Franchise Law in Bangladesh (2025): A TRW Law Firm Playbook for Franchisors & Franchisees

Prepared by TRW — Tahmidur Rahman Remura Wahid, Bangladesh’s cross-border law firm for market entry, brand expansion, and long-term compliance.

Executive snapshot

Bangladesh has no single, dedicated “Franchise Act.” Franchising here runs on a pragmatic blend of contract law, intellectual property law (especially trademarks), competition law, foreign-exchange control, tax & VAT, and consumer protection. That’s not a hurdle—it’s an opportunity to craft agreements with precision. Done right, you can protect brand equity, repatriate fees, and scale responsibly in one of South Asia’s most dynamic consumer markets. Done wrong, you risk blocked remittances, unenforceable non-competes, price-fixing pitfalls, and trademark erosion.

This guide gives you the Bangladesh-specific rules of the road: how to structure a franchise, what to put in your agreement, how to safeguard IP and quality control, how to move money compliantly, what taxes/VAT to expect, and the operational checklists our clients use to open on time without surprises.

1) Bangladesh’s legal architecture for franchising

1.1 No dedicated “Franchise Act”—so what governs?

There is no stand-alone franchising statute in Bangladesh. Franchises are built and policed through contracts—anchored by the Contract Act, 1872—and complemented by IP law (trademark licensing and enforcement), competition law (vertical restraints, exclusivities), consumer-protection norms, and tax/foreign-exchange rules. Government and industry sources explicitly note the absence of a specific franchise law; in practice, agreements set disclosure, training, territory, quality control, and audit standards themselves. (Trade.gov)

1.2 The core “pillars” you will rely on

• Contract law (offer/acceptance, consideration, misrepresentation, breach, damages, injunctions).
• Trademarks Act 2009 for registrations, oppositions, and enforcement against infringers; licensing/quality control practices are crucial to avoid naked licensing. (Bangladesh Laws)
• Competition Act 2012 for vertical restraints (exclusive territories, exclusive supply, and resale price maintenance (RPM) scrutiny), plus abuse-of-dominance considerations as the network grows. (Department of Printing and Publications)
• Foreign-exchange control under Bangladesh Bank’s Guidelines for Foreign Exchange Transactions (GFET) to remit royalties, franchise fees, and service charges through authorized dealers (AD banks). (BB)
• Tax & VAT under the Income Tax Act 2023 and VAT & SD Act 2012 for withholding on royalties/technical service fee, VAT on local supplies, and documentary compliance.
• Consumer Rights Protection Act 2009 and general product liability norms for labeling, pricing transparency, and remedies.

Because franchising intersects all these areas, the contract is not just a commercial document; it is your compliance blueprint.

2) Choosing your route to market

2.1 Master franchise vs. single-unit franchise

• Master franchise: One local partner gets development rights for a territory (e.g., Bangladesh nationwide), with rights to sub-franchise. Pros: faster scale, local know-how, single relationship to manage. Cons: control leakage if sub-franchise supervision is weak; regulatory/FX complexity at scale.
• Single-unit franchise: Tighter control, slower rollout. Useful to test product-market fit or for high-complexity formats (e.g., healthcare, specialty F\&B).
• Area development agreement (ADA): In-between model—no sub-franchising; local partner commits to open X units by set dates with development benchmarks (capex, training, locations).

TRW tip: In Bangladesh, we often begin with an ADA or pilot unit before expanding to master. It buys time to obtain permits, nail the supply chain, and settle menu/formulation localization with the regulator (including halal/labeling where relevant).

2.2 Branch vs. company vs. JV as the contracting entity

• Local company: The most bankable counterparty for leases, payroll, and VAT; easy to scale, clean exit via share transfer.
• Foreign branch: Useful if the franchisor wants direct local presence but can be clunkier for leases and HR.
• JV: Can combine brand IP with local operating muscle; governance must be tight (reserved matters, data access, capex approvals).

The franchise agreement itself can be signed by an offshore entity, but the operating entity carrying day-to-day obligations, VAT, and payroll typically sits in Bangladesh. Choose deliberately.

3) Intellectual property: guard the brand before you grant the brand

3.1 Register first, then license

Register core trademarks (word, device, trade dress elements if protectable) in the relevant Nice classes for goods/services; include local transliterations if customers will use a Bangla name. Registration under the Trademarks Act 2009 strengthens enforcement, border measures, and deters squatters. (Bangladesh Laws)

3.2 Quality control and “registered user” practice

A franchise is a trademark license with strict quality control. Your agreement should require compliance with brand standards manuals, ingredient/specification lists, uniforms, store layouts, and marketing guidelines. Keep contemporaneous inspection reports and training logs. Where appropriate, consider recording a registered user/licensee with the Registrar—this can bolster enforceability and demonstrates control.

