How to Start a Franchise in Bangladesh: Complete Guide 2024

Step 1: Research and Select the Right Franchise

Choosing the right franchise is the most critical decision. Consider these factors:

Evaluate Your Interests and Skills

• Passion: Choose a business you're genuinely interested in
• Experience: Leverage your existing skills and industry knowledge
• Lifestyle: Consider time commitment and work-life balance

Assess Market Demand

• Local Demand: Research if the product/service is needed in your target area
• Competition: Analyze existing competitors and market saturation
• Growth Potential: Look for sectors with 15%+ annual growth

Evaluate Franchise Brands

• Brand Reputation: Check customer reviews, media coverage, and brand strength
• Track Record: Minimum 3-5 years of successful operation
• Franchisee Satisfaction: Speak with at least 5 current franchisees
• Financial Performance: Request average revenue and profit data

Step 2: Assess Your Financial Capacity

Understanding the complete financial picture is essential before committing to a franchise.

Initial Investment Breakdown

• Franchise Fee: BDT 40,000 - 2,00,000 (one-time payment for brand rights)
• Setup Costs: BDT 15-60 lakh (location, equipment, inventory, interior)
• Working Capital: BDT 5-15 lakh (6 months operating expenses)
• Legal & Professional Fees: BDT 50,000 - 2,00,000

Ongoing Costs

• Royalty Fee: 5-8% of monthly revenue
• Marketing Fee: 2-4% of monthly revenue
• Rent: BDT 50,000 - 3,00,000/month depending on location
• Staff Salaries: BDT 1-5 lakh/month
• Utilities & Supplies: BDT 30,000 - 1,50,000/month

Financing Options

• Personal Savings: Ideal for 30-40% down payment
• Bank Loans: Most banks offer franchise loans at 10-12% interest
• SME Loans: Government-backed loans with favorable terms
• Partnership: Share investment and profits with partners

Step 3: Contact Franchisor and Request Information

Once you've shortlisted 3-5 franchises, initiate formal contact with franchisors.

Documents to Request

• Franchise Disclosure Document (FDD): Complete franchise details
• Financial Performance Representation: Average revenue, profit margins
• Franchise Agreement: Legal terms and conditions
• Operations Manual: Overview of business processes
• Training Program Details: Duration, content, location

Questions to Ask Franchisor

• What is the total investment required including hidden costs?
• What is the average time to breakeven and profitability?
• What ongoing support do you provide?
• How many franchises have failed in the last 3 years and why?
• What are the territory protection terms?
• What are the renewal and exit terms?

Step 4: Visit Existing Franchise Locations

Field research is invaluable. Visit multiple franchise locations to observe real operations.

What to Observe

• Customer Flow: Peak hours, average customers per day
• Operations: Staff efficiency, service quality, cleanliness
• Product Quality: Consistency with brand standards
• Location: Foot traffic, accessibility, parking, visibility

Questions for Existing Franchisees

• What is your actual monthly revenue and profit?
• How long did it take to reach breakeven?
• What challenges did you face in the first year?
• Is the franchisor support adequate?
• Would you recommend this franchise? Why or why not?
• What would you do differently if starting again?

Step 5: Conduct Due Diligence

Thorough due diligence protects your investment. Hire professionals if needed.

Financial Due Diligence

• Verify franchisor's financial statements (last 3 years)
• Check for any pending litigation or legal issues
• Validate claims about franchisee performance
• Review supplier contracts and pricing

Legal Due Diligence

• Have a lawyer review the franchise agreement
• Verify trademark and intellectual property rights
• Check compliance with Bangladesh franchise regulations
• Understand termination and renewal clauses

Market Due Diligence

• Conduct demographic analysis of your target area
• Assess competition and market saturation
• Validate market demand through surveys
• Project realistic revenue based on local conditions

Step 6: Secure Financing

With due diligence complete, arrange your financing before signing agreements.

