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Extending microfinance - Social franchising

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Extending Microfinance: Social Franchising Valerie Hackl, June 20, 2009
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Page 1: Extending microfinance - Social franchising

Extending Microfinance:

Social Franchising

Valerie Hackl, June 20, 2009

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Agenda

• Microfinance vs. Social Franchising

• Concept of Social Franchising

• Example CFWshops

• Advantages of Social Franchising

• Important principles

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Microfinance and Social Franchising:Similar but different concepts

Bank Beneficiary

Microfinance:

Social Franchising:

Access to capital

Bank

Beneficiary/ Franchisee

Access to capital

Social Enterprise/ Franchisor Access to

business concept/

know-how

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What is Social Franchising?

• Application of traditional franchise principles to social sector „McDonaldisation“ of social sector

• Concept to replicate a social program and multiply social impact

• Method to create meaningful job opportunities by partnering with / enabling franchisees

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Example: CFWshops, www.cfwshops.org*

• Lack of access to essential drugs and basic healthcare: ~30.000 children dying each day in the developing world

• ~70% of childhood illness and death: short list of preventable and treatable diseases

• Launched in 2000 by The HealthStore Foundation in Kenya, expansion to Rwanda since 2008

• Branded franchise network of health outlets

• ~70 clinics and drug shops owned and operated by Kenyan nurses and health workers in rural areas

Situation

CFWshops

Improve access to essential drugs, basic healthcare and prevention services for marginalized children and their families in the

developing world

* CFW stands for „Child and Family Wellness“

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An actual CFWshop

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CFWshops

How the CFWshop franchise is set up

HealthStore Foundation (Franchisor)

Nurses, health

workers (Franchisee)

Families in rural areas

CFWshops brand

Control mechanisms

Concept development

Franchise fee(fixed/month)

Information

Diagnosis

Prevention

Price

Marketing & Image

Health sector

Treatment

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The CFWshop system in more detail

• Design & equipment of CFWshops are very basic and standardized

• Central sourcing of quality drugs

• Three-week training program into the CFWshops franchise system for all future franchisees, ongoing training later on

• Investment per franchise outlet:

- ~USD 1.200 (USD 600 for inventory, USD 600 for development costs and initial training)

- Franchisee carries cost for his/her shop: USD 200 upfront, the rest can be financed by loan

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Advantages of Social Franchising

• Access to higher number of beneficiaries Widening of social impact

• Creation of job opportunities for franchisees

• Exploitation of scale economies through centralisation of activities

• High degree of control over system

• Local embeddedness leading to access to local resources

• Job opportunity

• Use of proven social program for local implementation

• Gain from franchise network, at the same time local autonomy (within certain borders)

• Exploitation of scale economies (decrease of operating cost)

Advantages for Social Entrepreneur / Franchisor

Advantages for Franchisees

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Important principles of Social Franchising

• Scalability: Application of one social concept to many locations

• Standardization: Internal principles and guidelines to ensure proper diagnoses and treatments

• Economies of scale: Increasing cost efficiency as network grows (in areas such as advertising, distribution, information systems, risk management, training, and supplies)

• VisionSpring: Distribution of reading glasses for developing countries

• CFWshops: Provision of health services in rural areas of developing countries

• Dialogue in the Dark: Exhibition to discover the world of the blind

• Science-Lab: Science courses for children

• …

Three principles inherent to Social Franchising

…and other social franchises

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Thank you for your attention.

Contact: [email protected]

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Backup

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Example: VisionSpring, www.visionspring.org

• Significant percentage of people in developing world losing jobs due to poor eyesight

• In most cases, simple non-prescription eyeglasses sufficient to solve this problem

• Lack of access to basic vision care prohibiting purchase of these affordable eyeglasses

• Launched in 2001 by Dr. Jordan Kassalow and Scott Berrie with headquarters in NYC, USA, expansion to more than 10 developing countries (India, Bangladesh, Guatemala, El Salvador etc.)

• Branded franchise network of partner organisations and individual franchisees (“Vision Entrepreneurs”)

Situation

VisionSpring

Reduce poverty and generate opportunity in the developing world through the sale of affordable eyeglasses

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VisionSpring at work

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Structure of VisionSpring

Franchisor(VisionSpring headquarters in

NYC)

…Partner

organisationPartner

organisationMaster-franchisees

EinzelpersonEinzelperson

EinzelpersonEinzelpersonVision

Entrepreneur

FranchiseesEinzelperson

EinzelpersonEinzelperson

EinzelpersonVision Entrepreneur

EinzelpersonEinzelperson

EinzelpersonEinzelpersonVision

Entrepreneur

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How the VisionSpring franchise is set up

VisionSpring (Franchisor)

Partner or-ganisations, individuals

(Franchisee)

People with poor

eyesight

VisionSpring brand

Control mechanisms

Concept development

Franchise fee(per glasses sold)

Information

Diagnosis

Affordable price

Health sector

Eye-glasses

Concept/know-how

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VisionSpring in more detail

• Central production of affordable, quality eyeglasses allowing for low production cost

• “Business in a Bag” as sales kit for franchisees containing all the products and materials needed to market and sell eyeglasses

• Comprehensive training program for all partner organisations, three-day training for all individual franchisees (“Vision Entrepreneurs”)

• Micro-consignment model: Repayment for the glasses once they have been sold

Social program empowering franchisees with a proven business model and opportunity to sell a high-impact, high-margin product

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Various concepts for replication

Dissemination Cooperation(E.g. Social

Franchising)

Subsidiary/ branches

Resource requirement

Control

Speed of growth

Source: Schöning, M. (2007), Multiplikation durch Franchising. In: Achleitner, A.-K. et al. (Hg.), Finanzierung von Sozialunternehmern, Stuttgart: Schäffer-Poeschel Verlag, 192-202.

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Traditional franchising as starting point…

Business concept

Franchisor Franchisee Customer

Brand

Control mechanisms

Concept development

Franchise fee

Information

Product

Service

Price

Marketing & Image

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Social concept

… for Social Franchising

Franchisor (e.g. social entrepre-

neur)

Franchisee (e.g. NPO, individual)

Customer and/or

beneficiary

Brand

Control mechanisms

Concept development

Franchise fee

Information

Product

Service

Price

Marketing & Image

Social sector


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