The original business owner (franchisor) has succeeded in his business. He now allows people to use his company name, processes, recipies, etc. for a fee. The person who buys the franchise (franchisee) is trained and supported by the franchisor which enables him to also succeed. Microfranchises are scaled-down franchises.

Jeanne Marie Uhiriwe, Solar-Kiosk Microfranchise, Kigali, Rwanda

Franchising

Traditional franchising is all about replicating a successful business concept recipe from the original firm (the franchisor) across a great number of outlets (the franchisees). The basic concepts are widely understood because the global population is generally familiar with international name brands.

McDonald’s, Subway, Starbucks, Pizza-Pizza, KFC, 7-Eleven, Kumon, Jani-King, Dunkin’ Donuts, Curves and many more world-wide companies have expanded by keeping costs down and operations very simple. They use the business-format franchising model to successfully replicate and expand a highly effective store model, provide consistent, standardized, quality service and achieve economies of scale, which in turn lowers the product cost for the group of franchisees.

Origin of Microfranchising

Microfranchising is a new economic development engine that follows in the footsteps of microloans, microcredit, and microfinance.

MicrofinancingIn 1974, Professor Muhammad Yunus, a Bangladeshi economist from Chittagong University, sparked the beginning of a worldwide movement by lending $27 from his own pocket to 42 poor basket weavers. Since this catalytic event, microfinancing has provided over 11 million women around the world with the microloans they need to help start or improve a small business, provide for their families and escape the cycle of poverty.

In 2006, Professor Yunus and the Grameen Bank that he founded received The Nobel Peace Prize for their efforts to create economic and social development from below. The announcement stated, “Lasting peace can not be achieved unless large population groups find ways in which to break out of poverty. Micro-credit is one such means. Development from below also serves to advance democracy and human rights.”

The eight pioneering global microfinance networks are – Accion, FINCA, Freedom From Hunger, Grameen Foundation, Opportunity International, Pro Mujer, VisionFund International, and Women’s World Banking. Others like Jacqueline Novogratz, founder of Acumen Fund; Jeff Skoll, founder of the Skoll Foundation; and Dr. Ir. Ciputra, Founder of Ciputra Group,actively promote entrepreneurial education, social entrepreneurship or social sector microfranchising.

Microfranchising began in the 1980’s with BRAC, the international development NGO based in Bangladesh, and its system of providing low-cost health care through community health promoters in Bengali.  However, Jason Fairbourne, Steve Gibson and other faculty and students at the Brigham Young University Marriott School of Management pioneered the current microfranchising movement.

While  microfinancing requires preexisting entrepreneurial talent, microfranchising better addresses the real needs of developing countries by providing a “business in a box” as well as reduced risk, training, a financing structure, branding, standardization, promotion, coaching, service delivery processes, tools, operating manuals, inventory, supply chain process for replenishment at reasonable cost and ongoing support to ensure continuing success.

Microfranchising

The term “Social Sector Microfranchising” was coined by Michael Seid of MSA Worldwide and Chief Concept Officer for Child Family Wellness (CFW) Shops and is on the board of the HealthStore Foundation, the builder of over 64 microfranchised pharmacies in Kenya and Rwanda. It is a form of franchising, based on simplified business-format franchising techniques and principles, adapted for use in various areas of countries at the base of the pyramid.

VisionSpring provides reading glasses in 26 countries at the base of the pyramid. Vision Spring helped Naubat Khan, a truck driver from Mewat, India. For the last 8 years he had experienced blurry distance vision. After purchasing a pair of glasses from VisionSpring, he no longer gets headaches and is a safer driver.

Vision Spring NGO, Naubat Khan, Mewat, India

There are numerous other examples of social-sector microfranchising in action:

Barefoot

Microfranchising uses all of the same fundamentals of the very successful business-format or packaged franchise model,  scales them down and applies them in developing countries. Microfranchising requires a much smaller investment from both the franchisor and the franchisee.

Microfranchises currently exist in numerous countries and in numerous industries.

In many developing and emerging countries, microfranchising has been used to create new businesses in agriculture, agri-business, food processing, municipal utilities, construction materials, construction, education, computer based training, language schools, health care, retail pharmacies, battery recharging, reading glasses, retail cell phones, information / communications and entertainment technology, business services, consumer products / durables, food services, personal care items, personal services, financial services, specialty retail and more.

Microfranchised Post Offices in Developing Countries

There is considerable disparity in accessibility to a post office. Globally, approximately 9,264 inhabitants on average are served by a post office. In Eastern Europe it is 4,470 inhabitants per post office. In Northern Africa, it is 21,427. However, for Sub-Saharan Africa that number is approximately 71,389 inhabitants.

