I first came to know about microfranchising in the context of developing societies through my work in Tanzania in 2013. The company I worked with, as a product development fellow, used what seemed to me at the time to be a very unique and effective way of delivering its products to the farthest rural communities while at the same time enhancing the local economic cycle by engaging local community members as business partners (instead of simply customers). I did not know at the time that this approach is called microfranchising. In fact, I only came to know about the term a few weeks ago when my friend – who is involved in all of this – told me about it and said that I should look it up. I did not only come to realize that this approach exists in various places around Afirca, in different variations, but that it is also steadfastly gaining more ground.
In the context of Tanzania, and similar contexts, the approach of microfranchising means that companies and organizations team up with local community members or groups (of entrepreneurial tendencies) to reach far and wide into remote areas, where the particular products (and services) are most needed (such as off-grid energy technologies, agro-business services and machinery, microfinancing, etc.). Instead of establishing branches everywhere, companies ‘franchise’ their brand and products/services to local individuals (or groups) all over the villages and districts. These local entrepreneurs do not just become employees, but business partners. Their incentives are often doubled in such deals: they get to diversify their own businesses and they also get access to professional training and association with larger business entities with supposedly wider networks, knowledge and more sophisticated commodities. The companies, on the other hand, expand their market significantly and become accessible to consumers wherever they are.
In this way, microfranchising seeks to overcome two obstacles:
- The infrastructure obstacle: since it is no secret that the deficiency of transportation and communication infrastructure in many developing countries – especially in the rural side – makes last mile distribution very difficult. Yet, such conditions also make last mile distribution very critical for the success of particular businesses that target households and individual end users.
- The marketing obstacle: since it is also a huge task for a company to introduce itself and its products to the entire region/country given financial limitations and the same infrastructure problem above. By focusing on targeting and properly-training selected individuals (and entities) who have initial interest and capabilities, and who will then carry-out the marketing activities within their own communities, companies are being wise and more efficient in using their marketing budgets.
Besides overcoming the obstacles, two good ‘triple bottom line’ values are being created by the microfranchising model:
- Sharing economic gains: since the local distributors get margins from sales (which makes them running a properly independent business) there is a level of immediate profit sharing with local community members. The ‘brand sharing’ with local entrepreneurs also makes the brand more organically familiar to communities (i.e. they associate the brand with some of their own members). Generally speaking, this looks more ethical than a centralized capital business model that treats communities only as customers, and workers only as employees, keeping all credit and profits to itself.
- Local business capacity increased: through training the local entrepreneurs, in the microfranchising schemes, to not only market and sell the new products, but also in the techniques of managing and improving their businesses. A valuable wealth of knowledge and skills is gently deposited into the communities. It is the kind of gift that keeps on giving (pardon the cliché).
I have personally come across a number of impressively successful stories of local entrepreneurs who were able to launch or expand proper and lucrative businesses through engaging in microfranchising schemes. Some of the stories close to my sentiments are stories of rural women entrepreneurs who were able to transform the lives of their entire families (themselves included) not just towards better economic conditions, but towards a more optimistic vision of their future and their families’ future.
Yet of course it’s not all nice and fluffy. Challenges exist in abundance. One particular problem is that microfranchising thrives – especially for local entrepreneurs – precisely because of conditions unfavourable to the large developmental picture. The weakness of transportation and communication infrastructure is not something to be celebrated, yet it is the reason for the success of many microfranchising schemes. When such stories of success seem to not be in alignment with long-term and big-picture aspirations of development, the sustainability of the model is rightly called into questioning. Yet things do not necessary have to be in total contradiction, for it is also the dynamic nature of social enterprise and technological change to evolve and transform with evolving conditions. Microfranchising may be able to participate now in improving socioeconomic conditions for rural communities and then later transform itself when different conditions come into place – perhaps better conditions that were brought into realization by contributions from the same microfranchising schemes.
Some links for further interests:
- Solar Panel Energy: Distribution through Microfranchising: http://bit.ly/1FxlisX
- Eco-Fuel Africa: Why-Micro-Franchising?: http://bit.ly/1Fxlubx
- Microfranchising: An Innovative Approach in Microfinance: http://bit.ly/1FhLpS5
(note: due to research ethics requirements, i cannot use pictures with people’s faces here most of the time, due to absence of verifiable consent. instead i take liberty in attaching some unrelated but nice pictures!)