Last week we talked about microfinance, and specifically ways to help alleviate poverty in the poorest of areas. A topic that’s closely related to microfinance, but in some ways a better option is micro-franchising. It’s basically business ownership training. It is not only for developing counties however, it can be used for the poor in cities of developed countries as well.
The overall objective of micro-franchising is to promote economic development by developing solid business models that can be imitated by entrepreneurs at the base of the pyramid. It seeks to apply the proven marketing and operational concepts of traditional franchising to small businesses in the developing world. Typically the startup costs of these franchises are very low. While the businesses may be designed for micro-entrepreneurs, they can really be for anyone apt for leadership in poor communities. Typically the franchises target development issues such as health, sanitation, and energy.
If you are still confused, I’ll give an example. The franchisor would operate with the efficiency of a typical fast-food restaurant, which would drive prices down and increase delivery of essential products and services. Most micro-franchises even have the ability to expand and hold more employees, which could include the poorest of the poor, boosting development even more.
A recent conference hosted by the UNC Chapel Hill CIBER, held a panel with researchers and business experts to discuss the micro-franchise model. One of the main speakers on that panel is Jason Fairborne, the author of MicroFranchising: Creating Wealth at the Bottom of the Pyramid. In an interview with WUNC North Carolina Public Radio, he mentioned the idea that micro-franchising allows people to be business owners without being entrepreneurs. This is huge in developing markets, because it takes a lot of skill and creativity to start your own business, and a whole other set of skills to run one. The creativity may be lacking in an economy made up of mostly agriculture and manufacturing production. Before micro-franchising, the poor were left out of the loop of managing a business. Now they can learn with a hands-on approach.