Bank Loan Process

1. Prepare Business Plan: Include franchise details, financial projections, market analysis
2. Gather Documents: Trade license, TIN, bank statements, franchise agreement
3. Apply to Multiple Banks: Compare interest rates and terms
4. Provide Collateral: Property, FDR, or guarantor
5. Loan Approval: Typically takes 2-4 weeks

Recommended Banks for Franchise Loans

• BRAC Bank: SME franchise loans, 10-12% interest
• Eastern Bank: Franchise-specific products
• Dhaka Bank: Competitive rates for established franchises
• City Bank: Fast approval process

Step 7: Sign Franchise Agreement

The franchise agreement is a legally binding contract. Review carefully with legal counsel.

Key Agreement Terms

• Territory: Exclusive or non-exclusive rights, geographic boundaries
• Duration: Typical 5-10 years with renewal options
• Fees: Initial fee, royalties, marketing fees, renewal fees
• Training & Support: Initial and ongoing training commitments
• Operations: Standards, quality control, reporting requirements
• Termination: Conditions for termination by either party
• Exit Strategy: Transfer rights, buyback options

Step 8: Find and Secure Location

Location is critical for franchise success. Follow franchisor guidelines while conducting your own analysis.

Location Selection Criteria

• Demographics: Target customer concentration, income levels
• Foot Traffic: Minimum 500-1000 people/day for retail
• Accessibility: Easy access, parking availability
• Visibility: High visibility from main road
• Competition: Distance from competitors
• Size: Meets franchisor requirements (typically 500-2000 sq ft)

Lease Negotiation Tips

• Negotiate 3-5 year lease with renewal options
• Include rent escalation clause (max 10% annual increase)
• Negotiate 2-3 months rent-free for setup
• Ensure lease allows franchise business operations
• Get landlord approval for signage and modifications

Step 9: Complete Training Program

Franchisor training is essential for understanding operations and brand standards.

Typical Training Components

• Product Knowledge: Recipes, preparation, quality standards
• Operations: Daily procedures, inventory, supply chain
• Customer Service: Service standards, complaint handling
• Staff Management: Hiring, training, scheduling, motivation
• Financial Management: POS systems, accounting, reporting
• Marketing: Local marketing, social media, promotions

Training Duration

• Food & Beverage: 2-4 weeks
• Retail: 1-3 weeks
• Services: 1-2 weeks
• On-site Training: Additional 1-2 weeks at your location

Step 10: Setup and Launch

Final setup phase brings everything together for your grand opening.

Setup Checklist

• Complete interior design and branding per franchisor standards
• Install equipment and POS systems
• Stock initial inventory
• Hire and train staff (2-3 weeks before opening)
• Obtain all licenses and permits
• Conduct soft opening (friends, family, VIPs)
• Plan grand opening marketing campaign

Launch Marketing

• Pre-Launch: Social media teasers, local newspaper ads
• Grand Opening: Special offers, celebrity appearance, media coverage
• Post-Launch: Loyalty programs, referral incentives

Success Factors for Franchise Businesses

First Year Priorities

1. Follow the System: Stick to franchisor's proven processes
2. Focus on Quality: Maintain brand standards consistently
3. Build Local Presence: Active community engagement
4. Monitor Finances: Weekly cash flow review, cost control
5. Customer Feedback: Actively collect and act on feedback
6. Staff Development: Invest in training and retention

Common Mistakes to Avoid

• Underestimating working capital needs
• Choosing location based on low rent instead of potential
• Deviating from franchisor's proven system
• Neglecting marketing and local promotion
• Poor staff hiring and training
• Not maintaining quality standards

Conclusion

Starting a franchise in Bangladesh offers a structured path to business ownership with lower risk than independent startups. Success requires careful franchise selection, thorough due diligence, adequate financing, and commitment to following the proven system. With the right franchise and location, most franchisees achieve profitability within 12-18 months and build sustainable, growing businesses.