Sri Lanka’s Lanka Sathosa to adopt franchise model in restructuring push

ECONOMYNEXT — Sri Lanka’s state-run retail chain Lanka Sathosa plans to adopt a franchise model to sell goods under its brand name as part of a wider restructuring drive, Trade Minister Wasantha Samarasinghe said.

Speaking in parliament, Samarasinghe said Sathosa had accumulated 24 billion rupees in losses and owed 14 billion rupees to suppliers, with over 200 of its retail outlets operating at a loss. To turn the network around, the government is closing non-viable branches, upgrading 100 shops, and moving toward a franchise system supported by better supply chains.

“While restructuring 100 branches, we must establish a system to move into a franchise model and sell goods under the Sathosa brand name,” Samarasinghe told the House.

He noted that implementing the model requires modern storage facilities, pointing out that a proposal has been submitted to the budget for an upgraded warehouse in Welisara. The government has also sought 2.5 billion rupees from state banks to address working capital and inventory challenges.

Lawmaker Ravi Karunanayake endorsed the shift, urging the government to franchise hundreds of retail outlets to end working capital shortages. Karunanayake cautioned against centralized warehousing, warning that holding heavy inventory leads to pilferage and erodes thin supermarket margins.

“The franchise model is correct. Please give 424 outlets on a franchise basis or take supplier credit, and then you will not face a working capital issue,” Karunanayake said.

Samarasinghe responded that the government is considering constructive ideas to fix warehousing and distribution, but rejected calls to hand over state operations entirely to private supermarket conglomerates. (Colombo/Oct7/2026)