Franchising Business Operating In Bangladesh

The folllowing sample essay on Franchise Essay discusses it in detail, offering basic facts and pros and cons associated with it. To read the essay’s introduction, body and conclusion, scroll down.

Concept of franchise There are thousands of franchised businesses, covering nearly every conceivable industry, from well-known national brands to smaller, local opportunities. The challenge is to decide on one that both interests the investors and is a good investment. The term franchise basically illustrates the concept of buying an international company and using in a different country/state.

In other words it means one is buying the right to use a specific trademark or business concept. The business run is essentially the same as all other business being run under the same name.

In order to do this, it is require buying things like products, tools, advertising assistance, and training from the franchisor (the company that owns the rights to the business). Benefits of being a franchise One can attain a number of benefits on purchase of a franchise: * Reduced risk – Franchises traditionally have a much lower failure rate than other start-up businesses.

* Receive a complete package – The total package can include trademarks, easy access to an established product; a proven marketing method; equipment; inventory; etc. Strength in numbers – When you’re becomes a franchisee, one have the buying power of the entire network, which can help to get product and compete with larger national chains. * Business processes – Many franchisors provide their franchisees with various proven systems including financial and accounting systems; ongoing training and support; research and development; sales and marketing assistance; planning and forecasting; inventory management; etc.

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They’ll show the techniques that have made the business successful and help to utilize them in developing your own business. Financial and site selection assistance – Some companies will help to finance the initial franchise. They also may help with site selection, making sure that the business is located in an area where it can thrive. * Advertising and promotion – Not only it will benefit from any national or regional ad and promotional campaigns from the franchisor, but they may also help internationally from providing camera-ready copy for your own advertising efforts to developing in-store point-of-sale materials designed to drive customers through the business.

Name Some Franchising Business Operating In Bangladesh

It would cost a great deal to develop these materials on own. Disadvantages of franchise * Franchising is certainly not for everyone due to a couple of reasons; one of the major is lack of control. In franchise business buying and operating a proven concept can make one feel like he is more a manger than a boss. This may be difficult for some people, especially those that are more entrepreneurial. This type of person may find it hard to conform to someone else’s system. On the other hand it can take a good deal of cash to open and operate a franchise.

Upfront costs can be significant, and you may find that ongoing royalty fees will have a major impact on your cash flow. Just as a franchisor’s reputation can benefit an individual business, the franchisor’s problems are also your problems. So if the parent company comes upon hard times, the individual franchise may also suffer because of how closely you’re tied in. Moreover the franchise agreement is a binding contract, and can be quite restrictive. One is locked in to certain business practices, fees, and even the look of the business.

Franchise law in Bangladesh Before entering into any agreement one should consider having an attorney, accountant or other advisor review the disclosure documents and proposed contracts. This can help to save capital and keep one from making a bad investment. The disclosure document is provided by the franchisor. It can serve as a window into the company’s operations. It is important to review it completely (preferably with the assistance of an attorney, accountant or business advisor) to know all the important information about the franchisor.

Such document may provide the information like: * The franchisor’s personal and business names, its organization; its background; and its financial history. * The circular should have complete list of fees that will be required to pay both to start the franchise and operate it. It will also provide the information on other obligations, such as inventory or equipment that must be purchased from the franchisor. * Lists of certain products that are approved by the franchisor’s with their limitations of selling them. The services that will be provided to the clients, information about what training is necessary, where it will take place, and what it will cost. * Details on trademarks and patents that will be received. * The documents must disclose any actions involving violation of franchise law, fraud, embezzlement, or unfair business practices. They also must disclose whether the franchisor, any predecessors, or any partners or officers have declared bankruptcy in the past 15 years. * The circular contains hypothetical profit projections, along with the formula for how these figures were created.

Records on economic conditions vary from region to region, so these figures do not assure success of a particular outlet. There are basically two types of fees that are expected to pay for the franchise The first is the initial upfront fee, which is what you pay the franchisor for the rights open your franchise. Essentially, you are purchasing the rights to use the franchisor’s trademarks, business methods, and distribution rights. This licensing charge can be significant, especially for a well-known, established franchise.

