MicroFranchising expands its scope worldwide
The investment community, governments and local entrepreneurs each seem to be lining up to support business growth as a way to economic stability. This is particularly important in many of the least developed countries of the world, where slight improvements in business development are creating very positive impacts. One idea that is gaining momentum in this space is the concept of microfranchising. This idea takes a large and well-proven business development concept and moves it to a smaller and sustainable scale.
This past week the African Development Bank announced it was joining other funding organizations in supporting SME (small and medium enterprise) creation. The trend toward micro and mid-size business creation systems is moving forward on every continent where poverty has an impact. The key to the ultimate success of these initiatives may lie in the word “system”, a word very familiar to franchising. Indeed it is the systems that have given franchising its strength within developed nations.
The benefit of these supportive entrepreneurial programs is that many come with a business system that improves their success rate. The system provides the fledgling SME with a proven set of processes that include appropriate training, marketing, purchasing power and the financial back-up. These and more have worked well for franchises in the industrialized world.
One successful example of this process can be found in Fan Milk, a business system/microfranchise in Ghana that it is now the leading supplier of ice cream with over $72 million in revenue. But even beyond the impressive sales numbers is the fact that 10,000 SME’s have been created to provide jobs and economic strength to the country. The Fan Milk business opportunity fills an important niche in the food supply chain for the country and builds economic security at the same time.
Microfranchising involves designing business models for the poor to be profitable for the business owner and sustainable in the marketplace. Jason Fairbourne, a thought leader in microfranchising has written that: “We recognize a distinct difference between being an entrepreneur and a business owner and use a microfranchise model to create business opportunities that a wide variety of individuals can operate”. Franchising uses business systems that can be repeated by a larger group of prospective operators and can make a greater impact in a region.
Another important factor in the success of microfranchising is that the business model must fill an important need in the country for which it serves. It must find a niche within a supply chain and then ether offer a better price, better value or a better quality than other solutions. Experts in this space suggest that some great ideas might not fit into the poorest economies and should not be considered.
CementTrust is suggesting that improving the concrete supply chain in places like Haiti, might present some microfranchise opportunities. We ask: Could a ready-mix supplier be established in a local Haitian community and make a reasonable living from the profits of selling concrete? Could concrete production or block making be turned into a business system that would fit with the microfranchise model?
We will continue to explore this possibility and would love to hear your thoughts on this idea.