Franchising has become a powerful business model in Bangladesh, opening the door for entrepreneurs and investors to leverage established brands and proven systems. The retail sector in particular has seen significant growth in franchise opportunities.

Local brands operating in different segments of the retail landscape, such as groceries, shoes, clothing, and consumer electronics, are now successfully running franchise operations.

The value of Bangladesh’s retail market is estimated at around $200 billion, a significant figure that reflects the considerable value of retail sales across many product categories. These include food and beverages, personal and household care, clothing, shoes and accessories, furniture and toys, electronics, appliances and much more.

When you invest in a franchise, you skip the brand-building phase, avoid common pitfalls, and benefit from the safety net and operational support of an established business. It truly combines the best of both worlds

Such diversity provides considerable opportunities for franchise expansion in the country, attracting entrepreneurs interested in investing in established retail niches. Let us now explore the reasons behind this growing trend, the sectors driving franchise expansion as well as the benefits and challenges associated with franchising in Bangladesh.

Factors that determine franchise 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 has responded by diversifying its offering and franchising has become a key expansion strategy.

Rapid urbanization: The largest cities – Dhaka, Chattogram, Khulna, Rajshahi and Cumilla – cater to abundant consumer demand. As urbanization continues, retail businesses are looking to capitalize on this growing market.

Infrastructure development, connectivity and electrification covering about 99.5% of the country have contributed to urbanization.

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

Additionally, the 36% participation of women in the workforce has resulted in increased demand for products that make daily life easier. Franchises offer a way to efficiently meet these demands.

Low cost labor: Labor costs in Bangladesh are globally competitive, making it attractive for franchise operations. This advantage extends to retail companies looking to expand their footprint.

No regulations prohibiting franchising: Unlike some countries, Bangladesh does not have specific regulations hindering franchise operations. This flexibility encourages local and international franchisors.

E-commerce boom: The urban youth and tech-savvy population are driving e-commerce activities. Online platforms and digital payment systems have made shopping more convenient for consumers, thereby contributing to the growth of the retail market.

Various consumer preferences: Bangladeshi consumers display varied preferences, ranging from fast moving consumer goods (FMCG) to lifestyle products and consumer durable goods.

Why invest in a franchise?

Starting a business from scratch and building a customer base and brand awareness can be intimidating. Franchise opportunities are a great way to start a new business with more support.

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

When you invest in a franchise, you skip the brand-building phase, avoid common pitfalls, and benefit from the safety net and operational support of an established business. It truly combines the best of both worlds.

In addition, you adhere to a business model that has already proven itself. The concept has been tested, refined and proven. The numbers can be seen and learned from experienced franchisees. Consumers tend to trust established brands.

You benefit from brand awareness and recognition. Customers are more likely to choose a well-known brand over an unknown brand. Franchisors provide strong support to franchisees. This includes training, operational orientation and continuing education. Some even offer call centers and administrative support.

As a franchisee, you benefit from these partnerships, which can result in benefits like becoming an authorized seller or receiving discounts on inventory and equipment.

Although no business venture is without risk, franchising mitigates some of these risks. With a proven system and ongoing support, franchisees operate in a more predictable business environment.

Being a franchise owner often feels like being part of a big family. You connect with other franchisees, share experiences and learn from each other.

With an established customer base and brand reputation, franchisees can start earning revenue sooner than if they were starting an independent business from scratch. Franchising creates a win-win scenario: businesses grow efficiently, while customers enjoy the benefits of a proven business model and an established brand.

Advantages of franchising as a brand

Franchising allows businesses to grow without the need for significant investments. Franchisees cover opening costs, thereby reducing the financial burden on the business. It accelerates growth by leveraging the efforts of multiple franchisees simultaneously.

Businesses can quickly establish a widespread presence in various locations. Customers are more likely to trust and engage with a well-known brand, leading to increased footfall and sales.

As the franchise network grows, so does the overall revenue contribution to their financial results.

Challenges of franchising in Bangladesh

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

Entrepreneurs may struggle to secure the investment necessary to start and maintain a franchise business. Ensuring adequate protection of intellectual property, such as trademarks, copyrights and trade secrets, is crucial for franchisors.

However, navigating intellectual property laws and their application in Bangladesh can be complex. Franchisors risk unauthorized use of their brand or proprietary information, affecting brand integrity and revenue.

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

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

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

Supply disruptions can affect product availability and customer satisfaction.

Finding qualified employees who match the brand’s values ​​and service standards can be difficult. Inadequate training or inexperienced staff can compromise the quality of service.

The retail sector in Bangladesh provides fertile ground for franchising. Entrepreneurs and investors willing to adapt, innovate and collaborate with established brands can unlock exciting opportunities.

As the middle class continues to grow, franchising will play a pivotal role in the evolving retail landscape in Bangladesh. However, challenges related to financing, supply chain management and finding a suitable location to run operations remain considerations for franchisors.

Overall, franchising presents an exciting avenue for growth and innovation in the Bangladeshi retail sector.

Razibul Hasan is the Managing Director 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.