Franchise Agreement

A Franchise Agreement is the contract by which the owner of a brand and business system (the franchisor) licenses a franchisee to operate one or more outlets using that brand, format, recipes, software and operating manual, in return for an upfront franchise fee and ongoing royalties. Bangladesh has seen fast franchise growth in F&B, retail, education and fitness, most commonly using cross-border franchise structures out of the UAE, India, Malaysia and Turkey. There is no dedicated Franchise Act in Bangladesh; the contract sits on the Contract Act, 1872, the Trademarks Act, 2009 (for the licensed marks), the Copyright Act, 2000 (for the operating manual and marketing materials) and the Foreign Exchange Regulation Act, 1947 (for outbound royalty and technical-fee remittances, which need Bangladesh Bank clearance). A good franchise agreement gives the franchisor the quality-control levers to protect the brand and gives the franchisee enough territorial exclusivity and support to make the outlet viable.

Stamp & registrationThe Franchise Agreement is executed on non-judicial stamp paper (Tk. 2,000 or higher depending on fees) with witnesses. Cross-border franchise arrangements need Bangladesh Bank permission before any royalty, franchise fee or technical-service fee can be remitted out — under current guidelines, royalty and technical-service fees are subject to sector-specific ceilings and require prior approval where the ceilings are exceeded. Register the licensed trade marks in the franchisee's use with the Department of Patents, Designs & Trademarks (DPDT) under the Trademarks Act, 2009 so that infringement action inside Bangladesh is straightforward.

What this agreement typically contains

Identity of franchisor and franchisee, and any local sub-franchisor
Grant of licence — marks, brand, system, manuals, software
Territory, exclusivity and the number of outlets permitted
Term (initial + renewal) and renewal conditions
Upfront franchise fee and ongoing royalty (% of gross sales) and advertising contribution
Franchisor's training, support and supply obligations
Franchisee's operational obligations — location, fit-out, staffing, hours, quality standards
Approved suppliers and price controls
Reporting, audit rights and technology / POS integration
Confidentiality, non-compete and post-termination restrictions
Termination triggers, cure period and handover on exit (de-identification)
Governing law, dispute resolution, and Bangladesh Bank / DPDT compliance

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Frequently asked questions

Is there a specific Franchise Law in Bangladesh?: No — there is no dedicated Franchise Act. A franchise arrangement in Bangladesh is governed by the general Contract Act, 1872 supplemented by the Trademarks Act, 2009 (for the brand licence), the Copyright Act, 2000 (for manuals, recipes and marketing materials), the Foreign Exchange Regulation Act, 1947 read with Bangladesh Bank guidelines (for royalty and fee remittances abroad), and consumer-protection and tax laws for the outlet itself. Because there is no franchise-specific statute, everything the franchisor and franchisee need — disclosure, territory, quality control, exit — has to be written into the contract itself.
Can I remit royalty payments to a foreign franchisor?: Yes but only through the banking channel after Bangladesh Bank clearance. Under the Foreign Exchange Regulation Act, 1947 and the current Guidelines for Foreign Exchange Transactions, royalty and technical-service fee remittances are subject to sector-specific ceilings; payments within the ceilings can be remitted through an authorised dealer bank on production of the franchise agreement, invoice and tax certificates, and payments above the ceiling need prior Bangladesh Bank approval. Build the remittance process into the agreement itself, and confirm the current ceiling for your sector before signing.
What happens to the outlet on termination of the franchise?: The agreement must specify a full de-identification: the franchisee has to remove all signage, logos, uniforms, menus, POS software, manuals and confidential materials, and typically cannot operate a competing outlet at the same location or within a defined territory for a specified period. Good agreements also give the franchisor a right of first refusal to buy the outlet's assets at a fair valuation. Without these clauses the franchisor's brand can be damaged after termination, and the franchisee can lose the goodwill it has built up — losses on both sides that are entirely avoidable by drafting.

Other contracts in this category

What this agreement typically contains

Identity of franchisor and franchisee, and any local sub-franchisor

Grant of licence — marks, brand, system, manuals, software

Territory, exclusivity and the number of outlets permitted

Term (initial + renewal) and renewal conditions

Upfront franchise fee and ongoing royalty (% of gross sales) and advertising contribution

Franchisor's training, support and supply obligations

Franchisee's operational obligations — location, fit-out, staffing, hours, quality standards

Approved suppliers and price controls

Reporting, audit rights and technology / POS integration

Confidentiality, non-compete and post-termination restrictions

Termination triggers, cure period and handover on exit (de-identification)

Governing law, dispute resolution, and Bangladesh Bank / DPDT compliance

Frequently asked questions

Is there a specific Franchise Law in Bangladesh?

No — there is no dedicated Franchise Act. A franchise arrangement in Bangladesh is governed by the general Contract Act, 1872 supplemented by the Trademarks Act, 2009 (for the brand licence), the Copyright Act, 2000 (for manuals, recipes and marketing materials), the Foreign Exchange Regulation Act, 1947 read with Bangladesh Bank guidelines (for royalty and fee remittances abroad), and consumer-protection and tax laws for the outlet itself. Because there is no franchise-specific statute, everything the franchisor and franchisee need — disclosure, territory, quality control, exit — has to be written into the contract itself.

Can I remit royalty payments to a foreign franchisor?

Yes but only through the banking channel after Bangladesh Bank clearance. Under the Foreign Exchange Regulation Act, 1947 and the current Guidelines for Foreign Exchange Transactions, royalty and technical-service fee remittances are subject to sector-specific ceilings; payments within the ceilings can be remitted through an authorised dealer bank on production of the franchise agreement, invoice and tax certificates, and payments above the ceiling need prior Bangladesh Bank approval. Build the remittance process into the agreement itself, and confirm the current ceiling for your sector before signing.

What happens to the outlet on termination of the franchise?

The agreement must specify a full de-identification: the franchisee has to remove all signage, logos, uniforms, menus, POS software, manuals and confidential materials, and typically cannot operate a competing outlet at the same location or within a defined territory for a specified period. Good agreements also give the franchisor a right of first refusal to buy the outlet's assets at a fair valuation. Without these clauses the franchisor's brand can be damaged after termination, and the franchisee can lose the goodwill it has built up — losses on both sides that are entirely avoidable by drafting.