microfranchising

E-Health Clinics in India

2010-08-01T21:08:00.000-07:00

This is a health clinic in rural India using an interesting combination of clean water and e-healthcare. This business is being incubated by Ashoka, here is the original press release.

Recent Microfranchising News - Feb 2010

2010-03-01T17:22:00.000-08:00

Vision Spring featured in March Entrepreneur magazine and a recent Parade Magazine.

The Feb Templeton Report leads with a story about a new report about franchising in frontier markets. It deserves further review. It cites the rise of SpotCity Taxi in India as an example.

MicroFranchise Toolkit available again

2009-05-11T18:09:00.000-07:00

I received a notice today that the MicroFranchise Toolkit, published out of BYU's Center for Economic Self-Reliance, is available again for purchase after selling out of the initial printing. I do not receive any kickbacks for promoting it but I did think the announcement was post-worthy because of the apparent level of demand for this product.

Have any of my readers used this toolkit? Any reviews or insights?

Skoll announces New Winners, VisionSpring among them

2009-03-19T20:16:00.000-07:00

A special congratulations to VisionSpring, one of the most cited organizations on this blog (Intro, TeamwithPSI, IntheNews, OnChangemakers, NameChange, NewBlog, ), for being one of the recently announced winners of the Skoll Award for Social Entrepreneurship. Skoll is also to be congratulated for their willingness to give large unrestricted grants to those they have properly vetted, which I think is critical for growth.

Ashoka and Gates looking for Innovation in Rural Communities

2009-03-08T18:35:00.000-07:00

Ashoka's Changemakers recently launched a competition looking for "sustainable change in rural development and agriculture" sponsored by the Gates Foundation. They are asking for nominations and ongoing comments from the Changemakers community.

I nominated the folks at Open Air Cinema from my last post; there is such great potential for them to inspire, educate, and shape rural communities through the power of film and media, particularly if they are simply providing the technology and empowering local filmmakers to create the content.

I look forward to future nominations and the full spectrum of innovations, here are two of my favorites:

Media Innovations in Rural Africa: Movies, Mobiles and the Web

2009-01-21T08:00:00.000-08:00

Springwise did a year end summary of innovative business ideas, here are a few that caught my eye:

I was slightly caught off-guard by the movie screen business being on the list because I actually saw that particular team present at a business plan competition back in college and even watched an away football game on the inflatable screen but then watched them struggle to find a stable market in the area. I'm glad to see they have taken it to the bottom of the pyramid. I think there is huge potential there in terms of public education, journalism, and rural democracy.

Ashoka and Gates announce partnership

2009-01-19T16:53:00.000-08:00

Over the course of this blog I have highlighted multiple models focused on agriculture. I tend to become excited about agricultural innovations because I believe enhancing agricultural productivity is one of the most highly leveraged points of investment when tackling rural poverty and the myriad of negative outcomes that stem from that poverty. I am not alone in that evaluation: research continues to support those claims as do the entrepreneurial experiences of organizations such as IDE and Kickstart. I think the Gates Foundation also found that it could not fulfill its global health goals without investing substantially in agriculture and rural development.

Which brings us to this latest announcement of a partnership between Gates and Ashoka. Now that it is public I can likewise publicly share my enthusiasm for this opportunity and what it could mean for the sector. $15 million does not put this partnership in the top tier of grants made by the Gates Foundation by any means but I think the knowledge and models that can come out of this partnership could dramatically drive the spread of innovation across the entire Gates portfolio. Ashoka's expertise in grassroot, early-stage identification as well as pattern and trend identification across their network will be powerful tools for Gates who then has the resources to really bring those innovations to the rest of the world. It will be an interesting experience for both organizations.

When it comes to franchising I'm anxious to see if it surfaces in the early rounds of identification by Ashoka. Traditionally franchising has not been associated with agriculture and farming but that could mean innovation is right around the corner.

Difficulty of getting products in country

2008-12-14T19:26:00.000-08:00

This is another story from VisionSpring. I realize I just made a reference to them in my last post but they are simply the most active participant online in this space and they provide a level of transparency that I cannot access from other initiatives. I hope to continue to provide variety in the examples but in the end we're looking for principles--

VisionSpring has been piloting with BRAC in Bangeldesh and are now about to "spring" into a full implementation of their program but they are struggling with meeting the inventory demands of BRAC, particularly in terms of getting product into the country from their factory in China.

This is a very common problem, I was just on a call with an organization that ships high-nourishment food packets across borders and getting through customs is one of their biggest challenges. I see the Grameen-Danone model of mini-plants as an innovation that will help to overcome these challenges in the short term and I think the model should be attempted by more but not all products can be streamlined into mini-manufacturing. The challenge of low prices and high volume for the bottom of the pyramid may ultimately be best served by large plants with great distribution systems.

Are mini-plants the engineering innovation needed for bottom of the pyramid products?

VisionSpring's model spreading to Water Purification

2008-12-11T20:47:00.000-08:00

Florence Cassassuce was a CNN Hero finalist and a World Bank Development Marketplace winner and according to an entry from a Changemakers competition last year, her next step is to turn her UV water purification bucket into a micro-franchise business based on the VisionSpring's model.

At the time of the competition her idea was in its infancy so it might not have received a lot of attention. She's dreaming big and coming to the table with refreshing transparency but it's too early to tell what is real and what is emerging. She has a great product, now can she distribute it widely.

Water purification franchises have proven to be very successful models in the U.S. (perhaps too much so--producing incredible amounts of plastic waste from individual bottles of water) so there might be elements to borrow from the private sector in addition to someone like VisionSpring who functions with a much lower price point and technology. Larger purchases such as a UV water filter might require options for buying on credit, savings plans, or collaborative purchases which could prove to be a model for many technology, productivity-enhancing products.

Do you know of other microfranchise models for water purification and distribution?

Event: Ashoka Induction Ceremony

2008-11-16T17:03:00.000-08:00

Ashoka's North American induction ceremony in Los Angeles, December 9th. (The pdf invite includes the full list of the new Fellows.)

One new Ashoka Fellow that caught my eye was Matt Flannery, c0-founder of Kiva, which I have argued recently should spread into microfranchising. I find it interesting that Ashoka, which has a long track record of finding social entrepreneurs early in their development, picked up Flannery about two years after he and Kiva were discovered by the blogging community but at the same time the remaining 24 fellows are likely completely unknown in the blogosphere. How can these two networks cross-pollinate?

2008 Ashoka Fellows in Franchising seeking support

2008-11-01T16:51:00.000-07:00

Want to adopt a high impact social entrepreneur? Ashoka recently published a list of Fellows from their latest crop which include a few that are involved in franchising or have innovations that could be applicable to the training and financing of microfranchises. Ashoka typically provides a living stipend to the entrepreneur to allow them the flexibility to pursue their innovation full-time. You can support a whole stipend or give to a common fund. The average stipend amounts are calculated by regional cost of living estimates. For inquiries or to get started, contact supportfellows@ashoka.org. To see Ashoka Fellows in action watch this video diary from a recent trip to Argentina.

Alice Freitas | Brazil, Connecting Informal Artisans with Conscious Consumers

Alice has created a direct sales catalog to help informal artisans overcome the challenges of large-scale distribution. An estimated 50% of all Brazilian workers-many of them women-are currently involved in the informal economy, and consequently lack access both to valuable market information regarding prices and consumer interests, and to the financial resources and bank credit required to start a business. Alice matches artisans’ groups with men and women trained as direct sales agents, providing them with thorough training and an intimate understanding of the producers’ personal histories and social impact. Capitalizing on the growth of conscious consumerism, she thus enables consumers to exercise informed decision-making, and provides them with a direct communication channel to the women behind the products. Having launched the first catalog in 2007, Alice is now developing a franchise model in order to scale her approach throughout Brazil and beyond.

Lilian Masebenza | South Africa. Fostering Income Generation for Women

Lillian incorporates income-generation and entrepreneurial development into traditional village collective models, called stokvels, capitalizing on their inherent popularity among disadvantaged women and youth in South Africa. First formed by black South Africans -mostly women- in response to financial restrictions upheld during apartheid, the stokvels have historically been used merely as a way to motivate each other to save for specific short-term needs, such as weddings, funerals, and holidays. Lillian has transformed these widely accepted savings collectives into an effective business model, using the existing networks to conduct business trainings and skills development courses. By using indigenous models as a basis for business development, Lillian provides business training, skills-development, and mentorship to groups that previously focused on saving for special occasions, fostering a new sense of entrepreneurship among the country’s most disadvantaged communities.

Vivienne Schultz | South Africa, Empowering Entrepreneurs

Vivienne’s company, Biz Africa 1399, uses a three-part approach to economically empower marginalized entrepreneurs. First Biz Africa 1399 identifies potential entrepreneurs and encourages them to develop their ideas. Then, these individuals participate in E-Hub, a nurturing, resource-rich environment that provides work space and administrative services. E-Hubs are supported by business partners who become incubators for aspiring entrepreneurs. Additionally, these relationships help create new markets and tackle the challenges faced by entrepreneurs. Vivienne realizes that she is working with a continent-wide problem and in order to tackle it she must create business networks for struggling entrepreneurs throughout Africa. In order to support her expansion plan, Vivienne has partnered with academic institutions and a continent-wide company. She is currently writing a book about how to use experiential, or hands-on learning, to foster economic
development.

Ouattara Souleymane | Burkina Faso, Creating a Culture of Apprenticeship and Craftmanship

Souleymane Ouattara is transforming the way artisans and skilled laborers are trained and, in doing so, is opening employment options to many young people in Burkina Faso. Through his Association of Tailors, Weavers, and Associates, Souleymane has enlisted trainers in a variety of fields who together create workshops and hold training sessions for young people interested in
their professions. Everyone involved in the trainings also receives management training to ensure they understand production costs and processes, develop their marketing and creative capacities, and have the proper tools to see their businesses grow. Today the system Souleymane has set up is not only effective, but also is expanding as even the government looks at ways of using elements of his engaging training model.

Tamzin Ratcliffe | South Africa, Building Africa’s First Social Stock Exchange

Tamzin has developed the Global Social Investment Exchange (GSIX), a web-based tool that links citizen sector organizations (CSOs) with donors by mimicking traditional stock exchanges. After successfully launching the Southern African Social Investment Exchange (SASIX) in 2006, which raised $800,000 for CSOs in Southern Africa, Tamzin is now preparing to create a global marketplace using GSIX. GSIX will publish a Quarterly Prospectus for investors to choose CSOs, and then investors can buy shares in GSIX through participating brokers. Funds will be transferred to beneficiary organizations through a transparent and accountable process, and investors will have the ability to track their investments and view their impact online. Similar to financial stock exchanges, GSIX will use specific, time-bound investment and by pushing CSOs to be accountable for investments, GSIX will push the social sector to develop ways to measure social impact and, thus the return on social investments.

MicroFranchising recent Buzz

2008-10-22T21:28:00.000-07:00

Primarily due to SoCap08, which was apparently bursting at the seams, and Blog Action Day on Poverty, there have been a series of posts around the web referring to franchising or microfranchising at the bottom of the pyramid. Here are some of the highlights:

A working paper shared by David Lehr of the Acumen Fund. This is the first major publication I have seen from someone outside of Brigham Young University, an exciting step if it means that research is moving out of academia into the private sector.

Jocelyn Wyatt shared her overall impressions which I think represents a good summary of the current pulse on the donor market and shows how well positioned microfranchises are to raise capital.

Gonzalo Pena gave a hat tip to the concept of microfranchising in his Top 10 list of ways to fight poverty and we were later able to have a good conversation together.

The MicroFinance Journal blog had a recent post about a microfranchise in the Philippines, Hapinoy, which represents another example of converting businesses in the informal sector into branded franchisees.

Al Hammond the creator behind WRI's bottom of the pyramid initiatives, including the well-known voice in the blogosphere - NextBillion.net, is using the term franchising openly in regards to the pharmacy network he is now building as a senior entrepreneur-in-residence at Ashoka.

MicroFranchising Conference Nov 6-7

2008-10-19T19:17:00.000-07:00

I received an update from the 2008 ESR Conference folks with details about the MicroFranchising Sessions. The early registration/discount deadline is tomorrow, October 20th. Here are the descriptions for the MicroFranchising sessions:

Business Solutions for Development
Come listen to Jason Fairbourne and Steve Gibson discuss how microfranchising can serve as a bottom of the pyramid solution for development.

Branding a Microfranchise—VisionSpring, HealthStores, & Living Goods
Miriam Stone from VisionSpring, Scott Hillstrom from HealthStores, and Chuck Slaughter from Living Goods will join Jason Fairbourne and Steve Gibson in discussing specific challenges and remedies for creating a microfranchise brand.

Systemization of Microfranchises—Grameen Foundation & Mercy Corp
David Lehr of Mercy Corp, along with representatives from the Grameen Foundation, will discuss systemization, replication, and scale as it relates to global microfranchise initiatives.

Research from the Field—Brigham Young University
BYU has spent two years studying microfranchise institutions around the world and collecting data that compares them with microcredit institutions and stand-alone businesses. Findings from Bangladesh, Guatemala, and Ghana will be presented here.

Popular countries for operations

2008-10-09T21:00:00.000-07:00

Ryan Gunderson over at Riches for Good had an interesting post the other day analyzing the country site of operation of the organizations on Fast Company's Social Capitalist Award list compared to World Bank numbers of # of individuals living on less than $1 a day. Although the data is not academic by any means it is illustrative:

A couple things I noticed:

1. Obviously India is a popular country for social capitalists. Demographically it makes sense: population density allows for certain efficiencies/cost per client etc., the large numbers are appealing to the donors backing the social capitalists, operation is relatively cheap in India, and there is also great need according to sheer numbers. Additionally, there is also a very vibrant citizen sector in India allowing for partnerships and synergy. Finally, I think English language is a big factor.

