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