Japan will play in the 2015 Rugby World Cup © Getty Images

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Japan will host the 18th Super Rugby franchise when the tournament expands in 2016.

Singapore posted a rival bid for the Asian franchise but SANZAR has opted to hand Japan the license. Japan's domestic rugby scene has come on leaps and bounds in the past few years with some of the world's top players opting to run out in the Top League and the franchise may now see a combination of foreign talent and Japanese players running out alongside each other.

SANZAR has now informed the Japan Rugby Football Union of its decision with the deal subject to "execution of the formal participation agreement".

"This week's meeting was a significant step in the evolution of Super Rugby," SANZAR CEO Greg Peters said. "Compelling proposals were put forth by Japan and Singapore in what was a very competitive tender process and we thank both parties for their passion in sharing our vision to expand the competition to new fans, territories and commercial markets.

"While ultimately edged out in this instance, Singapore presented a highly attractive bid and we will maintain a positive relationship with an eye to potentially working with them in the future. Following the Executive Committee's decision however, SANZAR will now work exclusively with the JRFU to finalise arrangements for their entry in to Super Rugby, subject to execution of the formal participation agreement. Until this process is concluded, there will be no further comment from either party."

New Zealand Rugby Union (NZRU) chief executive Steve Tew had foreshadowed Japan's acceptance by SANZAR earlier Friday.

"The best way to explain this is that Japan have been the preferred option for some time," Tew told reporters in New Zealand.

SANZAR had sought an expanded competition in two years' time based on the key criteria of commercial value, infrastructure, geographic location, rugby readiness and ongoing sustainability. But SANZAR's decision has raised concerns the extra teams will dilute the competition's playing talent, which will until the 2016 season feature teams exclusively from South Africa, New Zealand and Australia.