Franchising is the future in the Bangladeshi retail sector 

Franchising has become a powerful business model in Bangladesh, opening doors for entrepreneurs and investors to leverage established brands and tested systems. The retail sector in particular has witnessed significant growth in franchising opportunities. 

Local brands operating in different segments of the retail landscape, like grocery, footwear, clothing and consumer electronics, are now running successful franchise operations. 

Bangladesh's retail market is estimated to be worth around $200 billion—a significant figure that reflects the extensive value of retail sales across numerous product categories. These include food and beverages, personal and household care, apparel, footwear and accessories, furniture and toys, electronics, household appliances and more. 

When you invest in a franchise, you bypass the brand-building 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

Such diversity offers considerable opportunities for franchising to expand within the country, appealing to entrepreneurs interested in investing in established retail niches. Now, let us explore the reasons behind the growing trend, the sectors driving franchise expansion and the benefits and challenges associated with franchising in Bangladesh.

The factors driving 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 has responded by diversifying its offerings and franchising has become a key strategy for expansion. 

Rapid urbanisation: The largest cities—Dhaka, Chattogram, Khulna, Rajshahi and Cumilla—provide abundant consumer demand. As urbanisation continues, retail businesses seek to capitalise on this growing market. 

Infrastructural development, connectivity and electrification covering around 99.5% of the country have aided in urbanisation. 

Middle class aspirations: Bangladesh's middle class is expanding and their aspirations for branded products and services are also on the rise. The increased purchasing power of the middle and affluent class with a per capita GDP of $2,824 reflects demand in the market. 

Additionally, women's participation of 36% in the labour force has given rise to demand for more products that make day-to-day lives easier. Franchises offer a way to meet these demands efficiently. 

Low-cost labour force: Bangladesh's labour costs are competitive globally, making it attractive for franchise operations. This advantage extends to retail businesses seeking to expand their footprint.

No regulations barring franchising: Unlike some countries, Bangladesh does not have specific regulations that hinder franchise operations. This flexibility encourages both 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 convenient for consumers, contributing to retail market growth.

Diverse consumer preferences: Bangladeshi consumers exhibit varying preferences—from fast-moving consumer goods (FMCG) to lifestyle products and consumer durables.

Why invest in a franchise?

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

Franchises offer a smart investment path with lower 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 safety net and operational support of an established company. It truly combines the best of both worlds.

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

You benefit from the brand's reputation and recognition. Customers are more likely to choose a known brand over an unknown one. Franchisors offer robust support to franchisees. This includes training, operational guidance, and ongoing education. Some even provide call centres and administrative assistance. 

As a franchisee, you benefit from these partnerships, which can lead to advantages like becoming an approved vendor or enjoying 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 within a more predictable business environment. 

Franchise ownership often feels like being part of a larger family. You connect with fellow franchise owners, 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: companies expand efficiently, while customers enjoy the benefits of a proven business model and established brand.

Benefits of franchising as a brand

Franchising allows companies to expand without the need for significant capital investment. Franchisees cover the costs of opening, reducing the financial burden on the company. 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, leading to increased footfall and sales. 

As the franchise network grows, so does the overall revenue contribution to their bottom line. 

Challenges of franchising in Bangladesh

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

Entrepreneurs may struggle to secure the necessary investment to launch and sustain a franchise business. Ensuring proper intellectual property protection—such as trademarks, copyrights and trade secrets—is crucial for franchisors. 

However, navigating IP laws and enforcement in Bangladesh can be complex. Franchisors risk unauthorised 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 may lead to dissatisfaction and affect overall brand perception.

Efficient supply chain management is essential for franchise success. However, sourcing reliable suppliers and maintaining consistent inventory can be challenging. 

Supply disruptions can affect product availability and customer satisfaction. 

Finding skilled employees who align with the brand's values and service standards can be tough. Inadequate training or inexperienced staff may 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 pivotal role in shaping the retail landscape of Bangladesh. However, financing, supply chain management challenges and finding a suitable place to run operations remain considerations for franchisors. 

Overall, franchising presents an exciting avenue for growth and innovation in Bangladesh's retail industry.

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 opinions and views of The Business Standard.