facebookI have this passion to open a coffee franchise like Ya kun. Or old chang kee.Is it is advisable to invest in franchising or should i stick to investing in stocks? - Seedly

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Anonymous

26 Sep 2020

Career

I have this passion to open a coffee franchise like Ya kun. Or old chang kee.Is it is advisable to invest in franchising or should i stick to investing in stocks?

Discussion (2)

What are your thoughts?

The Seedly team did a post (link here) examining the estimated costs to franchise various F&B brands. Among them was Ya Kun, where the team estimated the start-up costs for 1 outlet to be $250,000.

You will need to do an analysis of the potential returns of a Ya Kun outlet, versus the stock portfolio you have in mind. Analysing the potential return of a new Ya Kun outlet will involve things like:

  • Monitoring foot traffic at your intended location. How many people walk by every 15 minutes? How does this figure change from peak to non-peak hours, and from morning, afternoon, to the evening?

  • Monitoring foot traffic at other Ya Kun outlets in the vicinity to compare foot traffic

  • Analysing sales data (if available from Ya Kun), to get a general sense of how much sales/profit an outlet might generate

  • Do a 3 year financial projection modelling income statement, balance sheet, and cash flow. You need to calculate your IRR (Internal Rate of Return) to determine the annual % return from your Ya Kun franchise investment.

  • Speak with other franchise owners to learn from their experience. Is managemnet easy to deal with, how are actual sales like vs promised returns, etc.

For your intended stock portfolio, analyse the returns using the various method available - Discounted Cash Flow (DCF), comparable analysis, etc. Compare the returns from your Ya Kun projections to your stock projections, and then you can make the final call.

If you're considering opening a cafe, read this guide on how much it costs to start a cafe in Singapore.

If you do open a Ya Kun franchise, make sure to protect your investment. A good cafe insurance package (covering fire, food poisoning, etc.) is essential. Get online business insurance quotes from Provide, and save up to 25% on premiums.​​​

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