3.3 Trade secrets & know-how

Bangladesh has no dedicated trade-secrets statute; protect know-how through NDAs, confidentiality, data-security, and IP return provisions, plus staff training clauses (and franchisee staff NDAs). Limit access via role-based permissions, watermark manuals, and retrieve credentials immediately on termination.

3.4 IP enforcement plan

Maintain a watch for confusingly similar marks, look-alike store designs, and unauthorized social media pages. Include franchisee assistance obligations for enforcement (evidence sharing, declarations), and a clear infringer escalation ladder (cease-and-desist, raid, civil suit, customs recordation, police complaint).

4) Competition law and vertical restraints

The Competition Act 2012 prohibits anti-competitive agreements and abuse of dominance. In the franchise context:

• Exclusive territories: Common and often defensible if they enhance inter-brand competition and investment incentives. Draft with clear carve-outs (online sales, cross-border delivery) and performance criteria.
• Exclusive supply / tying: Permissible if objectively justified for quality consistency (e.g., proprietary sauces, certified equipment). Keep supplier lists and testing protocols so it’s quality-driven, not a profit-siphon.
• RPM (resale price maintenance): Avoid fixing retail prices. Use recommended retail price (RRP) or maximum retail price (MRP) only; incentivize compliance through marketing co-op support and training, not mandates.
• Information sharing: Guard against exchange of competitively sensitive information between rival franchisees; confine to aggregated benchmarking.

A well-documented pro-competitive rationale (quality, safety, investment in training, brand integrity) helps if the Commission asks questions. (Department of Printing and Publications)

5) Foreign exchange: moving money out (and in) the right way

Bangladesh is liberalizing, but outward remittances still follow the Bangladesh Bank’s GFET. In practice:

• What you can remit: Royalties, franchise fees, technical service fees, management fees, and marketing contributions are remittable through Authorized Dealer (AD) banks if the underlying agreement is compliant and documentation is in order.
• What banks look for:

1. Executed agreement (franchise/technical services) with fee schedules;
2. Evidence of service delivery (invoices, training logs, access to systems/manuals, inspection reports);
3. Tax clearance (withholding paid where applicable);
4. Board approvals/resolutions; and
5. Form TM and related GFET paperwork for the specific remittance bucket (commercial remittances).

• Bankability tip: Pre-clear the agreement with your AD bank; align fee language with GFET Chapter 10 (Commercial remittances) and specify exact fee types, calculation bases, payment cadence, and documentary evidence you will provide with each remittance. (BB)

If you plan sub-franchising, build a transparent flow—sub-franchisees pay the master; the master pays the offshore franchisor—with audit trails and matching evidence to avoid holdups.

6) Taxes & VAT: what to expect (headline issues, not advice)

• Corporate income tax (CIT): Franchisees are local taxpayers; plan your operating margin after minimum tax on gross receipts (a floor that can bind low-margin distributors).
• Withholding tax: Royalties and technical service fees paid to non-residents are typically subject to withholding at source under the Income Tax Act—rates vary; double-tax treaties can reduce them. Build gross-up and tax cooperation clauses.
• VAT: Local supplies (goods/services) are generally subject to VAT; cash-flow planning around VAT deducted at source (VDS), input tax credit windows, and Mushak documentation matters.
• Customs: For proprietary equipment or pre-mixes, model duty/VAT/SD and test whether bonded warehouse or exemption SROs apply.

A clean tax-routing diagram (who invoices whom, for what, with what proof) is the fastest way to avoid blocked remittances and month-end reconciliation shocks.

7) The franchise agreement: Bangladesh-tuned clause checklist

Below is the clause set TRW anchors in Bangladesh-facing franchise agreements (for inbound brands and outbound Bangladeshi franchisors alike).

1. Grant & territory

• Precise territory (districts/cities or nationwide), channels covered (dine-in, delivery, e-commerce, marketplaces, dark kitchens), and online sales rules.
• Performance milestones with cure periods and conversion to non-exclusive if missed.

1. Term & renewal

• Initial term aligned to amortize capex; renewal tied to KPI compliance and store refresh.

1. Fees

• Initial fee (phased or tied to development schedule); ongoing royalty (sales-based, net of VAT returns/VDS).
• Marketing fund contributions (local vs. global); clear escrow mechanics if needed.

1. Quality & brand standards

• Manuals (version-controlled), inspections, training completion as condition precedent to opening.
• Approved suppliers and local-equivalent testing protocols.

1. Data & reporting

• POS integrations and sales reports; data ownership and privacy; cloud access for audits.

