The Quick Resource Guide to Microfranchising
Authors: David Lehr & Lisa Jones Christensen Kenan-Flagler Business School, University of North Carolina at Chapel Hill Version: November, 2010 For those who want to learn more about Microfranchising (MFZ), this document lists resources available for getting up-to-speed. It includes a list of web sites, articles and a mix of very well-known and very obscure Microfranchising Organizations. It closes with some information on the types of models that are generally followed. Like any data source in a field that is rapidly growing, this guide is only a partial snapshot of the current state of the Microfranchising industry. This list also reflects the bias of the authors, so please update us on information that is new or lacking. Your suggestions on what else should be included would be greatly appreciated! Please email us at lehr.david@gmail.com or at lisa_jc@unc.edu.
Microfranchishing Web Resources There are lots of interesting links on microfranchising, most of which are not updated with any regularity. These are some of the ones that we follow: Brigham Young University, Ballard Center. From the website: Through the MicroFranchise Development Initiative we develop, enhance, teach, consult, and publish research conducted by students, faculty and practitioners. Thus, allowing individuals, other universities, NGO practitioners, governments, and multinational companies to propagate MicroFranchising, thereby improving the economic well-being of the poor throughout the world. http://marriottschool.byu.edu/selfreliance/microfranchise/about The International Franchise Association founded in 1960, is a membership organization of franchisors, franchisees, and suppliers. http://www.franchise.org/aboutifa.aspx iuMAP is a directory of BOP social enterprises. The site lists some recent work in microfranchising and also has many blog posts on microfranchising. http://iumap.org/directory/social-enterprises-by-sector/strategies/microconsignmentmicrofranchising/ iuMAP has also created an eBook from their blog posts on microfranchising. http://www.scribd.com/doc/37628659/Micro-Franchising-eBook
NextBillion.net is a website and blog bringing together the community of business leaders, social entrepreneurs, NGOs, policy makers and academics who want to explore the connection between development and enterprise. The URL below goes directly to the content on microfranchising. http://www.nextbillion.net/search?q=franchising&x=0&y=0
Lehr & Jones Christensen, Microfranchising Quick Guide, November, 2010
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Microfranchising Research Papers / Books A Good Business For Poor People, Stanford Social Innovation Review, David Lehr, Lisa Jones Christensen, Jason Fairbourne, Summer 2010. Most poor people start businesses because they have no other choice, not because they have a burning desire to become entrepreneurs. For these “necessity entrepreneurs,” microfranchising poses fewer risks and offers greater benefits than does creating a new business from scratch. http://www.ssireview.org/articles/entry/a_good_business_for_poor_people Building Entrepreneurship in Subsistence Markets: Microfranchising as an Employment Incubator, Lisa Jones Christensen, Helen Parsons, Jason Fairbourne, March, 2009. This research introduces microfranchising as a business model adaptation that helps low-income individuals overcome non credit-related barriers to entry in obtaining employment. http://qmss.columbia.edu/files_qmss/imce_shared/Parsons_2009.pdf Clinical Social Franchising Compendium: An Annual Survey of Programs, 2010, The Global Health Group, University of California, San Francisco, May 2010. The 2010 compendium features information and statistics on 40 social franchising programs from around the world. The 10 additional franchises included since the 2009 publication is a testament to the rapidly growing and changing field of social franchising in developing countries. http://globalhealthsciences.ucsf.edu/GHG/docs/Social-Franchising-Compendium2010.pdf Franchising in Frontier Markets, What‟s Working, What‟s Not, and Why, Dalberg Global Development Advisors, December 2009. From the website: Is franchising an underexploited business model in frontier markets? Could franchising be the “next big thing” in development? A summary version by Steve Beck, Wouter Deelder and Robin Miller, MIT Innovations, Winter 2010 is also available at: http://www.templeton.org/pdfs/press_releases/Winter%202010%20MIT%20Innovations %20-%20FiFM%20.pdf http://www.dalberg.com/PDFs/Frontiers_Markets_content_print_marks.pdf Microfranchising at the Base of the Pyramid, Acumen Fund Working Paper, David Lehr August, 2008. This paper introduces and explains the business models and lessons learned from Drishtee, VisionSpring (formerly Scojo) and HealthStore Foundation. http://www.acumenfund.org/uploads/assets/documents/Microfranchising_Working%20P aper_XoYB6sZ5.pdf Microfranchising: Creating Wealth at the Bottom of the Pyramid. Cheltenham, UK: Edward Elgar Publishing, 2007. Fairbourne, Jason S., Stephen W. Gibson, and W. Gibb Dyer Jr. This book brings together the ideas of researchers and social entrepreneurs at the heart of a movement to turn microfranchising into a mechanism for sustainable development. Next Billion Microfranchising Series e-book, Summer 2010. This ebook is a compilation of blog posts from the iuMap series on nextbillion.net, http://www.scribd.com/doc/37628659/Micro-Franchising-eBook, Lehr & Jones Christensen, Microfranchising Quick Guide, November, 2010
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Social Franchising - A Way of Systematic Replication to Increase Social Impact, The Association of German Foundations, Fleisch, Hans. Spring 2008. This publication offers both experts and practitioners a useful overview of the subject and “sets the ball in motion” for a wide-scale breakthrough of social franchising similar to that of social marketing. http://www.socialinnovationexchange.org/files/event/attachments/Social%20Franchising %20A%20Way%20of%20Systematic%20Replication%20to%20Increase%20Social%20Impa ct.pdf
