Bangladesh is the seventh largest consumer of goods and services in the world. In Bangladesh, franchising is an established method for launching a business. The industries of transportation, beauty, fast food, education, wellness, mail delivery, clothing, and health care are among the most popular for franchise startups.
The franchise business is one of the options that brands have adopted for expansion in Bangladesh. Bangladesh offers a variety of inexpensive franchise opportunities. This article discusses Franchise Business Registration in Bangladesh, as well as “What is a Franchise Business?” and the documents required for Franchise Business registration.
What is a franchise business in Bangladesh?
It is one of the primary means by which foreign companies and brands have strengthened their presence on the Bangladeshi market. A franchisor (franchise brand) is involved and provides the franchisee (owner of the franchise outlet) with conceptual, structural, legal, and training support in exchange for an upfront start-up fee and ongoing royalties.
Both the franchisor and franchisee profit from franchise ownership and operation. After the franchisee has access to the brand’s devoted customer base, legal counsel, creative support, and training support, the franchisor can further expand the business into untapped markets, thereby increasing market share and revenues. Franchising is the most valuable and practical type of business opportunity.
A franchised business consists of a franchisor and a franchisee. Although the former refers to an entity that lends its brand, trade name, or any other form of intellectual property laws along with the value chain, the latter describes a person who, in exchange for a royalty and an initial fee, conducts the business of the former under the mark or name of the franchisor.
Good international business policy may be sold under certain conditions.
- As part of its global trade policy, a reputable company may open franchises in any nation.
- The parent company may charge franchise owners royalty fees.
Legal formalities require the aforementioned information. In Bangladesh, starting a business as a foreign investor is somewhat difficult. Numerous other licenses are needed to establish a Manufacturing Company. However, after completing the necessary legal procedures and obtaining the necessary licenses, you are permitted to start a business in Bangladesh.
In Bangladesh, franchise agreements are governed by a variety of pertinent laws rather than a single type of legislation. Several examples include the Bangladeshi Contract Act of 1872, the Consumer Protection Act, the Patents Act, the Trade Marks Act, the Copyright Act, the Specific Relief Act, the Design Act, and the Transfer of Property Act of 1882.
Franchise Business Formation in Bangladesh:
Before agreeing for such a reason, Bangladeshi law does not require the franchisor to be licensed by any governing body. However, the Trademark Act of Bangladesh makes it simpler to register as a trademark account holder.
Disclosure Regulations Disclosure regulations exist in some nations, requiring franchisors to disclose pertinent information to franchisees prior to contract signing. The franchise agreement determines the validity of post responsibilities in Bangladesh by incorporating all applicable disclosure laws. In this instance, the Contract Act of 1872 definition of “consensus ad idem” is applicable.
The franchise agreement also specifies how this obligation applies to sub-franchisees. It is important to note that common law principles govern the proposed contractual relationships.
In the absence of disclosure laws, there are no established formats or obligations for ongoing disclosures.
A franchise is not required to be a member of a national franchise association, but doing so could help protect franchise owners’ interests.
Franchise Contract in Bangladesh
In addition to the obvious requirements of capital, facilities, and other essentials, a franchise is founded upon a franchise agreement. The type of agreement utilized for this purpose varies based on variables such as format, control, franchisor type, etc.
The Bangladeshi Contract Act of 1872 stipulates that franchise agreements must adhere to its provisions. If this condition is met, franchisees are permitted to include disclosure laws in their contracts. In this scenario, the franchisor’s deceit permits the franchisee to file civil lawsuits for damages and criminal lawsuits for fact manipulation and criminal breach of trust.
Legal framework for Registration of Franchise Businesses in Bangladesh:
• Franchise Enrollment:
The franchisor is not required by Bangladeshi law to be registered with any professional or regulatory body prior to entering into this agreement. On the other hand, the trademark act makes it simpler to record the registered user of a Trademark.