1. IP

• Trademark license scope, no challenge covenant, social-handle control, domain rules, IP return at exit.

1. Supply chain

• Import permissions (halal/food safety where applicable), Shelf-life/cold chain, customs documentation, and local substitutions.

1. Employment & training

• Minimum staffing, manager certification, and refresher training cadence.

1. Pricing & promotions

• No RPM—use RRP/MRP framing and promotional calendars. Build performance-based marketing support, not price mandates (competition law safe harbor mindset).

1. Compliance & integrity
   • Anti-bribery, sanctions, export controls (for tech/brand), accurate records, cooperation with audits.
2. Insurance & risk
   • Public liability, product liability, workers’ compensation, and business interruption where prudent.
3. Termination & de-branding
   • Clear material breach events; post-termination obligations (de-signage, inventory handling, data/IP return), non-solicit of staff/customers, and transition assistance for live orders.
4. Disputes
   • Arbitration (seat/law) or local courts; interim relief carve-out for IP/brand protection; enforcement planning with New York Convention awareness.
5. Foreign exchange
   • Bank-friendly remittance annex: fee table, documents to accompany each remittance (invoice + training/inspection proof + tax payment evidence + Form TM, etc.).
6. Public communications
   • PR approvals, influencer guidelines, crisis comms, and recall/incident protocols.

8) Pre-entry diligence for franchisors (what to check before you sign)

• Trademark availability: Full search & filing; consider transliteration marks.
• Regulatory friction: Food safety (labels/additives), halal certification, health permits, import restrictions on ingredients/equipment.
• Bank readiness: AD bank’s position on royalties/tech service fees; obtain a written comfort that your fee model is remittable with listed documents (many banks will outline the practical checklist). (BB)
• Tax preview: Simulate WHT on royalties/fees and VAT on local supplies; check if treaty relief applies.
• Landlord terms: Anchor tenant rights, fit-out timelines, signage, e-vehicle delivery bays if you run dark stores.
• Delivery platforms: Aggregator contracts, exclusivity risks, and data access clauses.
• Supply chain: Import lead times, cold chain, substitution ingredients and supplier certification.
• Pilot: One or two units to stabilize SOPs before master rollout.

9) Pre-entry diligence for franchisees (what to demand from the brand)

• Unit economics: Realistic COGS, labor, rent, utilities; test sensitivity to VAT/VDS and minimum tax floor.
• Support reality: Training depth, site selection help, opening team presence, and marketing.
• Supply risk: Who bears import delays? Are there buffer stocks?
• Tech stack: POS licensing fees, uptime SLAs, data ownership, and integration costs.
• Exit & renewal: Transfer rights, right of first refusal on territory changes, and fair renewal standards.
• Local tailoring: Menu or assortment localization, price ladders, and festival promotions.

10) Opening timeline (illustrative, unit model)

Weeks 0–4 — Commercial MoU, trademark filings, draft franchise & technical services agreements, bank pre-clearance on remittance wording.
Weeks 5–8 — Entity/bank/VAT registrations; site selection; landlord LOI.
Weeks 9–12 — Final lease; import approvals; equipment orders; staff hiring; training schedule; manuals localized.
Weeks 13–16 — Fit-out; POS integration; brand standard inspections; soft-opening plan; Mushak & tax settings tested.
Week 17+ — Soft opening → formal launch; first royalty/marketing invoices; evidence pack for AD bank with Form TM and tax payment proofs for remittance.

11) Common mistakes we fix (and how to avoid them)

1. Unclear fee taxonomy. Banks struggle to classify “brand support” or “platform fee” if it isn’t named in GFET terms. Use royalty/technical service/management fee labels, with substance to match (training logs, inspection reports, receipts). (BB)
2. RPM exposure. A single sentence mandating retail price can trigger competition issues. Use RRP/MRP with non-coercive incentives. (Department of Printing and Publications)
3. Naked licensing risk. If you don’t actually monitor quality, you weaken the trademark and brand defense. Bake inspection, sampling, and corrective action into the agreement (and do them). (Bangladesh Laws)
4. VAT/VDS surprises. Invoices not Mushak-aligned, or returns missing VDS certificates, will choke cash-flow. Build the VAT data trail into your ERP from day one.
5. Weak de-branding. If exit steps are fuzzy, ex-franchisees linger online and offline. Specify timed takedowns, handle domain/handle transfers, and set liquidated damages for holdover.