2. China is lagging. Is this due to language and culture? Is the government not conducive to allowing social capitalists to operate? Are the funders of social capitalists not as aware of the image of the poor Chinese farmer as they are of the poor Indian farmer?

3. It would be interesting to see this data according to % of the country living under $1 a day as opposed to overall population numbers. I think some of the more needy countries are not being served in proportion to their desperate circumstances.

My conclusion: there is enough need out there that you can make a difference anywhere. We should not punish small countries with high poverty rates simply because the numbers to show our donors are not as impressive. Some of our efforts should go towards the areas of greatest need not only the areas of greatest ease of operation.

IDE-Cambodia's MicroFranchise Scheme: Winner at World Bank Expo

2008-10-05T22:13:00.000-07:00

Congratulations to Michael Roberts and IDE for their Microfranchising work in Cambodia being selected as a winner at the World Bank's Development Marketplace. The IDE microfranchise scheme in Cambodia was one of 22 winning projects selected out of over 1,700 proposals. You can read full press releases and watch videos from the expo on the World Bank website. I'll include their entry below. My commentary:

1. Having the label of microfranchising showcased in such a high profile environment (the competition was sponsored by the likes of the World Bank, IFC, Gates Foundation, and Google.org) should be considered a major development in terms of the development and spread of this as an idea or concept.

2. I had a chance to sit down with Michael while he was in town to discuss IDE's microfranchising work as well as explore connections with Ashoka, which could be many. There are so many natural points of overlap between IDE and Ashoka, particularly when it comes to identifying innovation in agriculture and rural development.

3. The last comment I wanted to make in regards to this event was their use of the model of a competition to source the most innovative solutions. I think it is great to see the likes of the World Bank engaging in this very organic, grassroot type approach. Competitions have been a major recent trend in philanthropy and innovation in general, think X Prize, the recently announced $10 idea competition by Google, Ashoka's Changemaker's compeitions as well as the numerous popularity/fundraising compeitions hosted by the likes of Parade magazine and American Express.

IDE-Cambodia's Entry (my markings):

Micro-Franchising Scheme for Agricultural Services
COUNTRY: Cambodia
ORGANIZATION: International Development Enterprises (Cambodia)
FUNDING REQUEST: $200,000
CONTACT: Michael Roberts
+855 23 223 541
mroberts@online.com.kh
www.ide-cambodia.org

OBJ ECTIVE: To increase small farmers’ productivity and increase the net annual income of 1,800 small farm households by $150 by developing a sustainable micro-franchise enterprise to provide affordable horticultural services through Private Extension Agents (PEAs).

RATIONALE: The majority of Cambodia’s poor live in rural areas and depend primarily on agriculture for their livelihood. Small farm productivity could benefit from the substitution of imported vegetables, which account for up to 60 percent of all vegetables consumed in Cambodia. Small holders in Prey Veng and Svay Rieng (Cambodia), the two targeted provinces located along the route for Vietnamese imports, cannot exploit this opportunity because they lack know-how in vegetable production and access to credit and market information. In response to these constraints, this project will develop profitable micro-franchises to provide agricultural inputs, technical advice, in-kind credit and marketing services through a network of Private Extension Agents (PEAs).

INNOVATION: This project will implement an innovative micro-franchising scheme for agricultural extension services through private-sector providers in provinces affected by imports. It will do so by bundling information and know-how with agricultural inputs and by supporting the private sector providers as franchisees and linking them in a micro-franchise network.

Sargon, my HeroRat, passed away

2008-10-04T11:57:00.000-07:00

Pardon the slightly off-topic post-

Sad news to share. Sargon, my adopted mine detection sniffing rat, passed away of old age the other day. He had cleared mines since 2003 and served over 300 families in Mozambique. Honestly, I was surprised to receive the update as I just saw Sargon featured in the October National Geographic magazine (I can't find the picture online), but I guess that he went out with a bang, checking out at the peak of his career.

I had met the visionary behind these mine-detecting rats a few months ago, Bart Weetjens, when he came into the office (Bart was elected as an Ashoka Fellow in 2006). His organization, Apopo, just received a $1 award from the Skoll Foundation. It was then that I participated in their "Adopt a Rat" program and selected Sargon as my wonder-pet.

I received a touching and slightly humorous announcement in my email box informing me that this "detail-orientated" "quick learning" "reliable, professional, and effective alone or in a team" rat passed away of natural causes. It added that he was known to work "even harder for peanuts or bananas."

There is an element of replication here, I was meeting with Bart to discuss his finances and he has received numerous pledges from other African governments wanting to replicate his operations in their countries but the wheels of African governments turn so slowly that he has not seen any of the money. In fact he has an over-abundance of requests for replication, only limited by his own operational budget and capacity. I suppose there could be potential for Apopo branding and franchising across the world but I don't think the local communities could completely sustain the operations as consumers, the model would likely have to be a mixture of government, individual philanthropy from the West and local contributions in-kind or cash.

There are still many HeroRats working hard in Sargon's memory if you want to Adopt one of these HeroRats.

Kiva should co-brand with microfranchises

2008-09-26T10:00:00.000-07:00

I have been a fan of Kiva from their early days. They had another recent surge of success when they introduced Group Lending and Partial Loan Repayments, both brilliant moves in my opinion on multiple fronts: driving consistent traffic to their site, engaging their citizen base in a frequent and meaningful way, and leveraging natural networks.

However, I am still anxiously awaiting the day when Kiva moves into the next realm of innovation, when they are using their platform to strategically inspire change in the market. Right now they are focused exclusively on microcredit and simply support the normal activities of their partners and the microcredit borrowers. It could be argued that that is their expertise and value-add, however, I do not see the innovation nor the value of Kiva as a funder of microcredit, which is partly why I agree with people who say that Kiva should not be focused on providing a financial ROI for lenders. Even if Kiva continues on their projected growth their financing of microcredit will be minuscule compared to the capital being raised for microcredit through integration in the financial markets and through microcredit accelerator's such as Unitus.

The innovation of Kiva is that they have created a platform that allows a broad base of average citizens to become miniature philanthropists. Kiva has never had to spend a dollar on marketing, people find Kiva and become inspired: bloggers picked it up early, when people find Kiva they blog about it, they showcase their loans, Kiva even had to create an entire site, KivaFriends, to handle all the interest of their constituents to discuss the issues.

Therefore, as a platform and in the position of inspiring and shaping grassroot philanthropy I think Kiva is extremely well-positioned to strategically shape the local marketplace of their borrowers. One way they could shape the marketplace would be to partner with microfranchise operations. Kiva could be the platform, the broker, that connects microcredit organizations with the best microfranchise solutions, and then together they offer a financing mechanism for the expansion of new business and innovatin in the marketplace.

This would provide value to the microcredit borrower, providing them a new business model, a great potential source of income as opposed to simply increasing their inventory in the same business as their neighbor. It would provide value to the community in which the microcredit borrower lives, bringing a service such as VisionSpring eyeglasses or HealthKeepers pharmaceutical products or a technological product such as Kickstart's waterpump. It could probably be structured so that the MFI gets a cut as a distributor of products. Kiva could provide value to these fantastic innovations by being a catalyst for the best models. It would provide value to the Kiva Lender because they would feel they are being innovative in their lending and philanthropy.

Kiva needs to think beyond scaling up microcredit and more about being a platform for change.

MicroFranchising book now available in paperback

2008-09-18T21:18:00.000-07:00

I just received a notice that the book, MicroFranchising: Creating Wealth at the Bottom of the Pyramid, is available in paperback. It is included in my recommended readings link; the paperback version is the one without the picture.

I'm excited and I know the authors are excited because it will make the information accessible to a much wider audience. I thought it was unfortunate that the original publisher put such a high price tag on the book as part of their strategy to target university libraries. Now, at a more reasonable price for the general consumer, I think the conversation can really begin. The book really is a great collection of theory based articles coupled with profiled case studies. The material in that book has been the starting point for many of my own wandering thoughts on this blog. Happy reading.

SoCap08 Major Donors and Entreprenurs Mixer

2008-09-03T12:00:00.000-07:00

There is a big-time event coming up in San Francisco for the social enterprise crowd, SoCap08- October 13-15. It appears that the entire list of who's who in the 'new philanthropy' in Silicon Valley will be there, both from the entrepreneur and investor sides.

The registration fee comes across as a bit high for me but if one were able to secure a major funding relationship at the conference it would be well worth the investment, let alone the education available with such a lineup of speakers.

As I look over the schedule of events, a couple panels that look particularly interesting in the context of franchising--

"Taking Social Enterprise to Scale" - Rick Aubry, Rubicon Ventures

Obvious connection. Rubicon has bakery and landscaping social entreprises in the U.S.

"Social Investing 101" - Regina Connell, Good Capital; R. Paul Herman, HIP Investor Inc.; Andrew Kassoy, B Lab; Steve Godeke, Godeke Consulting

I'd be curious to see if franchising is brought up in the fundamentals class.

"Market Creators" - Deb Dunn, Skoll Foundation; Tim Freundlich, Good Capital; Elise Lufkin, Calvert Giving Fund;Andrew Kassoy, B Corp; R. Todd Johnson, Jones Day

This topic has been on my mind recently. If I were there and the topic was not addressed I would bring up the statement by the CEO of Kickstart regarding his projected timetable and the need for donor investments to reach that tipping point in the market.

"Democratic Capital" - Melanie Swan, MS Futures; Premal Shah, Kiva.org; Mads Kjaer, MyC4; Rajesh Jayaraman, Zopa; Ben Rattray, Change.org

I have always felt there is enormous potential for microfranchising to partner with these democratic capital raising solutions. An investor making snap judgments on these sites may have greater confidence to support a new business in the third world if it is a proven franchise operation. These sites could help facilitate greater diversity in these markets by doing so.

"Design in the Developing World" - Regina Connell, Good Capital; Paul Polack, International Development Enterprises; Tim Brown, IDEO

I would be on the lookout for products conducive to product franchising.

Overall, it looks like a fantastic event. From the perspective of the entrepreneur I am struck by the collection of investors that will be present, all looking to be educated on how to spend their wealth, a great opportunity to showcase one's work. From the perspective of a new investor wanting to get involved in social enterprise I see this as a great forum to learn from some of the best and most experienced in the field.

Resources Around the Web

2008-08-30T09:12:00.000-07:00

This will be a permanent page of major resources around the web on the topic of MicroFranchising:

Relevant Books

My personal collection of recommendations that are available through Amazon.

MicroFranchise Toolkit

The only how-to toolkit of which I am aware. Published by BYU's Center for Economic Self-Reliance as part of their MicroFranchise Development Initiative.

White paper from the Acumen Fund

A great overview written by David Lehr. The Acumen Fund has a number of investments in microfranchises and is well positioned to see the successes and failures of this emerging strategy.

MicroFranchise Wiki

Another resource of BYU. Hit enter on the search bar without selecting a filter to see all the microfranchises profiled. Additional links to relevant articles on the front page.

Social Franchise Ventures, LLC

Specialized consulting firm dedicated to helping nonprofit's within the US develop social franchises.

MicroFranchise Ventures, LLC

Parent Company of a family of microfranchise brands promoting economic development through enterprise in the developing world.

Case Studies

Dishtree in India

HealthStore (CFW Shops) in Kenya

Mi Farmacita Nacional in Mexico

Care Shops in Ghana

VisionSpring (Eyeglasses)

Village Phone Direct

Microfranchising links of interest

2008-08-27T23:00:00.000-07:00

Interview with VisionSpring at Acumen Fund blog. Notice the same comments about market creation as being the unanticipated largest challenge as discussed in the last post about Kickstart.

NextBillion talking about the potential role of business students in the BoP. Notice the interest of students is outpacing the ability of the universities to deliver the education. Ashoka's University Network keeps good tabs on the universities that emphasize social entrepreneurship.

Another post at NextBillion mentioned microfranchising, this time coming from the Global Social Benefit Incubator in conversation with an operation out of Kenya, Coast Coconuts.

Job Posting: CRM Specialist for Social Franchise Network

2008-08-27T18:39:00.000-07:00

Freedom from Hunger is looking for a CRM Specialist to design and manage their client information system for their social franchises. Position would be based in San Francisco or Davis, CA.

I worked with Freedom from Hunger as part of my graduate studies and can endorse them wholeheartedly. I've highlighted their HealthKeepers social franchise previously. Sean Kline tells me one of the clients they will be working with on the CRM solution will be Reach India.

Kickstart and donor money to build markets

2008-08-25T23:28:00.000-07:00

Britt Bravo over at Have Fun Do Good recently posted a great interview with Martin Fisher, CEO and co-founder of Kickstart. For me, the most interesting part of the interview was the discussion regarding the challenges faced by Kickstart, interesting because 1) I believe Kickstart has molded and adjusted to those challenges extremely well and 2) the issue of having to create entire new markets when introducing new products or services will be a similar challenge faced by most of the microfranchises discussed on this site.

It can be easy to talk about social enterprises as if launching a business were easy and success were automatic. Here we are reminded of the reality by one of the most successful organizations at introducing a new technological product at the bottom of the pyramid saying they expect it to take ten years of heavy promotion and reliance on donor funds to tip the market. That strikes me as a much longer time frame than is commonly presented in the industry. We like to talk about sustainability and revenue streams from social enterprises but we must not forget that there is still an incredible market failure in the funding for this market-creation stage. Even the most hard-nosed revenue stream proponents will need to understand the world of philanthropy and fundraising.