Often, it is also based on the value of the territory or trading area, so the larger the market, the more one could end up paying. The initial franchise fee may or may not include things like training costs; start-up promotional fees; inventory; build-outs equipment/fixtures; and any other costs that are necessary to start a business. It is required to pay ongoing fees to maintain the rights to the franchise. Most franchisors charge a royalty fee, which is typically a percent of the gross sales. This royalty fee can range from 1 percent to as much as 15 percent, although 5 percent is typical.

Some franchisors charge a regular fee (payable weekly, monthly or quarterly) in lieu of royalty payments. This type of fee may also be part of the mark-up you are charged for goods or services you are required to purchase. It is also common for franchises to pay a portion of the franchisor’s local, regional and national advertising and promotional costs. These fees are usually put into a cooperative advertising fund that ultimately benefits all franchises through increased exposure to the trade name. Airtel Bangladesh Ltd Recently in Bangladesh there are small numbers of franchised business.

There are no regulations barring franchise operations. Some US franchisors have granted in Bangladesh during last few years, for example Pizza Hut, Wimpy, Nandos, A&W, Movenppick, KFC and so on. In Bangladesh when a franchised shop is granted the government have to look into different fields to match the countries culture, demand and add norms and value to the new product and services. Some of the issues may vary from one to another due to country’s political, economical and social environment. Let us consider Airtel telecommunication in Bangladesh as an example to the above study. Airtel Bangladesh Ltd. s a GSM-based cellular operator in Bangladesh. It is the sixth mobile phone carrier to enter the Bangladesh market, and launched commercial operations on May 10, 2007. Before it was Warid Telecom International LLC, an Abu Dhabi based Telecommunication Company in Bangladesh. Majority 70% stake in the company was sold to India’s Bharti Airtel Limited for US$300 million. Bharti Airtel Limited took management control of the company and its board, and rebranded the company’s services under its own Airtel brand from 20 December 2010. The Bangladesh Telecommunication Regulatory Commission approved the deal on Jan 4, 2010.

Bharti airtel is making a fresh investment of USD 300 million to rapidly expand the operations of Warid Telecom and have management and board control of the company. This is the largest investment in Bangladesh by an Indian company. The new funding is being utilized for expansion of the network, both for coverage, capacity, and introduction of innovative products and services. As a result of this additional investment, the overall investment in the company will be in the region of USD 1 billion. After Airtel has been launched in Bangladesh the company segmented the market through people’s usage.

Airtel provides both post-paid and pre-paid connection plans. The post-paid plan is branded and marketed across the country under the name Airtel Postpaid, which means leader or royalty. The pre-paid segment is branded and marketed as Airtel Prepaid. The Airtel Prepaid category is divided into four segments: * Adda: this package is meant for the people who love to keep in touch with a close group of friends and browse the net when bored and make the most of your time on phone. It will provide the maximum fnf and all that at fantastic rates. * Golpo: this package is usually offered to the person who loves making long conversations.

It provides with 24 hrs flat tariff to any number. * Dolbol: it offers to create one’s own community and talk @ the lowest rate of 29 paisa/min within the community members. It also offers a bundle of other facilities that customers look for. * Kotha: it offers the lowest pulse rate in Bangladesh with 1 sec pulse from the very first second. Competitors of Airtel in Bangladesh * Grameen phone * Citycell * Robi telecom * Teletalk * Banglalink SWOT analysis of Airtel Strength: i. Global Brand Image ii. Low call tariff iii. Instant cash back offer iv. Product availability v.

Different product segment for different type of customers vi. Dedicated and customer oriented employees vii. Loyal towards customers Weakness: i. Limited coverage ii. Unstable network quality Opportunity: i. Customers good intention to use Airtel service ii. Unutilized market Threat: iii. Network quality and retention of customers. Looking at the above discussion that includes Airtel Bangladesh limited business profile and strategy it can be said that the company is operating at question mark position of BCG matrix. It has already attained the market growth rate but according to its competitors the market share is low.