12) Model risk allocations that work in Bangladesh

• Force majeure: Include port congestion, regulatory bans, and utility shortfalls; define extended force majeure remedies for prolonged import blocks.
• Currency risk: Quote royalties in USD, pay in BDT at AD bank’s telegraphic transfer (TT) rate on the remittance date; allow make-up or true-up mechanisms.
• Supply substitution: Pre-approve local suppliers contingent on lab testing and periodic audits; franchisor can withdraw approval if quality dips.
• Technology failures: If franchisor-provided POS goes down, specify manual fallback and SLA credits—not VAT non-compliance.
• Regulatory change: Split the impact: franchisor bears incremental costs tied to global brand mandates; franchisee bears country-specific taxes/permits changes, with price review triggers.

13) Disputes: pick your lane and plan enforcement

• Arbitration with a neutral seat (e.g., Singapore) is common, but evaluate local interim relief needs for IP and site access. If you arbitrate abroad, ensure the award will be enforceable swiftly in Bangladesh.
• Local courts may be preferable for injunctions against infringers or de-branding injunctions; keep evidence packs ready (inspection reports, photos, consumer confusion).
• Escalation ladder: senior-executive negotiation → mediation → arbitration/litigation; maintain the status quo in-store (quality and safety) until a tribunal orders otherwise.

14) Ethical growth: consumer protection and brand stewardship

Bangladesh’s consumer-protection regime expects accurate labeling, price transparency, and fair trade practices. Build a compliance culture: staff training on receipts, menu boards, allergen disclosures, and complaint handling. Running a diligent grievance loop is not just regulatory hygiene; it’s brand equity.

15) TRW’s franchise toolkits (what we deliver)

• Market-entry memo: marks, entity, tax/VAT, FX remittance mapping, and bank pre-clearance points.
• Bangladesh-tuned franchise suite: franchise agreement + development agreement + technical services + IP license + data & brand manuals + PR templates.
• FX & tax pack: invoice templates tied to GFET categories; remittance checklist; withholding/VAT guidance aligned to your exact fee design.
• Regulatory capture: food safety/halal labeling, equipment imports, and customs codes; playbooks for aggregator contracts.
• Litigation readiness: cease-and-desist templates, injunction briefs, raid coordination, and takedown notices.

Explore related guidance and schedule a consult at https://tahmidurrahman.com.

16) Frequently asked questions

Q1. Do I need a “franchise disclosure document (FDD)” by law?
No. Bangladesh does not prescribe a statutory FDD like the U.S. or some ASEAN states. Best practice: provide a disclosure annex covering litigation, bankruptcy, IP status, fees, estimated investment, training, and historic openings/closures. It reduces misrepresentation risk and helps banks review the file. (Trade.gov)

Q2. Can I fix retail prices to protect the brand?
Avoid hard RPM. You may publish RRP/MRP and run promotions, but don’t sanction franchisees for deviating. If you need consistency, use suggested pricing, quality audits, and marketing co-op levers. (Department of Printing and Publications)

Q3. Will banks let me repatriate royalties each month?
Yes—provided the agreement language aligns with GFET, withholding tax is paid, and you submit the evidence pack (invoice + service proof + tax chalan + Form TM). Many clients remit quarterly to reduce admin. Pre-clear with your AD bank. (BB)

Q4. Do I need to record the license with the Trademark Registry?
Not strictly mandatory for every case, but recording a licensed/registered user can strengthen enforcement optics. What matters most is real quality control tied to the licensed marks. (Bangladesh Laws)

Q5. What dispute forum should I choose?
If you need swift injunctions in Bangladesh (e.g., to stop a rogue ex-franchisee), local courts can be effective. For complex damages/accounting, arbitration with a neutral seat is common—ensure interim relief carve-outs.

17) One-page summary table

Closing note & contact

Franchising in Bangladesh rewards clarity. Your agreement should read like a runbook—from branding to bank files. When the legal architecture is contract-driven, precision upfront saves months of firefighting later.

If you’re planning an entry—or want a diagnostic of an existing network—TRW can deliver a bank-ready franchise pack, including the FX/tax annexes that keep royalties flowing.

TRW — Tahmidur Rahman Remura (TRW Law Firm)
Dhaka: House 410, Road 29, Mohakhali DOHS
Dubai: Rolex Building, L-12, Sheikh Zayed Road
Phone: +8801708000660, +8801847220062, +8801708080817
Email: info@trfirm.com | info@trwbd.com | info@tahmidur.com

References

1. U.S. Dept. of Commerce, Trade.gov — “Bangladesh Franchising Sector.” Confirms no specific franchising law; notes contractual basis of franchises. (Trade.gov)
2. Trademarks Act, 2009 (Bangladesh). Primary statute for brand protection and enforcement. (Bangladesh Laws)
3. Bangladesh Bank — GFET (2018), Chapter 10 “Commercial Remittances.” Procedural backbone for remitting royalties/fees via AD banks. (BB)