Any Post, even one that lacks development funds, can apply the key franchising principles of branding and standardization to ensure quality and replication.

Posts can expand quickly and create many more post offices that operate at a lower cost. This allows the Post to reach a critical mass, achieve economies of scale, lower its operating costs and sustain itself.

A microfranchised post office model, in every village, that has a minimum sustainable number of people, would make the village post office relevant to the people; make the existing host business more successful and may have a dramatic, positive impact on the economy and the quality of life of people, at very little cost.

The Five Step Process 

When developing microfranchised village post offices in developing countries, Leapfrog Business Consulting follows 5 main steps:

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  • Market Research
    • Review of Postal services and processes;
    • Research pool of information – volume of mail, remittances, needs, etc.
    • Potential integration with other government departments for added services (financial regulator for banking, transport department for licence issuance, department of vital statistics for vital certificates, departments responsible for other citizen payments such as taxation and utilities, etc.);
    • Review of financial services options and / or potential integration with a bank or financial institution;
    • Potential integration with cellular communication companies for bill payment, buy minutes, phone cards, etc.
  • Business Plan – Objectives – Financial Modeling – Design;
    • Profitability Model for Franchisee;
    • Process Mapping; Tool Development (The Operating Model); Development of Training Binder (facilitator’s guide, training exercises, etc.); Franchisee Profile Identification / Screening / Selection; etc.
  • Model Testing against KPI Success Factors;
  • Replication Plan and Management Team; and
  • Implementation of Franchise System with management support mechanisms.

Benefits of Instituting Microfranchised Post Offices

Posts in developing countries face a number of key challenges which vary depending on their level of development. They need a clear development vision with timeline and milestones, development funds, clear policies, strong business development skills, training funds and more. They also face inadequate country infrastructure such as poor roads, no street names, no addresses, or places with no electricity.

However, the bigger challenge for these Posts is far from the main lines of communication – the difficult-to-serve rural customers. Many countries have large geographic areas with low population densities and few post offices. Some people may have to travel a day or more to reach a location and access basic government services or a post office or receive foreign remittances.

In addition, in these countries the demand for lettermail, postal boxes and other postal services is low because of the size of the economy. Yet, Posts can be strong engines for economic growth by focusing on offering a number of integrated government services, partnering with private companies to provide agent services and servicing the international remittances and parcel mailings from migrant workers and diaspora abroad.

A quality, well-designed and managed microfranchise system can dramatically and quickly extend any Post’s network and help grow the economy of that country.

In an urban area,  a microfranchised post office in a grocery or convenience or general store or pharmacy gives:

  • The Post a lower a cost-to-sell retail model; quickly expand their network, achieve economies of scale and sustainability which lowers the service and product cost to offer the services;
  • The customers better access, more convenience an longer hours; and
  • The local entrepreneur or host business another source of revenue and the ability for the host business to be more viable.

Haiti Village

In a rural village, a microfranchised post office in a grocery or convenience or general store, pharmacy, medical centre, or NGO office can:

  • Connect and empower communities to lead their own future;
  • Give the village authority or elders a strong participation in the project;
  • Give the Village a sense of identity through post office signage;
  • Fill the gaps in banking, postal, phone, fax and other services that the community is not able to attract;
  • Create a cost-effective infrastructure (through partnerships) freeing money to offer other services or reinvestment in the economy;
  • Build stronger partnership between rural communities and their government;
  • Views of the customers can be channelled through the Franchisee (postmaster) who can also attend village meetings and can  pass on resident opinions to the local member of parliament;
  • Deliver better regional services;
  • Keep small entrepreneurs in the community rather than migrating to larger, crowded urban centres; and can improve the profitability and viability of the host business (grocery / convenience store, general store, pharmacy, medical centre, microfinance NGO office or independent);
  • Enable migrants’ remittances to reach more locations at lower cost and funds can be reinvested in entrepreneurial projects.

Postal Franchises in Haiti

At a meeting held in Port-au-Prince, Haiti in June 2015, the Director General of l’Office des Postes d’Haiti (OPH), Carel Alexandre, and the Director General of the Universal Postal Union (UPU), Bishar Hussein, agreed to implement a postal franchise project for Haiti.

Haiti-OPH-UPU

The UPU delegation also involved the Secretary General of the Postal Union of the Americas, of Spain and Portugal (PUASP), Roberto Cavanna as well as the Director General of the Dominican Postal Institute (INPOSDOM), Modesto Guzman. Read More:  l’Office des Postes d’HaïtiLe National and Le Nouvelliste.

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