Briquettes: a lot of bang for your buck

2008-08-04T19:39:00.000-07:00

There was a great highlighted technology over on Afrigadget that could lend itself to a branded microfranchise. It would be a briquette making business. There are other technology designs out there but the idea of a briquette making business is very appealing because it can address multiple issues in one intervention, i.e. as a business it would obviously seek to create jobs and increase incomes but selling briquettes would also bring some great positive benefits to the health of the family and the local environment.

The D-Lab out of MIT reminds us that charcoal is a smokeless fuel, cutting back on the indoor air pollution that leads to so many respiratory infections in children where there is open fire cooking in the home. In terms of the environment, charcoal can be made from agricultural waste which would otherwise be burned off as waste. This is particularly critical in a country like Haiti where deforestation is at a dire level. For a quick introduction to the technology GOOD Magazine did a great little article on this and other basic technologies a while back.

Has anyone has success or failure in attempting to launch a briquette making franchise. What were your greatest challenges?

VisionSpring has a blog

2008-07-26T08:27:00.000-07:00

From Social ROI:

VisionSpring, an Acumen Fund portfolio company, uses a wholesale distribution and franchising model to administer vision tests and sell low-cost reading glasses to India’s poor who are suffering from reduced vision. They do this by recruiting local Vision Entrepreneurs who are trained to operate a mini franchise, and travel from village to village to conduct check eyesight and sell glasses. One pair, with case and cleaning cloth, costs from $2 to $4.

Check out their new blog at Business in a Bag.

Greg Van Kirk elected an Ashoka Fellow

2008-06-19T19:49:00.000-07:00

Lucy Bernholz over at Philanthropy 2173 beat me to the punch in posting about one of the latest Ashoka Fellows who has a microfranchising connection. But there's always room for repeated coverage of good models.

When the Ashoka newsletter came out the other day I was excited to see a familiar name, Greg Van Kirk, as one of their new Fellows. I am not involved on the venture side to have seem it coming but I'll probably be involved in deciding what funder provides his living stipend :)

I first learned about Van Kirk's Micro-Consignment model at the last ESR Conference at BYU. I remember being impressed by the many different levels of involvement of CE Solutions, providing complete support in the business incubation process. I have seen other models that are very good at the microfinance side, others who whose strength is training and mentoring, and others who have successfully moved technological solutions, but Van Kirk is supporting the entire process and having incredible success because of it.

So, congratulations to Greg and CE Solutions. Congratulations likewise to Ashoka and their continued ability to identify these high impact social entrepreneurs and to all those that fund them through giving to Ashoka. (Always have to acknowledge those behind the scenes now that I've worked in Development).

Scojo Foundation Changes Name to Vision Spring

2008-06-14T21:54:00.000-07:00

Scojo, one of my favorite microfranchises, recently announced that they were changing their name from the Scojo Foundation to VisionSpring. I also see that they started a blog. I'm curious to know if the change represents a change in legal structure as well. The press release describes VisionSpring as a nonprofit social enterprise.

I like the name change. "Scojo Foundation" rings heavy of the nonprofit, traditional foundation side of things. "VisionSpring" comes across as a legitimate business even to the point that people would not necessarily suspect they are a nonprofit. It also is a better descriptor and represents the changing role of their organization. In the beginning Scojo was about operation and implementation, now , having proved the model, they are facilitating the spread of their business-in-a-box through large well-established partners such as BRAC or PSI.

Congrats to Scojo, I mean VisionSpring, for reaching this exciting turning point. Who's next?

WiFi Franchise in Sri Lanka

2008-05-17T19:57:00.000-07:00

I was introduced to another communication center microfranchise called EasySeva in Sri Lanka similar to the n-Logue or ONE Roof models I have covered previously. I was informed they have 23 outlets and expect to have 55 outlets by the end of the summer. It is a private, for-profit Sri Lankan company with a holding company in the U.S. but the seed funding was awarded in a contract with USAID. The model of EasySeva relies on corporate partnerships to actually provide the services, including Dialog Telekom, Qualcomm, National Development Bank, Lanka Orix, and Microsoft. They are also working in collaboration with the business school at USC. After proving the model they will seek private investment.

That combination of for-profit, government, academic, corporate, and private investment is instructive for those who are considering building a microfranchise operation. I think it illustrates an effective handoff from public to private support as well as aligning interests with major corporate partners. The corporate partners are truly that, partners, they are not donors, they have a particular interest in reaching a new market that without EasySeva they would not be able to reach.

Another element about EasySeva that strikes me is the use of high technology. Just as cell phones have exploded in the developing world, completely leap-frogging the technology of land lines, WiFi is posed to do the same thing in broadband connectivity. The broadband wireless technology will allow VoIP connections to allow international phone calls at a cost 40-50% less than their nearest competitor.

They have ambitious goals to open 400-500 outlets in the next 3-4 years and then expand into the thousands on the subcontinent. Another one to watch.

CareShops in Ghana: Conversion Microfranchises

2008-05-15T19:45:00.000-07:00

The post below was authored by Julia Tran and ran a couple weeks ago on NextBillion. It is about a franchise called CareShops in Ghana that converts existing small businesses into franchised shops. I did my graduate work in Ghana and had some interaction with one of the individuals who launched CareShops (who has since been recruited by Freedom from Hunger to launch their HealthKeepers social enterprise). The extent of the network of "chemical sellers" in Ghana was really quite remarkable; in nearly every village I visited I was able to find a chemical seller. The problem of course is that their medications were of questionable quality and their inventory varied considerably. CareShops is a brilliant effort to do nothing more than strengthen this existing network with branding, standardization of medications, and increased training. In theory the government already provided these services to the chemical sellers but in reality the government has far too few resources to be able to follow through on all their regulations to demand compliance. On the other hand, CareShops, as a for-profit business, has an incredibly high motivation to demand compliance in order to maintain the integrity of their brand. The concept of conversion should cause any social entrepreneur thinking of building a franchise system to do their research to understand current networks of business in the informal market before building anything from scratch.

Though I'm no longer on WRI and NextBillion's staff, I'm glad to announce the release of WRI's latest What Works business case study, CareShop Ghana: Improving access to essential drugs through conversion franchising. This study is authored by Joel Segre (Harvard Business School, '08) and myself, and was made possible through the generous support of the Horace W. Goldsmith Foundation.

NextBillion has discussed pharmacy microfranchises in the health sector on numerous occasions, but CareShop is unique among them as a conversion franchise that recruits existing drug store owners, rather than a "green field" franchise model that establishes new outlets. A conversion franchising strategy has great potential especially in Ghana, where an extensive network of 8,000 individually run retail drug stores, known in Ghana as "licensed chemical sellers," already reaches every corner of the country.

CareShop's founders interpreted the prevalence of easily treatable infectious diseases in Ghana as significant unmet demand for better access to more affordable drugs, and endeavored to meet this demand by working with chemical sellers in a franchising arrangement. CareShop, as the frachisor, runs on a for-profit basis and generates revenue from product sales to chemical sellers as its franchisees. CareShop provides franchisees with valuable business and healthcare training, branded materials, and the convenience of having products delivered directly to their doorstep. CareShop is a program run by Ghana Social Marketing Foundation Enterprises Limited, which itself is a for-profit subsidiary of Ghana Social Marketing Foundation (GSMF), a non-profit organization.

To date, there are 276 CareShops operating in Ghana, the oldest of which joined the franchise in 2003. CareShop has been in operation longer than many drug store microfranchises, which afforded Joel and me the opportunity to work with a larger set of business records and observe clear trends in CareShop's outlook. In the case study, we endeavor to present a thorough analysis of both the inherent challenges of implementing a conversion franchising model and the benefits of such a model to franchisees and to some extent, the pharmaceutical retail market.

The case study may be of especial interest in light of the recent discussions on NextBillion regarding scaling strategies and on the value of fostering talent at the BOP. Franchisees eagerly embraced training opportunities at the time of their conversion. Indeed, GSMFEL's well received training program helped CareShop to scale rapidly during its first couple years of operation. Franchisees were selective, however, in which lessons they chose to apply. Changes in business practices that led to immediate payoff were more popular than changes that do not have readily apparent benefits. Yet some franchisees even resisted behavior changes that seem to offer advantages over old ways of doing business, such as using GSMFEL's delivery service rather than having to travel to wholesalers in the city.

The mixed success of GSMFEL's training program offers insight into the advantages and disadvantages of working with an existing group of entrepreneurs. Download the case study for more details on this topic and other lessons learned from GSMFEL's experience serving the base of the pyramid by engaging microentrepreneurs.

Franchises for Kids in U.S., could it work elsewhere?

2008-04-14T19:00:00.000-07:00

It looks like microfranchising has found a place in the U.S. in the form of mini-franchises for kids, as recently reported by Springwise.

Franchild takes the childhood lemonade stand up a notch with packaged franchises for beeswax candles, organic soap, and jewelry/apparel businesses. The $25 USD price tag is what caught my eye in terms of being a microfranchise. These exact businesses might not be viable in other countries but the model certainly shows that the idea of franchising can be packaged into smaller operating units with a non-traditional franchisee.

This also brings up the issue of youth being a potential untapped population of entrepreneurs. Last week I saw a great presentation showcasing the work that is coming out of Ashoka's Youth Venture program. The population pyramid what it is in many poor countries coupled with the improvements in education yet persistent lack of jobs has created a perfect storm that can either be destructive or a perfect opportunity for the rise of microfranchises.

OneRoof swinging for the fence

2008-03-23T21:19:00.000-07:00

OneRoof is a for-profit social enterprise that seeks to deliver 9 essential services in one franchised operation: Information Tech. and Communications, Financial Services, Education, Energy, Health, Clean Water, Sanitation, Agricultural Technologies, and Employment Generation.

I heard Jennifer Ellingson, a senior associate, give a presentation about OneRoof at BYU last November and was quite impressed. They currently operate 20 stores themselves in Mexico and India, having yet to sell franchises outright. I would consider them to still be in the testing phase of operations and launch although I believe they have raised a significant amount of money for their initial growth. I think the are finding very different challenges in Mexico and India which is modifying their model. Looking over their website it appears that they have been able to attract a very talented team which bodes well.

I like their model of being a broker of services as far as being a branded location that can be a point of distribution for a number of partners instead of providing all the services themselves. I have no sense of how well they are delivering on their mission, I have not seen them in the press much and their blog has not been updated since they secured their second round of funding. Their aim to function completely as a for-profit venture will make them an interesting case study in evaluating the feasibility of Gates' creative capitalism and Yunus' social business.

Regarding not knowing their current status: what do you think about transparency and reporting in the citizen sector? How much should social businesses report about their struggles?

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

2008-03-19T20:14:00.000-07:00

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.

Excellent Implementation: DMT Toilets

2008-03-11T20:21:00.000-07:00

Over the last couple months I have been an intern at Ashoka promoting their Citizen Base Initiative. One of my favorite stories I've had to work with has been DMT Toilets in Nigeria.

A couple characteristics that jump out to me in terms of microfranchising:

Issac Durojaiye's franchisees are young street boys. This is in line with John Hatch's vision that microfranchising will be for the children of microcredit borrowers, that second generation.
Sourcing products locally. One of the great successes of DMT Toilets in my mind has been their determination to manufacture their products locally, having a ripple effect of economic stimulation in the community.
Blending of for-profit business and partnerships with private and public sector entities. The write-up on citizenbase.org tells a bit more about their partnerships but I think this is a great example of "creative capitalism" that Bill Gates described at Davos. I love the fact that the government has recognized the superiority of DMT's deliver system so instead of going out and building their own toilets for sanitation issues they simply purchased 2000 toilets and gave them to DMT Toilets to operate. As long as the government contribution did not come with certain political strings attached I'm all for such partnerships.
The power of individual 'ownership' in a franchise setting. Giving the boys complete stewardship of the operation created a higher quality overall business operation.

Could this model be replicated in other areas? Your area of operation?

Field Update from Living Goods

2008-03-03T16:48:00.000-08:00

Although I do not have direct contact with Living Goods I have always been interested in their work as the concept is nearly identical to the HealthKeepers of Freedom from Hunger, the market research for that business being the topic of my graduate thesis. I am anxious to see how the models mold as they are refined on the ground. This is a recent update from Chuck Slaughter, the founder and president:

Friends of Living Goods,

Living Goods, known as the “Avon of Rural Health”, is delighted to share the following milestones from this last fast-paced year on our journey to becoming the first fully sustainable system for defeating the diseases of poverty:

• Last May Living Goods and BRAC signed a joint venture agreement to collaborate on building a Living Goods network serving 20+ districts in Uganda.

• The Rockefeller Foundation, Mulago Foundation, Causal Fund and the Horace W. Goldsmith Foundation each awarded core funding to Living Goods.

• Extensive research, field study and customer focus groups helped LG identify its first 28 health products which are now in stock across the LG network.

• In a sizable launch, Community Health Promoters were carefully selected, trained equipped and deployed to serve 200 communities.

• Poverty Action Lab began helping Living Goods design a best-of-class randomized evaluation system to measure LG’s key objectives of dramatically reducing mortality and fertility rates.

• Harvard Business School and the Harvard School of Public Health selected Living Goods to participate in their Project Antares field study.

• Living Goods was awarded an exclusive Draper Richards Fellowship.

• Most recently Living Goods began developing plans to market low cost solar lanterns and high efficiency cook stoves to help poor households dramatically reduce fuel expenses and indoor pollution.

