Franchising has become a strong business model in Bangladesh, opening the doors for entrepreneurs and investors to benefit from established brands and tested systems. The retail sector in particular has witnessed a significant increase in franchising opportunities.

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

The value of Bangladesh’s retail market is estimated to be around $200 billion; This is a significant figure that reflects the comprehensive value of retail sales across multiple product categories. These include food and beverages, personal and home care, clothing, shoes and accessories, furniture and toys, electronics, appliances and more.

When you invest in a franchise, you skip the branding phase, avoid common pitfalls, and benefit from the safety net and operational support of an established company. Truly combines the best of both worlds

This diversity offers significant opportunities for franchising to expand within the country and appeals to entrepreneurs looking to invest in established retail niches. Now, let’s examine the reasons behind the growth trend, the sectors driving franchise expansion, and the benefits and challenges associated with franchising in Bangladesh.

Factors driving franchising opportunities

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

Rapid urbanization: The largest cities (Dhaka, Chattogram, Khulna, Rajshahi and Cumilla) provide ample consumer demand. As urbanization continues, retail businesses are trying to capitalize on this growing market.

Covering about 99.5% of the country, infrastructure development, connectivity and electrification have aided urbanization.

Expectations of the middle class: Bangladesh’s middle class is expanding and their desire for branded products and services is also increasing. The increasing purchasing power of the middle and wealthy class, whose per capita GDP is $2,824, reflects market demand.

In addition, the 36% participation of women in the workforce has led to an increase in the demand for products that make daily life easier. Franchises offer a way to meet these demands efficiently.

Low cost labor: Bangladesh’s labor costs are globally competitive, making it attractive for franchise operations. This advantage also applies to retail businesses looking to expand their footprint.

There are no regulations prohibiting franchising: Unlike some countries, there are no special regulations preventing franchise operations in Bangladesh. This flexibility encourages both local and international franchisors.

E-commerce boom: Urban youth and technology-savvy population are driving e-commerce activities. Online platforms and digital payment systems have contributed to the growth of the retail market by making shopping easier for consumers.

Different consumer preferences: Bangladeshi consumers exhibit diverse preferences, from fast-moving consumer goods (FMCG) to lifestyle products and consumer durables.

Why should you invest in a franchise?

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

Franchises offer a lower-risk, smart investment path compared to starting an independent business.

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

You are also buying into an already successful business model. The concept has been tested, refined and proven to work. The numbers can be viewed and learned from experienced franchisees. Consumers tend to trust established brands.

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

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

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

Owning a dealership often feels like part of a larger family. You connect with franchise owners, share experiences and learn from each other.

With an established customer base and brand reputation, franchisees can start generating revenue quicker than starting an independent business from scratch. Franchising creates a win-win scenario: Companies expand efficiently while customers reap the benefits of a proven business model and an established brand.

Benefits of franchising as a brand

Franchising allows companies to expand without the need for significant capital investment. Franchise owners reduce the financial burden of the company by covering the opening costs. It accelerates growth by leveraging the efforts of multiple franchisees simultaneously.

Companies can quickly establish a widespread presence in various locations. Customers are more likely to trust and engage with a known brand, resulting in increased visitors and sales.

As the franchise network grows, the contribution of total revenue to profitability also increases.

Franchising challenges in Bangladesh

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

Entrepreneurs may have difficulty securing the investment necessary to start and maintain a franchise business. Ensuring proper protection of intellectual property rights such as trademarks, copyrights and trade secrets is crucial for franchisors.

But navigating intellectual property laws and practices in Bangladesh can be complicated. Franchisors face the risk of unauthorized use of their brand or proprietary information, which could impact brand integrity and revenue.

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

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

Efficient supply chain management is essential for franchise success. But finding reliable suppliers and maintaining consistent inventory can be difficult.

Supply disruptions may impact product availability and customer satisfaction.

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

Bangladesh’s retail sector offers 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 key role in shaping Bangladesh’s retail landscape. However, financing, challenges in supply chain management and finding a suitable location to conduct operations continue to be considerations for franchisors.

Overall, franchising offers an exciting avenue for growth and innovation in Bangladesh’s retail sector.

Razibul Hasan is the general manager 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.