Microfranchising Business Models There are a wide range of approaches to implementing microfranchising in terms of the business models and the overall objectives of the franchise. This section is adapted from the blog debate at: http://www.socialedge.org/discussions/business-models/microfranchising. The various business models include: Business in a Bag. Franchisees are given a sales kit and a supply of inventory and are generally mobile. Versions of this model are used by VisionSpring (www.visionspring.org), Community Enterprise Solutions (www.cesolutions.org), and Living Goods, as well as Fan Milk and most of the private direct sales companies. Infrastructure Model. The franchise is based around a specific piece of income-generating equipment either owned by the franchisor or paid off longterm by the franchisee. Examples include Sarvajal (www.sarvajal.com), which has franchisees sell pure water produced by village based filtration machines, and Nuru Energy(www.nurulight.com) whose franchisees sell rechargeable lights and operate a pedal powered charger. Conversion Model. The franchisees are existing independent businesses which become franchises by adopting set standards and branding, and are often given access to an improved supply chain. Other than Taxi Excel, some examples are Drishtee (www.drishtee.org) and the now-defunct CareShops Ghana (http://bit.ly/8ZUN6y). Agent Network Model. Franchisors have a business model based on a large number of agents. Examples are money transfer models like M-pesa (http://www.safaricom.co.ke/index.php?id=250), and Mobile Transactions (www.mtzl.net) whose clients want to send money to many different locations; and information collection models like Esoko (www.esoko.com) which aggregate information from many points across a coverage area. Paraskilling Model. Defined as such in the Monitor Group Report „Emerging Markets, Emerging Models‟(http://bit.ly/c8hVax). The franchisees are trained in a specific skillset normally only available from more expensive practitioners. An example is VisionSpring‟s training of franchisees to screen customers for reading glasses.
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Microfranchising Organizations- A Partially Annotated List Blue Star (sponsored by Social Marketing Company, SMC) www.smc-bd.org Bridge International Academies operates a franchise-like network of ultra low-cost, forprofit private schools, delivering high-quality education for less than $4 per student per month. http://www.bridgeinternationalacademies.com/Bridge/Home.html Cellular City www.cellularcity.com Child and Family Wellness (CFW) Shops (HealthStore Foundation) This network has provided for approximately 2,000,000 patient visits from low-income customers in Kenya seeking health care since its inception in 2000. To improve access to high quality essential drugs, basic healthcare and prevention services for children and their families in the developing world. Using a business format franchise model that maintains business and clinical standards, is geometrically scalable and achieves economies of scale. www.cfwshops.org Drishtee The organization's +8,000 franchisees reach more than 500,000 rural Indian residents with access to fast moving consumer goods. www.drishtee.com DMT Toilets http://www.dmttoilet.com/ Ecotact Limited, generates revenue through its IkoToilet franchises by providing access to high-quality, environmentally responsible sanitation facilities. IkoToilet franchise owners attract customers by offering other services like shoe shines, refreshments, and newspaper sales and then impressively uses biogas generators to convert the waste into fertilizer. The franchise plans to expand to serve over 200,000 new customers and employ over 2000 workers in the coming five years. www.ecotact.org EasySeva www.easyseva.com Excel Taxi Taxi Excel is the first franchised taxi business in Lima, Peru. Taxi Excel applies franchising to the taxi industry in order to improve and reengineer the service of public transportation in the country for the benefit of the taxi drivers and the general public. www.taxiexcel.com Fanmilk: http://www.fanmilk-gh.net/
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Grameen Village Phone Grameen has developed a model that "works as an owneroperated GSM payphone� whereby a borrower takes a $200 loan from Grameen Bank to subscribe to Grameenphone and is then trained on how to operate it and how to charge others to use it at a profit." There are now well over 255,000 Village Phones in operation in 55,000 villages throughout Bangladesh. http://www.grameeninfo.org/index.php?option=com_content&task=view&id=769&Itemid=738 Hapinoy Store program is a network of enterprises where Hapinoy Community Stores serve as distribution hubs for goods and services offered through the Program to its base of the pyramid target. To date, there are 150 Hapinoy Community Stores in 150 towns nationwide. Each store services an average of 70 smaller stores and grosses PhP 500,000 (approximately USD 10,000) a month, six months after joining the program. http://hapinoy.com/HAPINOY/featured_articles/health_care_hub.html Healthkeepers, Ghana is modeled after a door-to-door or party-based sales approach, in which a neighborhood woman becomes the local sales representative for a line of products. www.freedomfromhunger.org/programs/healthkeepers.php Healthpoint Services/E-health Points www.e-healthpoint.net Hippo Water Roller www.hipporoller.org Honeycare Africa: http://www.honeycareafrica.com IRC, Sierra Leone. Micro-franchising pilot project launched in February 2009. The project sought to provide self-employment opportunities for youth by