• Chris Elias- President of PATH, Paul Polak - Founder of IDE, and Erastus Kibugu of Technoserve Uganda joined the Living Goods Advisory Board.

We extend our sincere thanks to all who helped LG reach this important juncture. In particular we want to acknowledge the BRAC Uganda team and their exceptional director Mr. Khondokar Ariful Islam. Their commitment, experience and professionalism are unmatched and indispensable.

Of course this is just the beginning. We will add 300-500 more Health Promoters before the end of the year, and scale to 3,000+ in four years serving four million people in Uganda alone. In the coming years LG plans to replicate this model across the developing world with other world class partners and test expanded product offerings in clean water, power and small holder agriculture. In fact a half dozen multinational NGOs are already expressing keen interest in collaborating with LG to implement its innovative system in other countries.

Naturally, along with these opportunities abundant challenges lie ahead. Living Goods represents a disruptive innovation in rural health care that will require considerable trial and error. Building a truly sustainable, replicable business model will be one measure of Living Goods success; the far greater success will be counted in the many diseases prevented, the many children saved, and the many healthy productive years families will enjoy by virtue of having affordable essential medicines within reach.

Please feel free to contact me directly (cslaughter@livinggoods.org) if you have any questions, or are interested in partnering with or supporting Living Goods.

To Your Health,
Chuck

Microfranchising--Is it just a buzz word?

2008-01-16T21:00:00.000-08:00

At the end of the year the word "Microfranchising" made Lucy Bernholz's Top Ten Buzz words of 2007 and her entry then had some circulation at the GlobalGiving, Chronicle, Huffington,
and even made it over to Germany. Perhaps inspired by Rob Katz's recent post about the word "Bottom of the Pyramid" I have had contemplative thoughts about this word I find myself typing so frequently.

Is it a good sign or a bad sign that microfranchising made a buzzword TopTen list? Does this mean that it really only has value as a word and the sun will set after its little bit of glory? The great buzzwords of the past (paradigm shift) and the ones of today (Web 2.0) actually did have substantial impact on their relative industries; corporate training was completely overhauled starting with Covey and now every company and organization has a 2.0 strategy or strategy 2.0.

Lately I haven't received many google alerts for the term microfranchising but perhaps the conversation is taking place offline or perhaps it is still too early to tell if the word is catching on.

My take is that the term can be applied fairly broadly and there are many practitioners out there that are using 'franchise'-like models but just not the word. The words I still hear are "replication" and "scale" but the conversation has not turned that corner to talk specifically about franchising, as we traditionally think of it, as a way to replicate and reach scale.

What do you think--is there value in encouraging the adoption of certain words in the sector? Are certain words destined to have greater impact? attract more participation?

How do people become involved in this space?

2008-01-08T21:17:00.000-08:00

As I attended the ESR Conference and spoke with people informally or heard their personal stories I was intrigued to learn about the history of their introduction and first involvement in this space of microcredit/microenterprise/microfranchising/ and various efforts to help the poor. Three common histories:

1) Peace Corps. John Hatch (FINCA) and Greg Van Kirk (CESolutions) both were exposed or became dedicated to this kind of work when they volunteered with the peace corps.

2) LDS missionaries. Obviously, considering the conference was in Utah but this is a very common phenomenon. The LDS church has over 50,000 young people aged 19-21 spread out across the world at any given moment in time. These kids are on the streets, in the slums, in the homes of people around the world; they learn the language, fall in love with the culture and develop a soft spot in their heart for the people they served. They come home after two years of service and still feel a connection and want to make a difference.

3) The third common pattern was family vacations off the beaten track that exposed people to poverty for the first time in their life. The personal interaction and eye-witness experience changes them profoundly and they decide to take action.

I think the common thread is personal interaction. This has a couple implications:

First, there is great hope. The world is more interconnected than ever before. I can get on an airplane and be on the other side of the world even remote parts in a matter of hours. I can get on the internet and have an instant exchange with someone from India or Kenya. Prosperity is allowing more and more people to travel internationally. As personal contacts increase the number of people to get involved in efforts to eradicate poverty will increase.

Second, if you want to convert a donor to your cause find a way for them to personally interact with the beneficiaries of your program. I think of the example of Men on the Side of the Road in South Africa in which they consciously arranged, even if it was less efficient, for the beneficiaries to personally collect the donated resources from donors. They have extremely high commitment levels from their donors for their project at large. The same principal would apply if you are trying to secure a multimillion dollar grant. Take the drive to forge the personal connection.

Third, if the sector wants to recruit the best and brightest they must get into the universities and even high schools and facilitate the travel and personal interaction between the young people of the industrialized world and those struggling in poverty.

MicroFranchise Venture Fund

2008-01-02T19:40:00.000-08:00

Jason Fairbourne mentioned, almost in passing, that the BYU MicroFranchise Development Initiative has a verbal commitment of $100 million dollars to start a MicroFranchise Venture Fund in India. UNITUS, the microfinance accelerator, originally came out of BYU, perhaps this will turn out to have similar success but for microfranchising.

The focus on India is interesting; it is becoming the popular place to launch microfranchises: Scojo, Rat Catchers, OneRoof, n-Logue, Dishtree.

It will be interesting to see who they recruit to manage the fund and the companies they initially invest in. I suspect the highlighted practitioners at the conference would be likely candidates.

If you had $100 million to invest in microfranchises who would you support as your early investees?

ESR Conference Common Themes

2007-12-30T18:00:00.000-08:00

Shortly after the ESR Conference (Nov. 8-9) I moved cross country and in the mayhem left a number of posts covering the conference unfinished. So, these next couple posts are no longer 'late-breaking' stories but the principles and reports are still valid and, practically speaking, up-to-date. Quick refresh: there were five organizations that presented: Scojo (eyeglasses), Academy Creating Enterprise-ACE (business training school franchising graduates' businesses), Freedom from Hunger-FFH-Healthkeepers (preventative health), ONEroof (telecommunications), and Community Enterprise Solutions-CES (have a handful of microenterprises they help replicate). Taking that step back and looking at the picture as a whole I noticed a few common themes among the practitioners:

1. Experimentation

There was a common sense of humility, an acknowledgment of not knowing all the answers. They did not come in with a model and try to impose it, they put something out there and allowed it to evolve according to the needs of the people. In the process OneRoof's pilot programs in Mexico and India turned out a bit different from one another. ACE has experimentation built into their system, they allow their graduates to go out and experiment and wait for that business to surface that lends itself for franchise replication. FFH is experimenting with different products and allowing their pilot testers a lot of flexibility viewing them as collaborators in refining the business model.

2. Use of Technology

Mobile phones and the internet are facilitating communication to help practitioners overcome the distance and isolation challenges of working in rural areas. ACE requires their franchisees to send in simple sales reports via text message every day. OneRoof “relies heavily on Skype,” their representative said, to stay in contact with their stores.

3. Willingness to Partner

Each of the organizations had an eye towards partnership. They were not possessively protective of their idea or model; they were willing to collaborate and partner. Even within the group Scojo has trained FFH and CES and allows them to implement the program on the ground. ACE wants to start a fleet of bicycle vendors selling baked goods but instead of launching their own bakery they are trying to partner with a larger retail bakery, Julie's Bakeshops.

4. Company Ownership in early stages

All the practioners started in a phase in which they shouldered the financial risk and operation of the franchise. ACE has formulated this into a model they call the BOOT Model (Build Own Operate Transfer) in which they as the franchisor build and own the first couple stores which they essentially run as training centers for future franchisee operators. At the time of the conference OneRoof owned all of their stores. CES uses a Microconsignment model in which they gradually transfer ownership to the franchisee.

"Young Men at Risk" and the children of microcredit borrowers

2007-12-06T19:55:00.000-08:00

The latest competition at Changemakers is entitled Young Men at Risk. At the ESR Conference John Hatch brought up this issue in the context of his microcredit experience multiple times. FINCA finds that their clients' strategy for escaping poverty is to see that their kids get an education. Now those children of microcredit borrowers are graduating from high school but there are no jobs in their local communities. John Hatch sees disaster written all over if these young people cannot be channeled into productive employment. He therefore sees the children of microcredit borrowers as ideal candidates to be microfranchise operators. I liked his recommendation that the mother co-sign on the contract to become a microfranchisee.

It is hard to argue against him. My field experience indicated that the typical microcredit borrower is not a good candidate to operate a franchised unit. A large part of it has to do with simple life-cycles: the typical microcredit borrower is a bit older, they have little desire or confidence to change businesses, or to start something from scratch. They are often illiterate and have no experience keeping business records. The children of microcredit borrowers on the other hand are better educated than their predecessors, they can read and write, are anxious for employment, and have the vitality and youthful optimism and drive to start a new business.

Young Men at Risk --- An army of microfranchisees

New Book: MicroFranchising Toolkit

2007-12-05T20:50:00.000-08:00

A new book has come out called the MicroFranchising Toolkit. It appears to be a handbook aimed towards those without a business background who nonetheless are interested in systematizing their projects into a franchise. It provides templates for ledger books, rules for branding, etc.

I have not had a chance to go through the book but my first reaction on hearing the concept was-- yes, it's good to have a simple clear-cut guide but don't define everything so much so that practitioners will try to force the model on a situation where it is not well-suited. (The whole square peg in a round hole analogy.) Guide-yes. Helpful-yes. A cookie cutter solution that if you follow you will automatically be successful-no.

I would be interested in reading reviews from anyone in the comments.

GOOD Magazine and launching new Microfranchises

2007-11-19T12:50:00.000-08:00

The folks from GOOD Magazine contacted me (and probably some of you- fellow bloggers) in a marketing outreach for their second “Choose GOOD” campaign. I personally have not seen the magazine to say anything about content but I can whole-heartily endorse their partner organizations that benefit financially from the campaign. Among my favorites: Ashoka, Acumen Fund, Kiva, Room to Read and Teach for America.

As GOOD describes their mission:

Beyond funds raised, GOOD endeavors to forge substantive bonds between our subscribers and our partners, by connecting our partners to a highly creative and influential audience, we hope to catalyze a movement of positive thought and action.

I like the creative model GOOD magazine is using to support those organizations that have shown themselves to be high quality/high impact organizations. This brings up a general question: is it better to support those that already have traction or start a new venture? In our microfranchising context and for those who are just entering the space or have financial resources they want to channel this way, is it better to support a Scojo or HealthKeepers or launch a new microfranchise?

Of course there is room (and need) for both but I think there are many supporters who go the route of creating their own, often re-inventing-the-wheel or crashing-and-burning, who would have been better suited to have backed an existing proven model. I think one issue is that they like the personal contact, feedback, and connection they feel through a new project. So the question becomes: how can those proven model organizations embrace these individuals and allow them to feel connected and involved if they are only supporting the cause financially? Thoughts?

Honey Care Exports to U.S.

2007-11-19T12:46:00.000-08:00

One of my favorite microfranchises because of the low cost, simplicity, and multiplier in positive effects is HoneyCare Africa. Apparently they have saturated the market in Kenya and are now looking to export their honey collected from their 10,000 Kenyan farmers to the U.S. and Europe. I saw the first shipment to the U.S. at the ESR Conference last weekend. I did not go to the evening festivities where the honey was served so I haven't tasted it yet, anyone out there have a review?

Freedom from Hunger pilots HealthKeepers: Preventative Healthcare in a Basket

2007-11-14T21:17:00.000-08:00

I'll start with Freedom from Hunger and their MicroBusiness for Health Initiative. I, of course, am biased towards this project as I was involved in the needs assessment which turned out to be my main graduate work. Ellen Vor der Bruegge was the presenter.

Quick summary: Preventative health products in a basket sold by an microcredit borrower in rural Ghana patterned after the Avon or Tupperware models that were successful in rural America beginning in the late 1800's.

FFH could be considered the new kid on campus, they are just launching their program. They have put together a team of ladies to pilot the business and provide feedback. The name of the business is HealthKeepers and I like the fact that the women sellers chose the name for the business. As expected, they sell insecticide treated nets, condoms, and ORS packets with zinc but they also sell a handful of products, which Ellen called their “door-openers”. What would you guess is their biggest seller? Now, this is a region where malaria is hyperendemic, polio still exists in pockets, and children die everyday from ailments such as diarrhea. The answer, drum roll.... athlete's foot powder. That in and of itself is amazing--no traditional public health intervention would focus on athlete's foot, yet, market feedback identified a quick and simple product that is viewed to have high value in terms of quality of life. I think the key is that they experimented, they put something out there and let the market respond. If athlete's foot cream gets the customers attention which allows the HealthKeeper to explain the cost-benefits of investing in an insecticide treated net then I hope they become the largest distributor of athlete's foot powder in the world. I also liked that they gave free products to their entrepreneurs to try out, creating converts of the products, and subsequently creating a very convincing sales force. They also allow the seller to give away some products in the village to stimulate demand. I also liked that they try to source products locally.

Some of their challenges: Pricing--so that all parties in the value chain are sustainable. They are constantly trying to balance their three goals: increased health protection, providing a living wage for the entrepreneur, as well as create a sustainable business themselves as the franchisor. Another main challenge, and it was echoed by other presenters, is free handouts by other programs. There must be dialogue between the various NGOs and government entities working to fight malaria. I personally feel that it is better to sell the nets, that it will be perceived with greater value, that it is more likely to be used and maintained, that it will lead to consistent supply and greatest penetration.

They are aiming high looking to have 4-5,000 HealthKeepers covering all of Ghana. I'm excited to watch their business grow over the next couple years. As they say at FFH, Onward!

