Wednesday, March 19, 2008

Microfranchising in a Community Setting in the U.S.?

Recently I was invited to speak to a group of community leaders in a neighboring county in Virginia. I should mention I was providing backup for Jason Fairbourne, whom I had the privilege of working alongside as I finished my masters degree, who inspired the invite with his article in the Marriott School of Management magazine.

All of my experiences with microfranchising have been in the context of international settings. This audience, however, was concerned with the health of their local community which although being a rather affluent area overall, has large pockets of recent immigrants or otherwise low-income families. The question in essence was: Does microfranchising have any relevancy to community development in the United States?

My answer: As I put myself in the shoes of these community leaders of business, government and nonprofits who are dealing with issues of employment, housing, education and at-risk youth and ask the "so what?" question, I think there are a few lessons they can learn from microfranchising:

Replication of models. There is a changing tide in the nonprofit/community development sector and it is the rise of social entrepreneurs: innovative ideas combined with business-like practices and the passion of an entrepreneur. However, the ultimate goal is a social return on investment as opposed to profit-maximization. Prior to designing a new community project leaders could search best practices of Ashoka Fellows, Fast Company’s Social Capitalist Awards, and other star models. Why reinvent the wheel? The social entrepreneur could be recruited to bring the model to their area or train them to implement the model.

Application of Principles. Some principles of microfranchising that can be applied in a domestic community development setting:

  • Think about incentives at each level of participation. In microfranchising it involves a financial incentive for customer, franchisee, franchisor, distributor, investor. In community projects it would be end-users, government bodies, local businesses, funders.
  • Empower the community to be participants. Microfranchising looks to bring essential goods and services to the poor, provide employment, and stimulate the economy but they do so by involving the poor as a key actor, the franchisees. The group of people who the project was designed to help did so by making them actors in the operations and implementation of the project.
  • Have an eye towards replication when starting projects. In the business setting this is the principle taught in the E-Myth. In microfranchising you build your first operations with an eye towards replication, you are thinking about streamlining operations, standardizing actions, creating systems and manuals of operation. In microfranchising this must be modified at times to match the education levels of the poor, for example manuals may need to be picture based and not text based.
  • Business for Good. The business sector has raced ahead of the citizen sector in productivity and impact over the last century. Now the citizen sector can use the tools developed by business to achieve their social missions.

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