to three times.

Frankie credits Johnny's energy and conviction that has propelled BreadTalk Indonesia to its current level of success.

Johnny Andrean has plans to take BreadTalk on a regional blitzkrieg besides Jakarta starting with Bandung, Medan, Surabaya and Bali.

"My guiding business philosophy is based on team building, a conducive learning culture, innovative value, customer focus and trust and integrity. And to excel in this business, one needs a lot of creativity because BreadTalk is more than bread but a lifestyle brand," he said.

Johnny Andrean's unbridled creative energy is seen to be driving force behind the seven outlets in Indonesia with plans to extend beyond the Java island.

What is rather amazing still is the ability of the humble "kaya" which is made from coconut milk, eggs and pandan flavoring spread on toasted bread to be a well accepted staple fare in Indonesia. Ya Kun Kaya Toast started from simple beginnings in 1944. It started off as a coffeestall that was named after the late patriarch Loi Ah Koon.

Adrin Loi, the son and current executive chairman of Yakun International Pte Ltd, has decided to add a brand new chapter to the art of eating kaya toast. He currently runs 15 outlets in Singapore, out of which eight are actually franchised out while seven of them are corporate owned. Not content with Singapore, in less than one year, together with his Indonesian counterpart, he managed to open six franchise chains in Indonesia.

Although the portion of the Indonesian sales currently only account for 5 percent of its annual revenue, he expects this figure to increase over time. He is also looking to expand regionally into Malaysia, Taiwan, South Korea, Japan and Hong Kong. He also revealed that before he made a foray into Indonesia he was assisted by IE (International Enterprise) Singapore.

He was given grants claiming up to 70 percent of the total fee incurred for the feasibility country-wide study. He was also reassured by the fact that several Singaporean franchises have started to mushroom in Indonesia. Tung Lok, Coffee Club, PastaMania, Crystal Jade were some of the first few successful market entrants.

Like all newcomers he also faced his fair share of challenges.

"I had to educate the locals of our core product -- the kaya. The other challenge was finding the same or similar ingredients we currently use in Singapore to ensure product quality and consistency," he added.

His ultimate vision is to establish Ya Kun as a household name.

For Daniel Tay, the chef and managing director of Daniel Tay Bakerzin, a well known confectionery and dessert cafe similar to exclusive hallmark bistros in Europe, believes very strongly in the dessert culture that is slowly creeping up on Asians. He is so impressed with the entrepreneurial culture in Indonesia he says without blinking that Indonesians are a lot more enterprising than Singaporeans and where true entrepreneurs are made rather than born.

"The Indonesians have a basic concept where you do business to be rich, not to work for someone else. And that is something that they learn when they are young."

When he ran his business in Singapore, and needed money to expand his Singapore operations, his existing master franchisee from Indonesia, Kusnadi Radhaja, was so impressed and convinced of the dessert culture that was fast emerging in Asia, he decided to buy a stake in the holding company, Pacific United Holding.

Bakerzin is found in Thailand, Malaysia, Indonesia and Singapore with plans to enter the U.S. market. And all his franchisees' overseas, even in Thailand and Malaysia, are owned by Indonesians.

As a chef, his eye for uncompromising quality is well known among those that know him personally. When the Indonesian kitchen once ran out of imported chocolates that is used as a main ingredient for the collection of cakes and could not stock up on time, the chef from Indonesia had to fly down to Singapore to stock up on exclusive Valrhona Chocolates from France and fly back the same day.

This eye for quality and consistency is seen as a necessary trademark to his cakes that is well known for its rich taste and is seen as the heart of his craft. In Indonesia, the hottest selling item is in fact the Sop Buntut (Oxtail Soup) besides his signature cakes.