Concept Paper
Blog Discussion among HealthKeeper staff
Chat with field director

Economic Self-Reliance Conference Nov. 8-9 2007

2007-11-14T20:08:00.000-08:00

This past weekend I attended the microfranchising track of the 10th annual Economic Self-Reliance Conference at Brigham Young University. (Sidenote: if you feel so inspired to read or reread Emerson's 'Self Reliance' after hearing the title of this conference as I did, here is the full text). It was a wonderful gathering of practitioners, each sharing their experiences and lessons learned in the field. The upcoming series of posts I will summarize basic news, highlight the organizations that presented, and also my own observations regarding common denominators of success. A preview of the main presenters--Scojo, Academy for Creating Enterprise, OneRoof, Freedom from Hunger, and Community Enterprise Solutions.

News: Mention on BOPreneur

2007-11-13T12:30:00.000-08:00

Paul Hudnut at BOPreneur mentioned microfranchising in a recent post reporting from the TechAwards 2007. The rest of his observations are interesting as well.

4) Microfranchising is now in vogue. Interestingly, while there was a lot of buzz about it, no one seemed to credit BYU and its work at the Center for Economic Self Reliance. Even though they wrote the book on it. This is an area worth watching. People have talked about franchising to achieve scale in the past. Adding "micro" doesn't change the fact that you need a pretty high operating margin to make room for all the people in the chain. If I were going to look at this seriously, I'd also be looking at models like Great Harvest Bread Co., which has a one page franchise agreement. At Envirofit, for instance, it would be great to open up franchises, and we have discussed it. But that may mean higher prices for the retrofits. It may still be the best way to achieve broad distribution, since a great thing about franchising is reducing your asset footprint/expense per unit.

It's excited to hear that there is "a lot of buzz" about microfranchising up in San Jose. In one of these upcoming posts I'll report on the experience of some practitioners on the 'making room for all in the value chain' challenge based on presentations at the ESR Conference last weekend.

Selling the Concept to the Big Boys

2007-11-07T22:24:00.000-08:00

I was asked recently, something along the lines of, 'if you had unlimited resources, what would you do in this space of microfranchising?' My extemporaneous answer was that I would research the major franchises in the U.S. and Europe and then design microfranchises around their products and services. I would then pitch the BOP appropriate designs to them, showing how they could reach a new customer base, create future clients and how they could use it as a tool to show that they are a socially responsible business.

They would not have to take my exact design or even hire me as a consultant for appropriate operations at the BOP, I simply think that if these folks latched onto the concept of microfranchising, considering their resources and expertise, they would drive this concept to a whole new level and scale. So, Cendant could build small hotels catering to migrant workers, a McDonald's or Subway could create bicycle distributors like Fan Milk, Jani-King could launch franchises and clean the buildings of all the NGO Offices in these countries, GNC could bring essential nutrients to the BOP, ACE Hardware could create tool libraries as previously talked about...the list could go on and on.

What do you think? Would the big name franchises be open to this concept? Would they maintain a social mindset or would it just open the door to exploit the poor?

ESR Conference

2007-11-07T21:57:00.000-08:00

For the next two days I will be attending the Economic Self-Reliance Conference hosted by Brigham Young University. There are a number of breakout sessions that will focus on microfranchising. Considering they are sold out and that there are others out there that are interested but could not attend, I'll be sure to attend those pertinent sessions and post summaries and commentary.

Here are some of the sessions I'm looking forward to:
MicroFranchising in the Health Industry
Graham MacMillan (Scojo)
Ellen Vor de Bruegge (Freedom from Hunger)
Identifying MicroFranchising Opportunities
Greg Van Kirk (Social Entrepreneur Corps)
Andy Barfuss (COO Academy for Creating Enterprise)
Barry Smith (Keystone National Private Equity LLC)
MicroFinance and the End of of Global Poverty
John Hatch (FINCA)

Franchising web services

2007-11-01T12:07:00.000-07:00

I've emerged from my cave...my graduate thesis has been handed over to the committee, the end is in site! Hopefully this means I'll have time to finish those half-written posts.

Came across an interesting example of combining franchising with the internet. How could this concept be applied to the bottom of the pyramid? microfinance? What microfranchises would be especiallly suitable for this model?

The site itself.

Ceramic Water Filters

2007-10-25T11:45:00.000-07:00

Today as I was driving I listened to an old podcast from GlobeShakers from the Stanford Center for Social Innovation, the guest speaker being Don Gould speaking about Pure Water for All.

In the interview Don describes a microfranchise model for manufacturing and distributing the ceramic water filters. It sounds like a great model: using locally available materials, creating jobs for local communities with a tremendous social return on investment. This interview was back in 2005, does anyone have an update on their project?

CFW Shops on Forbes.com

2007-10-16T20:37:00.000-07:00

How do you get basic care to the remotest villages in Africa? One clever idea is to borrow tactics from retail chains like McDonald's and Subway--operate an easy-to-replicate, owner-operated franchise system focusing on health care.

Minnesota lawyer and businessman Scott Hillstrom started HealthStore in 1997 after traveling through Kenya and noticing that one of the big problems there was lack of reliable access to basic generic drugs. Government clinics often ran out of drugs because of supply-chain problems, while roadside shops sold elixirs of dubious quality. "It hit me like a bolt out of the blue," he recalls: A franchise system would be a way to maintain standards and improve the supply chain.

With a budget of under $1 million a year, HealthStore Foundation subsidizes nurses in rural areas to run 65 for-profit retail clinics in Kenya that provide basic treatments for malaria, respiratory infections and worms.

The 65 clinics run under the name CFW Shops and treated 400,000 patients last year.

Read the full article

Field Observations by Dave Richards, Unitus Board Member

2007-10-04T15:43:00.000-07:00

A fellow blogger, Dave Richards (defeatpoverty.com) recently returned from a trip to India as a board member of Unitus. He just posted a number of his observations, which I recommend, including a paragraph that relates to our subject matter. Speaking about additional services of their MFI partners:

There are some great ideas for providing a "business-in-a-box" type product with built-in franchise-type branding/product and/or access to distribution channels. One example is that rural women are provided raw materials for creating incense sticks or clothing and there is a buyback of finished products to a large retail channel eliminating the middleman and therefore increasing the women's profits substantially. Another example is the creation of an optimized "dairy unit" consisting of 7 cows/buffaloes which is financed and operated by a group of borrowers which both doubles the yield of milk produced per day per animal and has built in profits through buyback with a dairy cooperative.

I would be very curious to learn about their distribution system and the exact relationship with the large retail channels. Honey Care Africa in Kenya also came to mind as they use a similar approach as far as empowering the poor as producers, collecting finished goods, and providing a connection with mainstream retail.

What products are most condusive to this strategy?

Preserving Family History as a MicroFranchise

2007-10-01T16:27:00.000-07:00

I saw this story on the Business Opportunities blog about a man who has a business video taping interviews with grandparents and producing DVD's for all the family. Ignoring the fact that this could be a great business in the U.S. with the baby boomers approaching retirement, a simplified version of this business could serve as a wonderful microfranchise that would simultaneously preserve oral traditions, culture or even dying languages. I think about the poor spending large sums of money at the time of death/funeral of their elders and the efforts they spend commemorating the dead in many countries. Perhaps this energy can be directed towards paying for video or audio recordings of their elders before they die. The business could recruit multiple interviewers/salesman and process/edit the videos from a central location. The equipment could be very basic.

Has anyone seen an operation like this work in the field? Do you think it would work?

Book: Business Solutions for the Global Poor

2007-09-20T12:24:00.000-07:00

I found this to be most nitty-gritty, detail-filled collection of case studies for business operations at the Bottom of the Pyramid. It was published after Havard Business School's Conference on Global Poverty: Business Solutions and Approaches in December 2005. A small sampling of chapter titles gives an idea of the valuable information presented: "Understanding Consumers and Retailers at the Base of the Pyramid in Latin America", "Creating a Market for Affordable Housing", "Viable Business Models to Serve Low-Income Consumers: Lessons from the Philippines". There are used copies available through Amazon.

It would be impossible to include all the specific insights I gained from this read. I read the book thinking of my own projects and, time and time again, found specific examples of businesses that developed innovative ways to overcome the same problems I face. If not the same problems, it at least forced me to ask myself questions if I was ready for the problems ahead. I would therefore recommend the book to managers and entrepreneurs who are beginning projects at the BOP for a one-stop overview of what has worked before and to get a feeling for the mentality that will lead to success.

For more details from the conference abstracts and powerpoint slides are available through Havard's Social Enterprise Initiative website.

In the News: Microfranchising at NextBillion

2007-09-13T12:59:00.000-07:00

A post today responding to the SSIR article about microfranchising over at NextBillion.

I obviously echo Ana's thoughts about microfranchising being a 'hot topic' of late, hence this blog. I will say that Microfranchising isn't a new phenomenon, it just has a name now. But I do think having a name has great power and implications for the sector. The two parts of the word 'micro' and 'franchising' both carry certain connotations and imply certain lines of thinking. I think the word can also help social entreprenuers think and design their interventions with an eye towards replication from the beginning. It really is the principles advocated in such books as the popular E-Myth, now applied to the BOP. I also think the name is very appealing to private sector donors/funders/investors who are businessmen through and through and want a big bang-for-their-buck in their social investments as well. Not to say that's the heart of the matter but I do think the word resonates with them.

Ana also mentions the pity that the new publication MicroFranchising: Creating Wealth at the Bottom of the Pyramid is so expensive. I think the authors were likewise disappointed in the price set by the publisher in terms of the popular audience it could reach. And so things are already in motion to publish a new book for a wider audience that will focus on telling the stories of microfranchisees and the founders of the organizations.

CFWShops in SSIR

2007-09-07T11:54:00.000-07:00

The latest issue of the Stanford Social Innovation Review has an article about microfranchising. It is written by Jessica Flannery, co-founder of Kiva, which I have always been a fan, and highlights the story of Scott Hillstrom and his HealthStore Foundation which helps finance CFWShops in Kenya. I believe Scott Hillstrom is also behind the pilot microfranchise Living Goods.

The article provides a lot of interesting history and details of the CFW Shop experience.

Build upon Existing or Start Anew?

2007-09-07T11:35:00.000-07:00

Stephen Gibson, founder of A.C.E., writes in Microfranchising: Creating Wealth at the Bottom of the Pyramid,

“In order for microfranchising to be successful, the business that is to be replicated must have established itself as a profitable model that is worthy of replication.”

This statement grows out of Gibson's personal model of selecting 'worthy' businesses from his graduates at his Academy and helping them to replicate. I do think the strategy has particular merit but it is not mandatory. Selecting an existing profitable model in the marketplace helps to ensure that the model is culturally appropriate, that it has been incubated by local entrepreneurs, and passed a first survivability test in the market. However, I think the power of branding and franchising is understood well enough now that one can design a business as a franchise from the very beginning of operations. In line with the vision espoused in the famous E-Myth, an eye to systems, manuals, and replication from the beginning can lead to quicker growth and ultimate success.

My question for the readership is, how long is ideal to allow a pilot to prove itself worthy? What would be particular signs that the model is ready to be replicated and scaled up?

Tool Libraries

2007-09-05T17:00:00.000-07:00

This is a concept which is not new (the apparently famous Berkley Tool Library” has been around since 1979) but the idea seems to be catching on in the United States and could have potential as a microfranchise. There was a recent post on Treehugger, which has been posted by EcoRealty. Kevin Kelly over at Cool Tools also spotted it a few years ago. There is also a Wikipedia entry which seems to have collected a list of operating tool libraries.

The concept could work beautifully in poorer communities given the right structure. My first thought is to combine it with a microcredit service. (I perhaps appeal to the 'combine it with microcredit' thought too often but the structure and scale of microcredit just begs for piggyback ventures.) When we traditionally think of libraries in the West we think of library cards, getting notices in the mail, etc., which would be obvious barrieres at the bottom of the pyramid. The microcredit innovation of group collateral could serve as the check on accountability and the established record keeping of microcredit institutions would be a great resource. Some microcredit groups I visited in Ghana already had a system of collective purchasing with group savings. Elect one of the women to be the tool librarian that way the MFI staff aren't burdened. The group can grow their library of tools collectively and rent them out to the community and then use the proceeds to buy mosquito nets, bam, and it comes back to my field of public health. See dad, I'm using my degree.

I can picture a tool library in Ghana having the FullBelly Peanut Grinder or KickStart's Brick Press, just to provide two quick examples. The idea of a tool library might also be appealing to financial donors who like to see their contribution touch multiple lives on a recurring basis. It's got potential.

Squarefoot Gardening goes micro

2007-08-27T11:26:00.000-07:00

I was at a presentation last Friday where the founder of the concept of Square Foot Gardening, Mel Bartholemew, presented his company's newest product: a prepackaged, no-tool-required, easy-assembled squarefoot garden designed to be distributed through humanitarian efforts. In the lecture he said they intended to “give” them away which made me immediately hesitant thinking about problems created by other free handouts bednets, clothing, etc. I would instead see squarefoot gardening as an excellent business opportunity that microentrepreneurs should be anxious to adopt. I would feel more comfortable selling them the package, one could subsidize it in some manner or offer a flexible payment schedule, but having them invest in it would give them a sense of ownership and stewardship that would lead to greater success and dignity than a free handout. That's where I weigh in on that debate.

I get most excited about the multiple aspects of squarefoot gardening that could be fantastic microfranchises, either as distributors/educators/seed distributors/compost makers.

If you haven't heard of it before, square-foot gardening (or outside of the U.S. 1 meter squared gardening) is a simple gardening technique that is more efficient than traditional row gardening. The organization claims the same crop yields can be obtained in 20% the space with 10% the water usage over tradtional methods.

