Franchising is the future of the retail sector in Bangladesh.

Franchising has emerged as a powerful business model in Bangladesh, providing entrepreneurs and investors with the opportunity to leverage established brands and proven systems. The retail sector in particular has seen a significant increase in franchising opportunities.

Local brands operating in various retail segments such as food, footwear, clothing and consumer electronics are now successfully franchised.

The Bangladeshi retail market is valued at approximately $200 billion, a significant figure reflecting the enormous value of retail sales across numerous product categories. These include food and beverages, personal care and home care products, clothing, shoes and accessories, furniture and toys, electronics, household appliances and much more.

When you invest in a franchise, you bypass the brand-building phase, avoid common pitfalls, and benefit from the security and operational support of a reputable company. It truly combines the best of both worlds.

This diversity offers significant opportunities for domestic franchising expansion, attracting entrepreneurs interested in investing in established retail niches. Now let’s look at the reasons behind the growing trend, the sectors driving franchising expansion, and the benefits and challenges associated with franchising in Bangladesh.

Factors opening up franchising opportunities

Bangladesh, a densely populated country in South Asia, boasts a growing middle class and a consumer base hungry for new products and experiences. The retail sector responded by diversifying its offerings, and franchising became a key expansion strategy.

Rapid urbanization: The major cities – Dhaka, Chattgram, Khulna, Rajshahi and Cumilla – provide ample consumer demand. As urbanization continues, retailers are looking to capitalize on this growing market.

Infrastructure development, communications and electrification, covering about 99.5% of the country’s territory, have contributed to urbanization.

Middle class aspirations: Bangladesh’s middle class is expanding and its desire for branded products and services is also growing. The increased purchasing power of the middle and rich class with a per capita GDP of $2,824 reflects the demand in the market.

Additionally, women’s participation in the workforce (36%) has led to increased demand for more products that make everyday life easier. Franchises offer a way to effectively meet these needs.

Cheap labor: Labor costs in Bangladesh are globally competitive, making the country attractive for franchising operations. This benefit extends to retailers looking to expand their footprint.

There are no rules prohibiting franchising: Unlike some countries, Bangladesh does not have specific regulations preventing franchising. This flexibility encourages both local and international franchisors.

E-commerce boom: Urban youth and tech-savvy population are the driving force behind e-commerce. Online platforms and digital payment systems have made shopping convenient for consumers, fueling the growth of the retail market.

Diverse consumer preferences: Consumers in Bangladesh exhibit varied preferences ranging from fast moving consumer goods (FMCG) to lifestyle products and consumer durables.

Why invest in a franchise?

Starting a business from scratch and growing a customer base and brand awareness can be challenging. A great way to start a new business with more support is through franchise opportunities.

Franchises offer a smart investment path with less risk compared to starting an independent business.

When you invest in a franchise, you bypass the brand-building phase, avoid common pitfalls, and benefit from the security and operational support of a reputable company. It truly combines the best of both worlds.

Additionally, you are buying into a business model that has already proven successful. The concept has been tested, refined and proven to be effective. The numbers can be seen and learned from experienced franchisees. Consumers tend to trust established brands.

You benefit from reputation and brand recognition. Consumers are more likely to choose a well-known brand over an unknown one. Franchisors offer reliable support to franchisees. This includes training, operational leadership and ongoing education. Some even provide call centers and administrative assistance.

As a franchisee, you benefit from this partnership, which can lead to benefits such as becoming an approved supplier or receiving discounts on inventory and equipment.

While no business venture is risk-free, franchising mitigates some of the risks. With a proven system and ongoing support, franchisees operate in a more predictable business environment.

Franchise owners often feel like part of a large family. You communicate with other franchise owners, share experiences and learn from each other.

With an established customer base and brand reputation, franchisees can begin generating income sooner than if they were starting an independent business from scratch. Franchising creates a win-win scenario: companies expand efficiently while customers benefit from a proven business model and an established brand.

Advantages of franchising as a brand

Franchising allows companies to expand without the need for significant capital investment. Franchisees cover opening costs, reducing the financial burden on the company. This accelerates growth by leveraging the efforts of multiple franchisees simultaneously.

Companies can quickly establish a large presence in various locations. Customers are more likely to trust and interact with a well-known brand, resulting in increased traffic and sales.

As a franchise network grows, so does the overall contribution of revenue to their net profit.

Challenges of Franchising in Bangladesh

Access to financing remains a major barrier for potential franchisees. Limited access to capital, high interest rates and collateral requirements can hinder franchising development.

It can be difficult for entrepreneurs to secure the necessary investment to start and maintain a franchise business. Ensuring proper protection of intellectual property such as trademarks, copyrights and trade secrets is critical for franchisors.

However, complying with and enforcing intellectual property laws in Bangladesh can be challenging. Franchisors risk unauthorized use of their brand or confidential information, which impacts brand integrity and revenue.

Maintaining consistent operating standards across multiple franchise locations can be difficult, as differences in quality of service or product offerings can harm the brand.

Inconsistent customer experiences can lead to dissatisfaction and impact overall brand perception.

Effective supply chain management is essential to the success of a franchise. However, finding reliable suppliers and maintaining constant inventory levels can be challenging.

Supply disruptions can impact product availability and customer satisfaction.

Finding qualified employees who align with a brand’s values ​​and service standards can be challenging. Insufficient training or inexperience of staff may compromise the quality of service.

Bangladesh’s retail sector offers fertile ground for franchising. There are exciting opportunities for entrepreneurs and investors looking to adapt, innovate and partner with established brands.

As the middle class continues to grow, franchising will play a key role in shaping the retail industry in Bangladesh. However, the challenges of financing, supply chain management and finding a suitable location for operations continue to be a priority for franchisors.

Overall, franchising represents an exciting path for growth and innovation in the Bangladeshi retail industry.

Razibul Hasan is the CEO of Meena Bazar.

The views and opinions expressed in this article are those of the author and do not necessarily reflect the views and opinions of The Business Standard.