Spotlight

Gaurav Marya, Chairman, FranGlobal

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An Evolving Industry

What are some of the top trends shaping the franchising industry today?
The franchising industry has seen the emergence of newer franchise models such as “keep the professional career while running a franchise”. Along with this, the influence of micro-influencers marketing has increased over the period of time. Franchises are opting for Multi-brand franchisees as it helps in improving cash flow and mitigating the business risk. The demand for customized product/ services has increased over a period of time. More and more franchisors are accommodating these changes.

What were the challenges in bringing in international franchises to Bangladesh?
Some of the challenges in international franchising are that there is no established law about franchising specifically. The industry is also plagued with poor intellectual property rights law, copyrights law and patents law. Due to the country’s relatively weaker regulatory framework regarding business franchising often poses a hurdle. This leads to high investment costs because there is a prevalent lack of transparency and inefficiencies in the bureaucratic process which needs to be immediately addressed.

How have the franchises performed against local competitors?
Some of the successful foreign brands in franchise business in Bangladesh are Sbarro Inc., Kenny Rogers’ Roasters, Tony Roma’s, Johnny Rockets, Kentucky Fried Chicken, Krispy Kreme Doughnuts, Pizza Hut, Burger King, Coldstone Creamery. Furthermore, many franchise brands such as KFC and Pizza Hut are already performing well in Bangladesh. For instance, Transcom Foods has opened the first KFC in 2006 and expanded significantly thereafter, maintaining the international standard of the brand.

Compared to other similar markets, such as in South Asia, how does Bangladesh fare?
India followed by Bangladesh is showcasing good economic prospects amongst South Asian countries. In Bangladesh, the GDP per capita jumped 400% to $1,480 from 1990 to 2017. Also, according to BCG over the next 10 years, the annual income of around two million additional Bangladeshis will reach $5,000 each year. Furthermore, Bangladesh has one of the most liberal FDI norms amongst South Asian Countries. All these factors combined together would help in propelling the franchisee business in Bangladesh. According to an estimate, Franchise Industry may reach nearly $6 – $7 Billion in the next 6 to 7 years.

What sort of market research did you conduct and how were the strategies different compared to similar markets?
Bangladesh has a huge potential, and middle-income group is the major segment in this country. We do an array of primary and secondary research. We usually take an abductive approach, counter mixing inductive and deductive research methodologies as well. However, Bangladesh is a mass market segment, and that’s where the exact potential lies. We also do random sampling across different demographics.

Can you talk a bit about how the profits are distributed? How much is retained and redistributed within the Bangladesh economy? And how much is sent back to the parent company?
There is the uneven distribution of profits, mainly due to non-compliance of the regulatory reforms imposed by the government. I can undoubtedly say that the market has huge potential if we can encourage more awareness amongst businesses. For instance, a large conglomerate in Bangladesh is cash rich, and due to cash transactions accounting standards, are easily breached. This in turn disrupts the distribution of even profits. Overall this creates more inflation and less turnover for both company and government.

What other franchises are in the pipeline right now?
FranGlobal would be bringing in more than 50 brands in Bangladesh. Some examples of the upcoming franchise in Bangladesh include Uclean, Domino’s Pizza, Jetking etc.

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