The organization is extremely socially minded and focused on empowering the poor to get themselves out of poverty. They have had amazing success in multiple countries around the world, showing great adaptability across cultures and conditions. Their stories also show great confidence in the poor themselves, who have seen the value of the idea, sought education about it, and ran with it. Including one case of a loose book finding its way from Nepal into the hands of an entrepreneur in India who used the methods to subsequently launch a training school for square foot gardening.

For more info:
Their book over at Amazon
A website endorsement from a Purdue gardener of the concept
Post at Get Rich Slowly
Wikipedia entry

Dave Richards on Microfranchising

2007-08-27T11:21:00.000-07:00

A post about Grameen Phone over at Defeating Global Poverty that I think would interest everyone.

Vote for Scojo Microfranchise as a finalist at Changemakers

2007-08-23T12:04:00.000-07:00

Scojo Vision Entrepreneurs has been selected as a finalist for the Disruptive Innovations in Health competition at Changemakers. I have highlighted Scojo on this blog as one of my favorites and know they are prominent examples in Micfranchise publications. Voting is open until August 29th.

The entry for Scojo also details their delivery model and financial model with a level of detail that is hard to find elsewhere.

I will also point two other microfranchise models that were not selected by the judges to be finalists. One is Freedom from Hunger's MicroBusinesses for Health for which I personally conducted early research. The other is Honey Care Africa which was one of my first posts.

Funding through popularity contests

2007-08-14T16:15:00.000-07:00

Razoo is still in beta form but I think it could be of interest to the microfranchising crowd. It is a grassroots effort at awarding money to social causes. They are just finishing their first voting, I personally voted for PlayPumps.

But this could be a great way to get an extra bit of funding and if Razoo grows in popularity so could the award money. I can see a microfranchise winning a Razoo competition, getting a little seed capital to launch another franchise, getting media attention, getting new funders, being discovered by other social entrepreneurs, and spurring growth.

I also think that because it is so new and it's following relatively small an organization that really wanted to win could win the money if they did some quick marketing. Go for it.

The implication of 'micro'

2007-08-13T17:52:00.000-07:00

As I read the BOP literature and follow the conversations online I have one fear regarding this concept we are calling microfranchising and that is that it will be highjacked by MNCs who do not share the “poverty alleviating, social, grassroots, BOP, benevolent, barefoot franchising” characteristic that the “micro” in microfranchising is intended to convey. This is the definition proposed by Jason Fairbourne in the introduction of MicroFranchising: Creating Wealth at the Bottom of the Pyramid, to which I likewise subscribe.

I fear that the connotations of “the fortune” at the BOP will create a frenzied 'gold rush' that will result in Western capitalism running over the poor instead of helping them live the life they desire. We assume falsely that our current way of living in the U.S. or Europe is the ultimate ideal and that all peoples share our visions of a good society. I fear that the forcefulness of advertisers and marketers would lead peoples in developing nations to sign onto western materialism and consumerism thinking such as 'more is better' and 'wealth is the highest virtue', that, when after the-deed-has-been-done, so to say, they will regret the loss of such virtues as sharing, frugality, hospitality, family, community, as they exist currently in their societies. I think it is a common report from people who have spent significant time with the poor that the poor seem to have something that is missing in our 'developed societies'; an innocence, a kindness, a sense of joy for life in spite of pain, which is often a stark contrast to the getting-ahead or hustlle and bustle of the streets of New York or the lonely isolation of suburbia.

In my own quest to help the poor and relieve suffering, I do not want to rob them of their most treasured values. That is one reason I hope that social entrepreneurs will take the lead of this movement of microfranchising instead of international MNCs that are only concerned about their own bottom line and profit maximization. That is not to say that MNCs cannot act in a social entrepreneurial way in certain endeavors of their company. But I would bring to mind the insights that Clay Christensen taught in the Innovator's Dilemma, that the very structure required for a large company to be successful will be the very obstacle to its ability to implement and/or adapt to destructive technologies. With the thought that the technologies and system innovations that will be required to reach the BOP will undoubtedly fit the definition of a disruptive technology. So I agree with Christensen as he suggests that the large company would need to set up an autonomous company that had the freedom to pursue disruptive solutions, even if it meant competing with the mother company. But again, I hope that such off-shoot organizations created to target the BOP will function in a way that will remain true to the social element on which the movement currently operates.

So that's my wish, that this great concept of microfranchising will remain in the camp that inspired microcredit and inspires social entrepreneurs everywhere.

Increase skills of the poor through Instructional Videos

2007-08-06T12:32:00.000-07:00

One element that will be a challenge with any microfranchising venture will be training. I think technology can play a major role in this regard. Internet cafes, computer kiosks, and products such as the $100 computer are bringing computing access to more marginalized communities and, most critical for this current discussion, access to cd or dvd players/drives.

However, beyond worker training, I think training through VCD’s or DVD’s has the potential to its own microenterprise. Consider the skills taught through video by the company SmartFlix that could bring income and skills to the poor: Soapmaking, smelting iron in africa, Infant and Toddler First Aid, plumbing and electricity, welding basics, homeade biodiesel and the list goes on and on. Just think of the possibilities if the subjects, language and learning style were catered to the needs of the poor. A microenterprise could be established to rent videos to people about to enter an internet cafe. Microfinance institutions could offer the videos to their clients to increase productivity and diversity in the marketplace. The videos could be coupled with mobile movie businesses.

Financing through Remittances

2007-08-01T16:54:00.000-07:00

An interesting article on NextBillion the other day about CEMEX's Construmex program which puts remittance money directly into production in the form of housing.

I don't know the exact method Construmex uses to wire the money for purchases but one popular trend is through the mobile phone. Aryty is the first company that comes to mind.

Both of these ideas are suitable for financing microfranchise startups. It is another service that the franchisor could supply.

Product Franchising Irrigation Kits and Mobile Movies

2007-08-01T16:39:00.000-07:00

This is an old article that shows two possible franchising opportunities. First the “ready-to-use, prepackaged irrigation kits” are a possible candidate for product franchising. Explore around on IDEI's website and particularly look at their product list.

The Bollywood-style instructional video is also a potential franchise business. A franchisee could acquire one of these modified vans and travel to villages to show movies. A primary source of income could be from companies who wanted to run ads before the movie. This could also be a wonderful mechanism to share public health messages.

In the News

2007-07-26T10:30:00.000-07:00

Here are some recent articles mentioning microfranchising:

Microfranchising: Using Markets, community to cure illness poverty from the International Herald Tribune

A complimentary aritcle by the same author about Scojo.

Stores in Shipping Containers was compiled by AIDG. There articles brings together examples I would classify under mobile units in this blog.

"My Little Pharmacies" in Mexico

2007-07-13T11:47:00.000-07:00

This post is from NextBillion:

"I'm very happy to announce the release of the WRI business case study, What Works: Mi Farmacita Nacional, authored by Enrique Coronado ('08), Christina Krettecos ('07), and Yvonne Lu ('07) of Columbia Business School.

Mi Farmacita Nacional, a fully for-profit pharmacy franchise, is among the first retailers of generic medications to serve low-income communities in Mexico. Mi Farmacita was launched in 2003 and has since more than doubled its number of outlets every year to reach 57 outlets as of March 2007. Outlets in operation for a minimum of 22 months are now processing an average of 2,400 transactions/month in sales of affordable medications, doctor consultations, filtered water, telephone access, and other essential products and services.

What Works: Mi Farmacita Nacional analyzes the business strategies that have enabled Mi Farmacita's rapid growth and success in serving low-income communities.

This case study was made possible through the generous support of the Horace W. Goldsmith Foundation and Social Enterprise Program at Columbia Business School."

A couple thoughts as I read through the Case Study:

I find it interesting that the business is purely for-profit and is the joint effort of two large companies in an effort to tap a new market and not necessarily a social enterprise that started off with the goal of helping the poor. I would place it under the philosophy of the "Fortune at the Bottom of the Pyramid" folks. I think they have great potential to bring essential goods and services to the poor but I would also like to see a system of checks or audits to ensure that they will stay socially responsible as they deal with the poor.

I like their goal to be "accessible by foot" as they choose store locations.
I like the inclusion of phone and internet health services which they cite as significantly increasing store traffic.
I found it interesting that 70% of franchisee recruits reported the company website as their source of discovery of the business opportunity.
I looks like helping potential franchisees finance their startup costs is the major barrier to accelerated growth at the present time.

I'll be interested in following their progress in the near future.

Vodacom Phone Kiosks

2007-07-10T16:12:00.001-07:00

Vodacom provides phone and fax services to the poor throughout South Africa via phone kiosks set up by Vodacom and operated by a franchisee. In 1993, Vodacom was issued a license to operate in South Africa with specific requirements that involved providing services to the poor who either had limited or absolutely no access to phone lines. Vodacom accepted the challenge and has set up approximately 22,000 phone lines scattered among 5,000 kiosk sites. A kiosk receives a wireless signal which is directed to stationary phones in a renovated shipping container.

Vodacom seeks out entrepreneurs who own and run the kiosks. Vodacom began by tracking cell phones with abnormally high numbers of calls each month. Vodacom perceived that these people were self-motivated entrepreneurs selling air-time. After identifying the natural entrepreneurs, Vodacom trained them how to manage a mobile kiosk. Vodacom no longer has to recruit franchisees; businessmen/women now come to them seeking franchises.

The total cost of setting up a phone kiosk is $7,400; however, Vodacom assumes a greater portion of the costs and leaves the franchisee with a cost of approximately $3,400. Vodacom builds the kiosk and the franchisee is responsible for the equipment and transportation costs. Initially, Vodacom provided loans, but demand for franchises has grown so rapidly that they now have enough franchise applicants that they are able to select people who already have financing.

Total revenue from Vodacom’s 5,000 kiosks was $129.5 million in 2003. Vodacom receives 2/3 of revenues and the franchisee retains the other third, resulting in a gross profit on average of $38,800 a year. This model is a MFO paragon, demonstrating the third MFO hypothesis that a MFO should provide jobs as well as create entrepreneurs. Vodacom kiosks employ an average of 5 people per shop. Currently, the demand for kiosks is greater than Vodacom’s ability to develop them.

Source: BYU Center for Economic Self Reliance
There is also an extensive case study prepared by WRI
These Vodacom shops really show the potential of microfranchises in terms of providing employment, delivering essential services, and being highly profitable for the franchisor. Considering the higher startup costs, the franchisees of Vodacom shops are not the same target market as the Grameen Phone ladies or similar operators, but I actually think employment holds more potential to help poor families than forced self-employment.

Book: Capitalism at the Crossroads

2007-06-29T14:53:00.000-07:00

I've been out of the loop lately as I haven't had access to the Internet while traveling, but I'm back now and the quest for knowledge continues.

Stuart Hart's Capitalism at the Crossroads is another one of those essential reads for people interested in business solutions to global poverty. In my mind his fundamental messages are:
1- Business has the power, capability, technology, and financing to best address the modern issues of climate change and poverty
2- However, current business practices must fundamentally transform if they are to be successful at the BOP.
3- We have the opportunity to "start fresh" when bringing global capitalism to the BOP and can decide to apply sustainable methods and technologies from the get-go
4- Product design, services, and delivery must be tailored specifically to the poor
5- Appropriate design will require the input of the poor themselves
5- Disruptive solutions will come in small packages

His recommendations have some implications for our current topic of microfranchising. The term 'franchising' could be interpreted to imply a single solution package that will be replicated exactly the same all over the world. This would be in conflict with Hart's idea of becoming "indigenous" and adapting to local conditions from the bottom-up. I think there can be a balance. The benefits of microfranchising are the systems, training, quality management, and lower costs it could bring to the informal market. However, when designing a microfranchise, practitioners must be prepared to be flexible and take cues from the local community and end users in refining business models. I think it will require more than simply changing the product basket, such as the modifications McDonalds makes in their menu in India or in Muslim countries. There will need to be fundamental changes in product design, marketing, purchasing plans to make them appropriate for the BOP. There are a number of publications now available including Next4Billion and a paper on the Economic lives of the Poor, that are shedding light on the unique economic behaviors and decision making of the poor. Such information will help us better anticipate some of the challenges of working at the BOP. I also think development of successful microfranchises will be an organic process. I would get something out there and let the market/local context refine it before I package it and implement it on a large scale.

In his book Hart is trying to get the attention of MNC's and I agree that if they really caught this vision then they are in a wonderful position to make a huge impact on the world in a relatively short amount of time. However, I anticipate that reaching the BOP will be more along the lines of the disruptive technologies Clay Christensen has written about. I think there are two groups of people that are converging at the same time that could potentially be the entrepreneurs to introduce such solutions: retiring baby boomers who have wealth and want to make a difference but perhaps not the full energy or desire to start something from the bottom-up and college-aged students who are more globally orientated than ever before and who are looking to make a difference in the world instead of simply chasing wealth. I think the marriage of these two populations has a great potential to produce solutions for the BOP.

I also like his emphasis on the small and simple. In the West, technology is all about the latest and greatest with the most bells and whistles. It will take restraint and perhaps more creativity for designers to produce products with a priority for simplicity, functionality, and ultimate low costs. When considering the crossroads at which we stand, I am optimistic that we will rise to the challenge and design the course correction that capitalism needs in our modern times.

NextBillion on Product Franchising

2007-06-29T14:04:00.000-07:00

Julie Tran over at the World Resources Institute published a post yesterday about product franchising and the delivery of vaccines.

I think the model is especially appropriate for product distribution in urban settings. From my experience in urban informal markets there seem to be so many people selling the same products. And doing so in nearly every major bus stop or market across the country. There must be distribution systems behind those products. It could simply be a matter of channeling appropriate technology products alongside those same products.

