Full Answer
What is micro-franchising?
Micro-Franchising is defined as "a small business whose start up costs are minimal and whose concepts and operations are easily replicated” (Fairbourne et. al, 2006). Micro-Franchising is used to increase access to business opportunities that enable people to lift themselves out of poverty.
What are social and micro franchising?
Definitions: What are Social and Micro Franchising? Social Franchising is defined as “the application of commercial franchising methods and concepts to achieve socially beneficial ends” (International Franchise Association’s Social Sector Task Force, 2014).
Is franchising more than just a business model?
But franchising might be more than just a successful business model: it could be a successful development model, too. How so?
What are micro-franchises doing in Africa?
Living Goods, a micro-franchise based in Uganda, brings sanitary pads, diapers, basic antibiotics, soap, and vitamins to households at below-market prices. In Ghana, micro-franchisees from Fan Milk Ltd. are peddling dairy and milk products to remote areas on bicycles.
Why is micro franchising important?
Micro-Franchising is used to increase access to business opportunities that enable people to lift themselves out of poverty. Its primary purpose is economic development and unlike social franchising, it is not necessary that the business being franchised deliver crucial services or products to the consumer.
What is social franchising?
Social Franchising is used to increase access to products and services across a range of socially oriented industries (e. g., education, health, agriculture, water, sanitation, clean energy), with its target market being underserved populations in low, medium, and high-income countries around the globe. Providing access to critical socially ...
Do you have further questions about social franchising?
MSA can provide guidance on developing a successful and sustainable social franchise system.
What is franchising based on?
Franchising is founded on the principle of building a common brand. If you are not building a brand, you are not building a franchise. Don’t underestimate how long and how much money it takes to do that. In the long run, the brand will be key to growing and replicating the micro-franchise at scale. Brand standards need to be clearly defined (the negotiables and non-negotiables), and the consequence of non-adherence must be clearly stated. To continue to provide the extensive support that micro-franchisees require and make the business sustainable for the franchisor, the franchise fees will be essential. If franchisees don’t value the brand, they will be reluctant to pay those fees and unlikely to adhere to brand standards.
Why is franchise important?
It also provides very strong support systems – operational, financial and emotional – to franchisees, which is important, as they might have low self-esteem, which means self-doubt creeps in quickly and regularly.
How to support a franchisee?
The most important element is to ensure you have the capacity and money to support the franchisee once they are operational. Don’t overload the franchisee with weeks and weeks of training upfront and expect them to then run with it. Support needs to be provided regularly (at least weekly, initially) and it must be done in three ways. The first is operational, which means ensuring processes are followed correctly and brand standards are maintained. The second is financial: franchisees will typically not know how to manage money, so they will need help. And finally, franchisees will need emotional support. They'll need all the tools necessary to build self-esteem and navigate the many challenges they will face in their personal and business lives.
How successful is franchising in South Africa?
The numbers speak for themselves: in South Africa, up to 90% of independent start-up businesses fail, compared to just 10% in franchising.
What skills do franchisees need?
They will most likely have limited education, no former business experience, limited resources and few role models. They will likely lack self-esteem, be scared of failure and give up easily. They will most certainly lack medium and long-term planning skills and might struggle with money management. The “business in a box” and recipe you develop must take this into account. The business model needs to be simple – it must have as few steps as possible and require low technical skills (operationally and financially).
What is the strength of franchises?
In fact, that's the strength of franchises: they have a proven business model and system. This offers franchisees a roadmap covering everything from access to supply chains, equipment and products, to routes to market, marketing and brand awareness, all of which have been pre-defined and refined by the franchisor.
Do entrepreneurs need to develop microfranchise models?
Entrepreneurs have unique ideas, and have researched, developed, tested and implemented new micro-franchise models. They are normally highly experienced in a particular industry. Micro-franchise business models should not be developed by development practitioners or the poor themselves. Development practitioners might have a good understanding of the market but they are unlikely to be entrepreneurs themselves. Partner with industry experts. Normal business principles need to be used in designing the business model for them to be sustainable.