Franchising in Sri Lanka

22 August, 2020

As I have said in the many presentations I have made in the last 30 years (I have spoken in 47 nations in over 300 occasions) concerning franchising, it – franchising — will spread like a wild fire and more and more countries will embrace it..; now all the more quicker, with social media being so prevalent and ‘invasive’ in every corner of the world. Other factors for the ‘rapid infection’ include budget travels, media (the internet, Nexflix, etc.) and the common aspiration of young people wanting more choices, and catching up with the life styles of their peers in other nations.

Indeed, having realized the benefits of economic growth and high employment, many governments around the world including Asia have stepped up efforts to encourage franchising. On the other hand, Asian companies are increasingly appreciating the beauty of the franchising model, which combines the management and brand strengths of an established corporate entity with the vigor and dedication of entrepreneurs, as a viable vehicle to expand their business, both locally and internationally.

Very fortunately, out of a few deals brokered successfully last year by our company, one was an Italian cuisine franchise based in Singapore which we brought to Bangladesh. And we are in the midst of (at the point of writing this article) match-making a few franchise concepts to several groups of businessmen in different parts of Asia. The economies in South Asia show good prospect, and I see a lot of potential for franchising there.

But I want to focus on Sri Lanka in this article. My team and I had the good fortune to develop the franchise package for Tea Avenue three years ago. It has grown into four outlets in Sri Lanka and has franchised into Vietnam last year.

Top international brands like McDonald’s, KFC and Pizza Hut were the earliest to enter Sri Lanka. The world’s largest submarine sandwich chain, Subway officially opened its first store in Sri Lanka in 2014 and announced they would provide the opportunity for local entrepreneurs to open outlets under the franchise to rapidly grow its chain of stores throughout the country.

At the time of writing this article, there are already 70 Subway stores in Sri Lanka.

Thanks to the proximity (geographically and to some extent, culturally) factor, a number of Indian companies have made forays into this nation. India’s Jubilant FoodWorks Limited (JFL) operates Domino’s Pizza brand with the exclusive rights for India, Nepal, Bangladesh and Sri Lanka. It opened its first Domino’s Pizza store in Colombo in 2011, and it now has more than 20 stores, with plans to launch more such stores in the future. Another Indian company is CADD Centre, an IT and computer-related education brand. It currently has nine centers.

The Sri Lankan franchise market is expected to boom some more because of the formation of the Ministry of Megapolis and Western Development. This government entity is expected to engender a gradual increase in foreign investments. This scenario has created exciting opportunities for all franchisor players.

In the absence of sector-specific regulations, the local franchising business is governed by commercial laws like Exchange Control Act, the Intellectual Property edicts and possibly the Unfair Contract Terms Act. The reader is advised to seek proper professional advice and not rely on the writer’s third-hand information.

Quite naturally, the food & beverages sector will be the most vibrant, followed by education, beauty and health related, and then others like retail, fitness, travel…

In fact, the writer, having been in franchise consulting for 31 years now, will send his team back to Colombo as soon as the pandemic is ‘over” to help a local seafood restaurant build its franchise package. And more such projects are expected to come on board in the near future.

I am bullish about franchising in Sri Lanka. I am certain that the local government, having seen the success of franchising in many nations, will agree that franchising contributes positively to the national economy. It engenders innovation and competitiveness, in addition to higher employment (both in the form of entrepreneurs and workers). The increased participation from various stakeholders such as the government, investors and local and international companies will fuel the strong and healthy development of franchising in Sri Lanka.

I look forward to the formation of a national franchise association here which will join the Asia Pacific Franchise Confederation as a member, and participate actively in the franchising activities in the region.

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