I also like two elements of Abhay's system: supplying doctors with refrigerators free of charge and providing the first 30 vaccines free of charge. Capital equipment and financial risk with a new product are strong barriers to new product adoption. Those are excellent incentives for individuals to become franchisees.

Can we learn from Coke distribution?

2007-06-01T10:04:00.000-07:00

Considering all the essential products and services that are unavailable to the poor, shouldn't we be inspired by the fact that one can purchase a Coke in nearly every village on the earth. Coca-Cola is a brilliant model of systems of suppliers, distributors, wholesalers, and retailers.

One of their methods could be termed microfranchising. In South Africa, Coca-Cola operates an Entrepreneur Development Program. After selecting entrepreneurs they provide training in business skills, such as managing cash flow, creating profit, marketing and following legal requirements, as well as provide access to startup capital to acquire inventory, coolers, trolleys, bicycles, etc. The program is mutually beneficial as it provides employment and education to local entrepreneurs while helping Coca-Cola gain access to undeveloped markets.

The most interesting aspect in the EDP case is that Coca-Cola originally tried to not impose marketing standards and procedures but to let it develop 'naturally' according to local entrepreneurialism. However, over time, Coca Cola saw that helping small businesses launch was insufficient, they saw a need to provide ongoing training to help them be sustainable. Compare that to the experience of microcredit which has traditionally limited its services to provide access to credit with the assumption that entrepreneurs could take the opportunity and run with it. Just as Coca-Cola saw the need to provide extra guidance, microcredit institutions should be interested in the concept of microfranchising as it can be a mechanism to provide ongoing guidance to promote sustainable livelihoods.

Source: Where there are No Jobs

Sporadic Posts

2007-05-28T09:39:00.000-07:00

I will be in Europe for the next four weeks on a performance tour so my posts will be a little sparse, but I will still try to do a little reading at night and make an occasional post. Those new to the site, feel free to look back at all the previously highlighted examples.

Health Plus Pharmacies in the Philippines

2007-05-24T09:41:00.000-07:00

I have previously blogged about my involvement in a pharmacy-in-a-box project with Freedom from Hunger as well as Living Goods and their Avon-lady sales strategy. The Health Plus Pharmacies program in Philippines is perhaps the model furthest along in terms of implementation and coverage. I wasn't able to find a presence on the web, if anyone knows of one provide a link as a comment.

It launched in 2001 as a project of the Philippines Department of Health and the GTZ German Bank for Reconstruction. The project is called the National Pharmaceutical Foundation Inc. (NPF). The NPF provides 3 franchise shops: a health plus outlet (limited product line, no required pharmacist), a Shop-in-a-shop (counter space in a government pharmacy or coop), and a Health Plus Pharmacy (full product line, full-time pharmacist and part-time doctor required). The NPF provides the business model, handles product distribution, branding, store design, and conducts performance audits.

NGO's or individuals can purchase the franchise. Startup costs for an outlet are US$400. The average franchise fee is US$156 plus .5 percent annual fee of all drug purchases.

Franchisees are able to absorb 70% of the store's income. As of June 2005 there are 317 Rural outlets, four shop-in-a-shop stores, and three pharmacies.

I think the strength of this project is the balance between government oversight and private business. The Department of Health brings key funding and management resources while the franchises themselves function according to the market, and the efforts/quality created by the owners.

I also think the multi-prong shop types gives the venture added depth. The Health Plus outlets, although offering a limited product line, can benefit from the reputation of the full service pharmacies.

Source: Where there are No Jobs vol 4

Bicycle Vendors spreading Nutrition

2007-05-18T10:25:00.000-07:00

When I was in Ghana last summer I often patronized Fan Milk bicycle vendors for an afternoon ice cream treat. They represent a highly successful microfranchise model. Fan Milk itself has total assets of US $17.4 million, provides indirect employment to over 8,000 and was awarded the "Business of the Century" Award at the Millennium Excellence Awards in Accra.

An individual can become a vendor for US $22 which goes towards purchasing the bike. They sell a simple line of products, namely yogurt, chocolate milk, ice cream, and fruit popsicles. Each day the vendor buys US$33 of inventory and can make an average daily profit of $5.50 (even higher in the dry season). Vendors have the option of returning the bike if they leave the company. Vendors average 8 years with the company. Vendors can move up in the company or purchase additional bikes and sub-lease them out to new recruits.

As the franchisor, Fan Milk provides free equipment repair, biannual training on product handling and hygiene. They provide the option of health insurance to vendors. They require US$.55 per day in forced savings, which Fan Milk distributes when they leave the company.

This example has so many social benefits: environmentally friendly bicycles, high nutritional product distribution, positive employee packages (insurance, education, etc) and a high provider of employment. My major criticism of the model would be the amount of trash generated and littered from the individual packets. After plastic water sachets, the bright pink Fan Milk packaging was the most common site of trash.

This model reminds me of a couple other projects:
The recent Grameen-Danone yogurt partnership highlighted onDefeatingGlobalPoverty.

Design for the Other 90%exhibit in New York, Transportation section.
Practical Action's collection of bicycle modifications and trailers as well as the idea of a bicycle ambulance.

I think the bicycle vendor model as a microfranchise can be applied to so many different products.

Book: How to Change the World

2007-05-15T09:20:00.000-07:00

David Bornstein's How to Change the World is a must-read for anyone dabbling in the field of social entrepreneurship. The book presents numerous case studies of Ashoka fellows centered around Bill Drayton who has systematically found, supported, and promoted them. However the most insightful sections are provided by the author as he provides observations regarding patterns and common charateristics such as "Four Practices of Innovative Organizations" or "Six Qualities of Successful Social Entrepreneurs".

I find this book appropriate to highlight on this blog because the author's final call to action is to promote "Blueprint Copying", a phrase borrowed from Diamond's Guns, Germs and Steel. Bornstein argues that the social sector has heretofore done well at 'idea sharing' and 'knowledge diffusion' but have not quite harnassed the power of "blueprint copying". I propose our present topic of microfranchising is none other than a version of blueprint copying.

One thing I came away with, and it relates to this concept of blueprint copying (microfranchising), is that these leading social entrepreneurs are truly remarkable individuals with incredible drives to see their vision come to reality. However this feeling of the power of a single highly motivated individual is coupled with a hope that their great visions can be replicated and expanded by perhaps the next tier of entrepreneurs through 'blueprint copying'. His final statement is similar to my vision of this blog, "the opportunities are endless--and they are just beginning to be seen."

A worm store

2007-05-11T08:37:00.000-07:00

It's not everyday one can take inspiration from the movie Dumb and Dumber, but Llyod's “I've Got Worms” store could be a wonderfully simple and low-cost microfranchise in rural areas in the developing world. Vermicompost, an excellent organic fertilizer, uses earthworms to convert organic waste such as kitchen waste, animal waste, and agricultural residues into compost. A vermicomposting franchise would train franchisees to properly 'feed' the worms and how to construct proper holding containers. Franchisees could then sell worms and holding containers to their neighbors. It would not be an all-consuming business but it could be an additional revenue stream, much like Honey Care Africa beehives can be an additional revenue for farmers in Kenya. I also think it is a microfranchise that could be particularly suited for rural women.

Source: Where the are No Jobs Vol. 4

Definition Clarification

2007-05-10T08:37:00.000-07:00

I have recently had the opportunity to get a sneak peek at the first major publication on microfranchising that is coming out in July. I thought I would pass on the authors' definition of microfranchising as the definition page is one of the most frequented on this site. Some quotes:

“The underlying intent of a microfranchise is to alleviate poverty through the creation and provision of sound, proven businesses that will in turn increase the earning potential of the microfranchisee. Microfranchises are independently owned and operated; thus,they create income for the individual owner and the owner’s employees, while simultaneously providing needed goods and services at an
aordable price.”

“the “micro”in microfranchising stands for more than mini or small.“Micro”is essential to microfranchising and in this sense has a social connotation that refers to grassroots bottom-up
initiatives, poverty alleviation, benevolence, base ofthe pyramid,and the like. “micro”also represents
sustainability. Thus, microfranchising can be thought of as poverty alleviating, social, grassroots, BOP, benevolent,and barefoot franchising.”

“The franchise in microfranchise represents replication to scale. This involves systematizing an operation, paying close attention to each and every aspect of a business until it is a turn-key operation, then replicating it to scale. Franchising embodies the concept of granting the right, privilege, or access to a proven business system.”

“The marriage of the two terms makes up microfranchising, which is indeed very different from franchising. For example,in traditional franchising, the purpose for establishing a franchise is to grow one’s business quickly in order to increase profits. In microfranchising, the focus is more on the microfranchisee and how he/she benefits from buying into a proven systematized business. A microfranchise is established to assist the poor in creating a sustainable income through owning
and operating their own business. The reduction of risk, provision of specific training, ongoing mentoring, and reduction of creative burden are all benefits to the microfranchisee.”

The book goes on to discuss the theory of microfranchising, potential business models, case studies, financing tools, and a concluding outlook to the future. I look forward to discussing the ideas in the book after its release.

How should we spell MicroFranchising?

2007-05-10T08:35:00.000-07:00

It might seem like a trivial topic but it has been something I've flucuated on as I have written this blog. I've seen it spelled as one word with a capital F (MicroFranchising), with a hyphen (Micro-Franchising), one word lower case (microfranchising), and even as two words (Micro Franchising).

I would think it would follow the other 'micro'terms, i.e. microcredit, microfinance, microenterprise, microinsurance, etc, which seem to have come to a consensus as single words without hyphens or special capitalization. But perhaps there are different opinions.

Latrine Designs

2007-05-09T08:36:00.000-07:00

Two new latrine designs that I can across: the Eloo and Cemforce.

The Eloo was designed in South Africa and has won numerous design awards. It was also reviewed in the Stanford Review of Innovative Products Benefiting Humans. I could see a manufacturing plant in the main city of a poor country and then microfranchises of installation services. The U.S. distributor is Cleanup America.

Cemforce offers a few different products. The one that caught my eye was their VIP (Ventilation Improved Pit) because it advertises as being able to build in less than 10 minutes, with no special cranes or tools. I'm always a sucker for simplicity.

This is another case where the microfranchisees would more likely be installers or distributors.

Online business consultants for the BOP

2007-05-08T08:10:00.000-07:00

I recently came across a new website via NetSquared called Nabuur.com. They are attempting to connect people in the developed world with those in the developing world, particularly to generate information exchange/advice. I think this could be a valuable tool for a microfranchise operation. Perhaps a partnership could be established with a franchise in the U.S., for example Subway, in which the franchise owners could volunteer their time to be personal business consultants to microfranchisees of, for example, a bakery in the Philippines. What do you see as the potential problems of such partnerships? Do you think it is something that could be valuable to the Microfranchise movement? I wonder if websites like Kiva plan on incorporating the concept of Nabuur into their operations.

More buzz about the missing step in the ladder

2007-05-07T20:26:00.000-07:00

This is an old post from Rob Katz over at NextBillion. I saved the story but then forgot to post it right away. I think it is another example of major players in the development arena recognizing the need for, what Tom Friedman calls mesofinance, that step above microlending that is missing. I think microfranchising can be a possible fit for his vision.

Who should be interested in Microfranchising?

2007-05-07T15:32:00.000-07:00

This post also comes from my conversation with Steve Gibson. He thinks microfinance institutions are in a perfect position to expand to microfranchising. The loan officers would be their eyes on the ground to report the most successful or innovative businesses from their borrowers. The MFI could then approach such individuals and see if they are interested in franchising their business model and then the MFI would act as a business incubator to refine the systems of the business and then in a venture capital role to loan larger sums that would be neccesariy to take an informal market business and brand it, steamline it, and replicate it.

The other party that should be particularly interested is an multinational corporation interested in moving a product at the bottom of the pyramid.

I think social venture firms such as The Acumen Fund or Good Capital have already demonstrated that they like the idea of microfranchising by supporting such groups as Scojo.

I think individual donors would also like the idea of microfranchising. Both Kiva and recently acquired by Google, Microplace have indicated that they hoped to eventually offer small returns for lenders. Would a lender be more confident in lending to a woman starting a business herself or a woman who wants to purchase a franchise? The branding and knowing there is training and systems behind a microfranchise I think lenders would feel more confident lending to a microfranchisee.

$25 Rat Catcher Saves Fields

2007-05-06T15:52:00.000-07:00

“Rat catching is an occupation for many poor people in the agriculture fields of India. The 25 percent crop loss due to the rat menace is economically devastating to farmers through the country. The income of rat catchers ranges from US $15 to US $30 a month. They use a traditional earthen pot fumigation method to kill rats in their burrows. This method comes at great cost to the fumigators' health as they inhale smoke that leads to severe occupational health problems, including problems with the respiratory system, heart and eyes. A study shows 30-40 percent of the rat catchers have one or many of these health complications.

The Center for Development of Disadvantaged People has developed a technology that would eliminate these health hazards and more than double a rat catchers' income because its method is twice as efficient. The cost of the instrument in between US $20 to US $25. Eliminating rats is essential to Indian agriculture, and the distribution and use of this technology could prove not only beneficial to farmers, but also to entrepreneurs in the rat catching business. “

I like this example for the simplicity of the technology, the low start-up costs, and the ease of training. How many places in the world could benefit from this technology, how many crops could it save?