• Franchise Agreement for Business in Bangladesh:
Except for the obviously necessary elements of financing, infrastructure, and other necessities, a franchise is founded on a franchise agreement. The type of agreement used for this purpose varies based on a variety of factors, such as the format, level of control, and type of franchisor, among others.
Franchise agreements must comply with the provisions of the Bangladeshi Contract Act of 1872. Subject to this provision, franchisees may include disclosure requirements in the franchise agreement. In this instance, the franchisor’s misrepresentation makes it easier for the franchisee to file both a civil lawsuit for damages and a criminal complaint for false statements of fact and criminal breach of trust.
• Discloser Standards:
Certain nations’ disclosure regulations require franchisors to provide franchisees with the necessary information prior to contract signing. The application of pre-disclosure responsibilities in Bangladesh is determined on the basis of the aforementioned franchise agreement, which contains specific disclosure requirements. The “consensus ad idem” clauses of the Contract Act of 1857, which apply in this instance, may be noted by the reader.
The franchise agreement is also used to determine whether sub-franchisees are subject to this requirement. It is essential to note that the proposed contractual connections are governed by common law in this instance.
In the absence of disclosure requirements, there are no particular formats or responsibilities associated with continued disclosures.
Establishing a Franchise Enterprise in Bangladesh:
How can foreign investors launch a business in Bangladesh?
• Registering a limited liability company as a foreign national
• Registration of branch office
Local investors can easily start a business, despite the fact that we do not guide them. Our sole mission is to advise foreign investors who intend to establish a business in Bangladesh.
Before deciding to start a business in Bangladesh, it is advisable to acquire a basic understanding of the country. Human behavior, required business licenses, the cost of establishing a business, the political environment, population density,
investment sectors, the likelihood of investment return, the income tax rate, the value-added tax, and the market are just a few of the variables that influence the profitability of an investment.
Private Limited Partnership Registration:
• The registrar of joint-stock companies and firms, RJSC, does not make it easier than in other countries to register a limited liability company.
• All limited liability companies are registered by this government agency.
• Visit this page for information on the company registration procedure.
• No foreign investor is permitted to start a business without a legal identity and a registered business.
• Declare capital investment in Taka
• Pay fees to the government as authorized capital.
• Assign the number of shares and determine the position of share ownership.
• Proposed three company names • Detailed company objectives as a Memorandum of Association • The most important information is that foreigners can own 100 percent of shares in Bangladesh
PHASES OF COMPANY FORMATION NAME APPROVAL
- Name Clearance (NC) is a prerequisite for new entity registration (other than Foreign Company and Partnership Firm). Before submitting an application for registration, the promoters of a new entity must apply for and obtain name clearance.
- Currently, NC can be obtained online through the joint stock website at roc.gov.bd, which is a relatively straightforward procedure.
- The name clearance is valid for a period of ninety (90) days from the date of issuance.
[ADDITIONAL STEPS FOR A FOREIGN INVESTED COMPANY: OPENING A BANK ACCOUNT, TRANSFERRING MONEY, AND GETTING AN ENCASHMENT CERTIFICATE]
The promoters of a new entity (with name clearance) must apply for registration with the appropriate documents, forms, schedules, stamps, and fees, depending on the entity type.
a. prepare Memorandum/Articles of Association, forms & schedules, etc., based on entity type.
b. Pay Stamp Duty (online)
c. submit the application for registration online.
d. pay the enrollment fees (online)
e. Memorandum and Articles of Incorporation.
f. Completed Form I: Declaration on Company Registration [Section 25].
g. Form VI: Notice of Situation and Change of Registered Office [Section 77] duly completed.
h. Form IX: Consent of Director to Act [Section 92] has been completed. e. Form X: List of Individuals Consenting to Serve as Directors [Section 92]
i. Form XII: Particulars of the Directors, Manager, and Managing Agents, as well as any alterations [Section 115]
Evidence of Clearance of Name
CERTIFICATE OF COMPANY INCORPORATION
- Following review of the online application by the concerned dealing officer and deputy registrar, company registration may be approved, and the certificate, Form XII, and MOA AOA will be emailed to the applicant.
