Microfranchising
Encyclopedia
Microfranchising is a business model
that applies elements and concepts of traditional franchising
to small business
es 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 worlds 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 Organizations 2002 report indicates that 72 percent of Sub-Saharan Africas 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).
Business model
A business model describes the rationale of how an organization creates, delivers, and captures value...
that applies elements and concepts of traditional franchising
Franchising
Franchising is the practice of using another firm's successful business model. The word 'franchise' is of anglo-French derivation - from franc- meaning free, and is used both as a noun and as a verb....
to small business
Small business
A small business is a business that is privately owned and operated, with a small number of employees and relatively low volume of sales. Small businesses are normally privately owned corporations, partnerships, or sole proprietorships...
es in the developing world
Developing country
A developing country, also known as a less-developed country, is a nation with a low level of material well-being. Since no single definition of the term developing country is recognized internationally, the levels of development may vary widely within so-called developing countries...
. 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
Bottom of the pyramid
In economics, the bottom of the pyramid is the largest, but poorest socio-economic group. In global terms, this is the 2.5 billion people who live on less than $2.50 per day. The phrase “bottom of the pyramid” is used in particular by people developing new models of doing business that deliberately...
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
Microfinance
Microfinance is the provision of financial services to low-income clients or solidarity lending groups including consumers and the self-employed, who traditionally lack access to banking and related services....
and microcredit
Microcredit
Microcredit is the extension of very small loans to those in poverty designed to spur entrepreneurship. These individuals lack collateral, steady employment and a verifiable credit history and therefore cannot meet even the most minimal qualifications to gain access to traditional credit...
. 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
Jason Fairbourne
Jason Fairbourne is a pioneer in the field field of microfranchising, the founder of the Fairbourne Consulting Group, and is currently the Peery Fellow at the Ballard Center for Economic Self-Reliance at Brigham Young University’s Marriott School of Management...
, Steve Gibson, and other faculty and students at the Brigham Young University Marriott School of Management
Marriott School of Management
The Marriott School of Management is a business school located in Provo, Utah at Brigham Young University , a private university in the United States owned by The Church of Jesus Christ of Latter-day Saints...
--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 worlds 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 Organizations 2002 report indicates that 72 percent of Sub-Saharan Africas 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
Grameenphone
Grameenphone , widely known as GP, is the leading telecommunications service provider in Bangladesh. With more than 32 million subscribers , Grameenphone is the largest cellular operator in the country...
, CFW -The Healthstore Foundation (Kenya), VisionSpring (reading glasses, formerly Scojo Foundation), Drishtee
Drishtee
Drishtee is an India based business that provides information technology goods and services to rural India through village kiosks that are run and managed by local entrepreneurs...
ICT Kiosks (India), Reach India, Living Goods (Uganda), Healthkeepers (Ghana), and Fan Milk Limited
Fan Milk Limited
Fan Milk Nigeria Plc was founded in 1960 by a Danish Merchant and Industrialist Erik Emborg with a recombination-plant at Ibadan, a distribution centre in Lagos with less than 30 employees....
(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