Microfranchising: Improving Income
Opportunities for MFI Clients
Poverty is the deprivation of opportunity
Many turn to the market to
survive
Microcredit
Necessity Entrepreneurs
Entrepreneurial Burden
Entrepreneurial Burden
Entrepreneurial Burden
Business Model that Works at the BoP
Microfranchising
- The systematization and replication of microenterprises
- A business model that gives individuals the tools they need to run successful businesses
- Systematized business
- Training
- Access to products
- Strong branding
How it works
Microfranchise system
- The microfranchisor provides a “turn-key” business for a microfranchisee to operate
- The microfranchises is a set of systems and best practices, that if followed, will help the microfranchisee to be successful
- This is key to the business being easy enough for non-entrepreneurial individuals to be successful
Provide know-how
Conduct advertising
Design a respected brand
Negotiate contracts with suppliers
Protect licensed franchise territory
Establish effective operational manual
Microfranchisor
Microfranchisee
Benefits: Branding
Franchising
Fast food
Not just:
Retail
Business Services
Maintenance Construction
Service
Automotive
Restaurants
Computer / Internet
Real Estate
Manufacturing
Fitness
Advertising
Lodging
Financial Services
“In the United States alone, franchising accounts for more than $1 trillion in sales annually and employs more than 8 million people, or 1 in
every 7 adults.”
Microfranchise Example
- Leading manufacturer of Ice Cream,
Yogurt and Juice, founded in 1962 in Ghana, later expanded into Togo, Benin, Liberia, Mali, Burkina Faso and Nigeria
- 10,000 young men operating microfranchise
- $72 Million Revenue 2009
- $20 Million Profit 2009
- 95% retention of microfranchisees
- Microfranchisees earning double their counterparts
Microfranchise Innovation Sandbox
Traditional Franchising
Multilevel Microfranchise
Model
Consignment Microfranchise
Model
Distribution Microfranchise
Model
Direct Selling Microfranchise
Model
Conversion Franchising
Microfranchise Model
Three year longitudinal study
• Risk was reduced for the microfranchisee
• Microfranchisees earned more money
• Retention rates were higher
Microfranchising and Microcredit
Microcredit • Provide access to capital for
microfranchisee
• Provide access to communities
– Trust
– Research
Microfranchising • Provide turn-key business
opportunity
• Provide proven business model
• Provide links to formal markets
Results
1. Mitigated loan risk for MFI
2. Opportunity for MFI to move up-market with mitigated risk
3. Mitigated start-up risk for microfranchisee
4. Microfranchisor has access to capital needed to scale
5. Microfranchisor has access to potential recruits
6. Microfranchisor has access to trust built by MFIs in challenging markets
Meet Fati John
When we met her, she: • Earned $2/day • Was illiterate • Had 4 children unable to go to school • Worked 16 hour days Becoming a microfranchisee changed her life. • Today she: Earns $20+/day selling
variety of products in rural villages • Is paying to learn English • Can afford to send her children to
school • Works 12 hour days • Is self-confident and self-reliant