LICENSES for Franchise Business Registration in Bangladesh
- Request and acquire a Tax Identification Number (online)
- Request and Acquire a Business License – VAT Registration
- Factory Permit (if needed)
- Fire License (If needed)
- Environmental Clearance (inf needed)
IRC/ERC – (if needed)
- Any additional licenses required based on the nature of the business
• While local shareholders and directors are not required to register a new business, registration is required for foreign shareholders and directors.
• Very few consultants, attorneys, and consulting firms are aware of the procedure for registering a new business with foreign directors.
• Registration of a business with foreign directors differs from that of a business with domestic directors.
enlistment of branch office
In Bangladesh, the branch office registration authorities are BOI and BEPZA.
• Branch office is exempt from income tax because it is not permitted to engage in direct business.
• The branch office is unable to receive customer payments into its bank account, but it may incur expenses using capital transferred from the parent company.
• Click here for information on how to open a branch office.
Authorization of the project office
• BOI has the authority to authorize the opening of a project office in Bangladesh.
• Project office is NOT exempt from income tax.
• Knowledge personnel are exempt from taxation under certain conditions.
• Foreign personnel can be hired through the project office.
Market Identification for Franchise Business Registration in Bangladesh:
Identification of a market niche is essential for any aspiring entrepreneur seeking to enter the business world. When you finally decide to launch your franchise, choose a market that will be beneficial to you in terms of profitability and long-term viability.
To make an informed decision, it is recommended to conduct a comprehensive market and city-specific analysis. Keep in mind that popular niches are more prone to fierce competition.
Managing the Legal Aspects after Franchise Business Registration:
As soon as you sign the franchise agreement with the relevant business, you must obtain legal authorization from the Ministry of Corporate Affairs once you have chosen your area of expertise. If the franchise is located outside of Bangladeshi Territory, choose a reputable company that can assist you in resolving issues promptly.
Assume possession once the aforementioned conditions have been satisfied. To avoid future legal disputes with the franchisor, it is advisable to secure a credible witness while legal proceedings are ongoing.
• Essential Business Licensing for Franchise Business Registration:
Now presented is the most important factor for establishing a franchise in Bangladesh. To comply with the law, you would need a license and registration of your own. Without exception, if your company owns a restaurant chain, you must obtain an FSSAI License.
• Tax Obligations of a Business for Franchise Business Registration:
Every business owner must comprehend the tax ramifications. Therefore, we request that you emphasize the same and comprehend the various tax regimes that apply to your business.
Bangladesh has a variety of taxes, ranging from customs duties to the Goods and Services Tax (GST), so it is essential to comprehend the tiers and be adequately prepared. You can determine the best way to minimize your tax burden at this time.
Additionally, the franchise’s human resources in Bangladesh are indispensable to its business operations. Consequently, you must be aware of the number of employees required to support the operation. To ensure a smooth hiring process, you, as the owner, must familiarize yourself with the responsibilities of the staff.
Subsidiary Company Registration
|SUBSIDIARY COMPANY||SHARE HOLDING||NOMINEE DIRECTOR|
|PARENT COMPANY (FOREIGN)||MAJORITY UP TO 100%||2 DIRECTORS|
|LLC||FOREIGN: 99%, LOCAL: 1% ( |
|1 DIRECTOR FROM PARENT AND 1 DIRECTOR FROM LOCAL COMPANY|
|PARENT COMPANY||HOLD 100% SHARES||APPOINT 1 REPRESENTATIVE ON BEHALF OF BANGLADESH COMPANY|
Are you intending to do Franchise Business Registration in Bangladesh?
The legal team of Tahmidur Rahman, The Law Firm in Bangladesh: TRW, The Law Firm in Bangladesh are highly experienced in providing all kinds of services related to Franchise Business Registration in Bangladesh. For queries or legal assistance, please reach us at:
E-mail: [email protected]
Phone: +8801847220062 or +8801779127165 or +8801708080817
Address: House 410, Road 29, Mohakhali DOHS