Source: Where There Are No Jobs Vol. 4

Remittances as Microfranchise start-up capital

2007-05-01T15:18:00.000-07:00

People often ask Steve if the Academy also provides loans. They do not for various reasons including the conflict of interests between a business mentor and a creditor. Perhaps most interesting is the Academy finds that graduates who really want to start a microfranchise, despite their poverty, are able to secure money themselves, even up to USD $8000, with many of them securing funding through remittances. This idea reminded me of a recent business I heard about on NextBillion called Aryty.

I personally feel that remittances can be an unhealthy sign, possibly indicating a 'brain-drain' of the country's best and brightest going overseas, as well as creating a culture of dependency among the populace. However, I also see the large sums of money flowing as remittances and see potential for financing business instead of buying large screen televisions. I think therefore that directing remittances effectively can be a powerful financing tool for microfranchisees.

Keep it Simple

2007-05-01T15:08:00.000-07:00

Conversation with Steve Gibson continued: One fundamental lesson learned is to keep a microfranchise business as simple as possible. As a comparison consider two of the Academy's ventures: an ink-refilling business and baked goods distributors. An inkjet cartridge refilling business seems simple enough but technology is constantly changing meaning your business must be constantly changing, even radically, which does not play to the strengths of franchising. It is also a highly cut-throat industry with large players even giving away printers free if ink-refilling is contracted through them. The Academy's bake goods distributors consist of a man on a bicycle with a display case on front with five items to sell. Such a business has high potential for replication, for training of often poorly educated franchisee, and for continued demand in the market.

Throughout this blog I have tried to highlight such simple models as I agree with this fundamental philosophy. Over time more complicated microfranchisees will be necessary but the current status in the world tells us that there are enough problems that can be solved cheaply and effectively if only systems were in place to distribute the solution. I think the first wave of microfranchises should be as simple as possible than can be replicated quickly and widely.

The BOOT Model of growth

2007-05-01T14:59:00.000-07:00

At the Academy for Creating Enterprise in Cebu, Philippines they are experimenting with a model of franchise growth that they are calling BOOT (Build, Operate, Own, Transfer). The first player in the equation is the Academy itself. The Academy assumes full responsibility and builds a business with a specific vision for replication, developing systems and operating manuals. The chosen business could be selected from models the Academy has seen elsewhere, come up with themselves, or identified as a successful idea from one of their graduates. Graduates are given jobs as operators with the intent that these early operators will subsequently become owners of that current business and future franchisees in independent operations.

It is too early to give a definitive critique of the model, but I do think it has a number of strengths: early business risk being assumed by the sponsoring organization, a time of training before a transfer of ownership, and a built in mechanism for development of middle management.

Weekend Excursion/Back to business

2007-04-30T16:58:00.000-07:00

Sorry for the absence of posts, I used the weekend to go down to Zion National Park with the First Lady. Alright, she got there the day we left and I was hiking in the backcountry with my brother, but it does point out that it was the place to be this weekend. If you come anywhere near Utah, I highly recommed it.

Rejuvenated, I'm back to the land of wireless communication (any communication for that matter), laptops, and the blogosphere. I also got right back into the realm of microfranchising as I sat down with Steve Gibson earlier today. I have mentioned him and his Academy for Creating Enterprise in the Philippines a couple of times already in this blog. He is one of the early pioneers in this space as defined, although he would brush it off if such a statement had any connotation of prestige. He is currently living in this world of microfranchising and it was interesting to hear about the lessons his organization is learning as they experiment with replication models and different businesses. Over the course of this week I'll blog about some of the things we discussed (feel free to correct me at any point Steve if I misquote you).

Scojo Update

2007-04-26T09:53:00.000-07:00

There was a story about Scojo over at nextbillion the other day detailing Scojo's teaming up PSI, Population Services International. The five year agreement will couple two winners of FastCompany's Social Capitalist Awards. It is not clear from the article if the arrangement will keep the microfranchise model, the Scojo Vision Entrepreneurs, or if PSI will simply offer reading glasses as part of their product line. Either way it will bring vision care to rural Africa in an efficient and widespread manner.

Fridge for the Poor

2007-04-25T13:21:00.000-07:00

This technology has been featured on AIDG, the Rolex Awards, and Treehugger.

"The pot-in-pot consists of two earthenware pots of different diameters, one placed inside the other. The space between the two pots is filled with wet sand that is kept constantly moist, thereby keeping both pots damp. Fruit, vegetables and other items such as soft drinks are put in the smaller inner pot, which is covered with a damp cloth. The phenomenon that occurs is based on a simple principle of physics: the water contained in the sand between the two pots evaporates towards the outer surface of the larger pot where the drier outside air is circulating. By virtue of the laws of thermodynamics, the evaporation process automatically causes a drop in temperature of several degrees, cooling the inner container, destroying harmful micro-organisms and preserving the perishable foods inside."

Brillant design. Simple. Affordable for the poor. Impact of Health and Malnutrition. Job Creation. As of 2005 the inventor had delivered over 90,000 pots. How many more places around the world can benefit from this product? How can we get it to them?

FAQs

2007-04-24T21:50:00.000-07:00

These come from BYU's Center for Economic Self Reliance composed by Stephen Gibson:

Q. What evidence do you have that MicroFranchising is an effective tool?

A. Vol. 4 of the book series, “Where There Are No Jobs: The MicroFranchise Handbook” lists dozens of companies and NGOs that are using one or more of the many variations of the microfranchise model to move products through various sales channels. This book is available at the online shop of the BYU Center for Economic Self-Reliance.

Q. How does MicroFranchising work?

A. Microfranchising works like any commercial or social franchise. What makes it unique is that the primary objective of microfranchising is to help microenterprise owners grow either their businesses or their assets. In the franchising world there are two players that have a symbiotic relationship: the franchisor who is trying to increase market share and spread their brand and increase income, and the franchisee who is trying to earn a profit by running a proven business in his location. These same two players exist in the MicroFranchise world. However, often the franchisor could also be an NGO which is primarily interested in lifting up the owners, who are the potential franchisees, into the profit-making world. This is accomplished by replicating a good business opportunity to other small microenterprise operators.

Q. What are some of the advantages to a microentrepreneur of either being the microfranchisor or microfranchisee?

A. Here is a list of ten advantages to all parties involved in MicroFranchising:

--Replicates the performer’s winning business
--Removes the creative burden from the potential franchisee
--Provides a superior method of transferring technology
--Reinforces vital business skills and practices necessary for greater financial growth.
--Forces a mentor relationship
--Reduces the odds of failure during the start up process
--Speeds the exit out of poverty and to economic self-reliance
--Enables more small business owners to take advantage of market opportunities.
--Allows for economies of scale in purchasing and advertising.
--Eases the challenges of a fresh start-up because systems are in place.

ASAP launch

2007-04-23T11:03:00.000-07:00

I digress from microfranchising for a moment as I just received an email from Juanito (John Hatch), the founder of FINCA International and the concept of village banking, announcing the launch of the ASAP website. In his retirement John is co-founding this organization and fully supporting the movement.

ASAP stands for Alliance of Students Against Poverty but can modified to anything starting with 's'(Alliance of Schoolteachers, Scouts, Senators, Scientists, Social Innovators, etc) depending on the group. From the website:

The concept is simple: "a dollar-a-day for those living on a dollar a day"

The plan is for a Generation Y led campaign to abolish extreme poverty by 2025. It will therefore be an 18-year campaign--designed, managed, and evaluated by students--to get two million donors to reduce their consumption by $1/day so these savings can be invested in helping the world's most destitute families escape poverty. By 2025 they hope to have raised $7 billion on behalf of 50 million of the world's poorest families.

ASAP is trying to reach the poorest of the poor who have been missed by the microfinance movement. ASAP plans to channel funds, in the form of grants, through existing microfinance institutions that can either demonstrate strong track records in reaching the poorest families or through those that are willing to refocus part of their efforts toward serving the poorest. ASAP grants would support such activities as savings matches, asset transfers, subsidized food and medicines, healthcare, motivational training, business skill mentoring, and small scholarships that keep children in school—all of which have proven to increase the economic well-being of the very poor.

I think the concept of "a dollar a day for those who live on a dollar a day" really resonates with people and students in particular. I think the focus on the poorest of the poor and such activities as savings matches are a powerful medium to deliver aid that will breed self-reliance. The simplicity of the internet and setting up recurring payments through paypal has already been established by such organizations as Kiva. If ASAP plays their cards right in marketing and reaching their target population I think it could be very powerful.

Tom Friedman in the New York Times

2007-04-22T23:15:00.000-07:00

This article was brought to my attention through Rob Katz over at NextBillion.net

We might be using different words but we are seeing the same gap and opportunity. From the Friedman article:

Africa needs many things, but most of all it needs capitalists who can start and run legal companies. More Bill Gateses, fewer foundations. People grow out of poverty when they create small businesses that employ their neighbors. Nothing else lasts.

Whenever you read about capital flowing into Africa, though, it tends to be from big lenders like the World Bank, which have very strict criteria and work on big projects, or from microfinanciers, giving out $50 to a woman to buy a sewing machine. Microfinance has a role, but many people don’t want the pressure of being an entrepreneur. They want the stability and prosperity of a job created by capitalist risk takers and innovators. See India.

In some ways what Africa needs most today is more "patient" capital to spur its would-be capitalists. Patient capital has all the discipline of venture capital — demanding a return, and therefore rigor in how it is deployed — but expecting a return that is more in the 5 to 10 percent range, rather than the 35 percent that venture capitalists look for, and with a longer payback period.

Microfranchising is one tool that can help such ventures scale up.

Book: The Elusive Quest for Growth

2007-04-22T22:10:00.000-07:00

I might be a little behind as this book was published in 2001 but I found it while searching for his more recent work and found it extremely insightful. It is macro-level, economist view but the principles have applications at all levels.

Easterly's predominant theorem is that "people respond to incentives", whether those people are the poor, government officials in a poor country or rich donors in developed countries. I think the strength of the idea of private enterprise, be it microfranchising or other ventures, at the bottom of the pyramid is built upon the idea of incentives, namely profit incentives.

The other element of Easterly's work that really stuck out to me was the need to say no to corruption and poor government by voting with our aid dollars. When considering where to set up shop I think we all need to consider the International Country Risk Guide and reward those countries that are making policy and judicial decisions that show that the leaders are dedicated to the plight of the poor and the growth of the entire country and not just their own pocketbook.

And of course his emphasis on technology that improves productivity is particularly in line with the kind of businesses I propose on this blog. I would add an emphasis on technology that is tailored to the conditions of the poor.

Good read, I'll report on his latest book when my hold comes through from the library.

Practical Action Technical Briefs

2007-04-17T13:47:00.000-07:00

Formerly known as ITDG (Intermediate Technology Development Group), Practical Action has collected a wide range of technological solutions that are appropriate for people at the bottom of the pyramid. Some of the greatest resources on the site are the technical briefs that give details about projects ranging from an improved donkey plough to compost toilets to bicycle ambulances. The question becomes-how can we get these products and the technical information out to the people.

Hippo Roller Alternative

2007-04-12T22:31:00.000-07:00

I recently came across this product called the Q-Drum which is quite similar to the Hippo Roller I highlighted in a previous post. The Q-Drum has been around since 1997 when it was in an issue of TIME. A retailer could market test the two products side by side in a given area and see which is more suitable or perhaps both would be successful products. A microfranchise in association with this product would be a manufacturing operation.

Rural Energy by Grameen Shakti

2007-04-11T08:51:00.000-07:00

Grameen Shakti is a member of the Grameen family bringing renewable energy to rural communities. It was a 2006 Ashden award winner. I particlarly like their strategies of:
-Individual ownership for increased responsibility.
-Utilizing microcredit services to finance the purchase.
-Linking with income generating activities.

Malnutrition Microenterprise

2007-04-08T10:35:00.000-07:00

This food processing microenterprise is called VitaGoat and has been developed by the folks over at Malnutrition Matters: Food Technology Solutions. Their system was previously recognized as a Tech Museum Award Laureate in 2005. I like that the system is self-contained, but I do wonder if a more sustainable fuel can be incorportated into the system, perhaps the charcoal innovations from MIT that I highlighted in a previous post.

Listing of Microfranchise Opportunities

2007-04-06T13:28:00.000-07:00

Here is a list compiled by Kirk Magleby that identifies a number of microfranchise models. I will try to research details about the individual examples.

Personal Note

2007-04-03T17:54:00.000-07:00

I thought I'd share a personal success: my team was recently selected as a finalist in the Social Venture Competition at Brigham Young University. We will be presenting on Thursday in an effort to secure a portion of the $25,000 prize money. Our business is called Motu BioFuels and we are making biodiesel from coconuts and jatropha nuts in Tonga. Whether or not we win we are launching this summer. I've researched various case studies and conducted market research for other groups' social ventures, now it is my turn to get my hands dirty.

Vacutug for Urban Sanitation

2007-04-03T17:25:00.000-07:00

This is a small scale enterprise that UN-Habitat has been developing in Nairobi, Kenya. It is called 'Vacutug' and is a latrine emptying service.

The UN-Habitat site reports that the technology is "being constructed in association with a private-sector engineering company and a Kenyan water NGO. The micro-enterprise earned over US$10,000 over a two-year period and employed four people."

More details of the project can be found in this powerpoint presentation.

There are a number of reasons I like this business: the health and social class benefits of not using manual pit latrine emptying, the health benefits of proper sanitation, the rise in quality of life from proper sanitation, the market size due to the trend of urbanization, the need for the service is high density urban areas or squatter settlements where the walkways are too narrow for a regular sized tanker to reach, and the technology being specifically designed to be affordable and manageable for a microentreprenuer and the possibility for employment. Startup costs look to be around 5,000 per Vacutug.