Microfranchising

Microfranchising is a business model that applies elements and concepts of traditional franchising to small businesses in the developing world. It refers to the systemization and replication of micro-enterprises. Microfranchising is broadly defined as small businesses that can easily be replicated by following proven marketing and operational concepts. The overall objective of microfranchising is to promote economic development by developing sound business models that can be replicated by entrepreneurs at the base of the socio-economic pyramid (bottom of the pyramid or BoP); therefore, helping to solve the "necessity entrepreneur" dilemma by providing job opportunities to those who lack fundamental entrepreneurial skills. The key principles are replication, sustainability, and social impact.

Microfranchising is an innovative, new development tool that follows in the footsteps of microfinance and microcredit. The impetus behind the idea is to provide sound business opportunities and services to the poor by introducing scaled-down business concepts found in successful franchise organizations. Microfranchising attempts to solve the dilemma of the "necessity entrepreneur" by providing job opportunities to those who lack fundamental entrepreneurial skills.

The current Microfranchising movement was largely pioneered by Jason Fairbourne, Steve Gibson, and other faculty and students at the Brigham Young University Marriott School of Management--who have also been involved in microcredit, microfinance, and other microenterprise development activities.

There is a lack of employment opportunities in developing countries leaving nearly one half of the world’s population (3 billion people) living in acute poverty (living on less than two dollars a day). Therefore, many people have no choice but to start microenterprises in order to survive. The International Labor Organization’s 2002 report indicates that 72 percent of Sub-Saharan Africa’s population operates within the informal sector, eking out a hand-to-mouth survival. In Latin America 51 percent operate within the informal economy, and 65 percent in Asia. Furthermore, many of the small businesses operated by people in developing countries fail or exist on subsistence levels, leaving hundreds of millions in poverty. MicroFranchising is a new tool designed specifically to assist these entrepreneurs to become more successful and reach economic self-reliance, through the provision of successful business models with the necessary initial and on-going training needed to succeed.

Examples of microfranchises include: Village Phone Program by Grameenphone, CFW -The Healthstore Foundation (Kenya), VisionSpring (reading glasses, formerly Scojo Foundation), Drishtee ICT Kiosks (India), Reach India, Living Goods (Uganda), Healthkeepers (Ghana), and Fan Milk Limited (Ghana).

Literature

• Felder-Kuzu, Naoko: Kleiner Einsatz, große Wirkung. Mikrofinanzierung und Mikrofranchising – Modelle gegen die Armut. rüffer & rub, Zürich 2008, ISBN 978-3-907625-40-8
• Fairbourne, Jason S., Gibson, Stephen W. & Gibb, W.: MicroFranchising: Creating Wealth at the Bottom of the Pyramid. Edward Elgar Pub, 2008, ISBN 978-1848440531
• Fairbourne, Jason, ‘Microfranchising’, Marriott Alumni Magazine, Summer 2007, Marriott School, Brigham Young University, at http://marriottschool.byu.edu/marriottmag/summer07/features/atwork1.cfm (accessed May 15, 2008)
• Oduor J, et al (2009), 'Evaluating the impacts of Microfranschising the Distribution of Malaria Effectiveness in Kenya on Malaria Morbidity and Mortaliry', Journal of Development Effectiveness, vol 1 no. 3 372-384