facilitating franchise business relationships with existing companies that had products or services that could be distributed and sold independently by the youth. In addition to providing economic opportunities and skills for young people, the project was designed to contribute to the overall development of the private sector in Sierra Leone. http://innovationfair.spigit.com/Idea/View?ideaid=479 Living Goods Living Goods operates Avon-like networks of door-to-door Health Promoters who make a modest income selling essential health products at prices affordable to the poor. The model combines the latest and best practices from the fields of micro finance and public health to create a truly sustainable system for improving access to basic health products and defeating the diseases of poverty. www.livinggoods.org M-Pesa Agents, www.safaricom.co.ke Mi Farmacita Nacional http://www.corporativovirtual.com/mifarmacita/contenido.cfm?cont=INICIO
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Population Services International/Myanmar (PSI/M) launched Sun Quality Health (SQH), a network of private physicians established in 2001 they train and monitor on reproductive health, tuberculosis, pneumonia, diarrhea, malaria, and sexually transmitted infections. As of July 2010, PSI/M had 1,169 SQH providers in 169 out of Myanmarâ€&#x;s 325 townships, and 1,069 SPH providers in 45 townships. In each health area, PSI/M provides SQH members with training, patient education materials, promotion, access to products and supervision and monitoring. In return, the providers commmit to service standards and a price structure that offers them small margins but ensures that the services are affordable to even the lowest-income populations. http://globalhealthsciences.ucsf.edu/pdf/ghg-CaseStudy-Myanmar.pdf Project Shakti Hindustan Unilever Ltd. (HUL) is the Indian subsidiary of the multinational company Unilever. This Base of the Pyramid initiative is comprised of rural women, or Shakti Entrepreneurs (SE), who sell HUL products such as soap, toothpaste, and detergent, in their villages and nearby communities for a profit. As of 2010 there are more than 40,000 SEs covering over 100,000 villages throughout India. Members of the Shakti network penetrate and reach out to some of the most unfrequented corners of rural India. Project Shakti creates income generating capabilities by providing a sustainable micro-enterprise opportunity, and improves rural living standards through health and hygiene awareness. A typical SE conducts a steady business which gives her an income in excess of Rs.1,000 per month on a sustainable basis. The most crucial aspect Project Shakti is that it is a profitable channel for HUL and is thus proven to be commercially viable and fully self-sustaining. PT RUMA, In August of 2009, Grameen Foundation incubated and supported PT Rekan Usaha Mikro Anda (RUMA) is a social enterprise serving a financial and social mission by empowering the poor with profitable micro-franchise business solution to deliver products and services to underserved communities. In its first five months of operation, RUMA has deployed more than 1,600 micro-franchise businesses and is on track to reach sustainability in two years. Almost 70% of the businesses are owned and operated by micro-entrepreneurs earning less than $2.50 per day. Women operate more than 90% of the franchises and 100% are profitable. http://www.ruma.co.id/ RedPlan Salud (RPS) Redplan Salud is a program run by CATALYST and INPPARES in Peru supported by USAID that purchases contraceptives in bulk from pharmaceuticals, and recruits nurse-midwives and physicians, training them to become franchisees offering reproductive health drugs to poor communities. They serve 30,000 women (and their partners) living in five low-income districts of Lima: Comas, Los Olivos, Ate-Vitarte, San Juan de Lurigancho and Villa Maria del Triunfo. www.inppares.org/rps Sarvajal (Primal Water) Piramal was established in mid-2008 to find viable mass-market solutions to Indiaâ€&#x;s drinking water crisis. They are a for-profit business that has 120 franchisees today serving over 66,000 individuals. www.sarvajal.com Sehat First www.sehatfirst.com Lehr & Jones Christensen, Microfranchising Quick Guide, November, 2010
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Smiling Sun www.smilingsunhealth.com (sponsored by Chemonics) Solar Aid SolarAid works in rural areas across East and Southern Africa; installing solar on schools, community centres and clinics. Using a pioneering and innovative technique called microsolar, we train local entrepreneurs with sales and marketing techniques to manage their own businesses and generate independent income by selling our solar-powered SunnyMoney products. www.solar-aid.org ToughStuff, www.toughstuffonline.org VisionSpring empowers local entrepreneurs to launch their own businesses selling eyeglasses in their communities. Each "Vision Entrepreneur" receives his or her own Business in a Bag, a sales kit containing all the products and materials needed to market and sell eyeglasses. Vision Entrepreneurs undergo a three-day training in basic eye care and business management and receive close, ongoing support from staff. VisionSpring loans entrepreneurs the Business in a Bag itself. Vision Entrepreneurs repay VisionSpring for the glasses once they have been sold. www.visionspring.org Young Africa Young Africa runs three vibrant skills training centres: each department at the project is franchised to a local business. The teacher/entrepreneur trains students in a skill and incorporates them into the production process. Students get hands-on education, the enterpreneur makes profit and contributes part of that to YA. www.youngafrica.org/youngafrica/Home_EN/Mocambique
Lehr & Jones Christensen, Microfranchising Quick Guide, November, 2010
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