Sunday, July 18, 2010

Micro-Franchising

Micro-franchising is a new trend among charity entrepreneurs, but first we have to define the terms.
A charity entrepreneur is one that offers opportunities, often to very poor third-world countries, and often with help of some NGOs (non-government organizations, such as Red Cross, or Doctors without Borders).
Micro-franchising is basically make the franchise very affordable. A typical full franchise in the US is 20000 dollars and probably a lot more. Microfranchises can often be had for well under $1000, by using a lot of charity work and simplify the training. By combining the two, third world countries economies and lives are improved.
One such example given in Entrepreneur magazine was for reading glasses, which is increasingly important due to the aging population all over the world. Those simple "reading glasses" with fixed prescriptions that you can buy in a US pharmacy or market for $10 may just be something curious for you, as you have access to an optician and an optometrist that will give you full eye care. For someone in the third world, who has no opticians, no doctors, and no health insurance, a travelling salesperson with a simple backpack of glasses for sale, some simple eye charts, and a little training, is a godsend. The reading glasses micro-franchise is a win for all sides. The franchisor gets to do good and make a little money by selling things with opportunity to sell more, if any. Most are probably written off as charity. The franchisee gets to learn a business and make a livelihood, by selling the glasses at an affordable price, usually 10% of the monthly wages in the area. The clients are happy because they are getting something they did not have before at a price that is not prohibitively expensive. The NGO's are happy to help the franchisor train the new franchisees because it improves the overall quality of life in the area. They often also offer low to no-interest financing to the franchisees, which are typically paid back within 1 year.
The reading glasses microfranchise, as reported in Entrepreneur magazine, is packaged as "franchise in a box". The franchisee gets one full kit, which contains glasses, eye charts for rough determination of of lens strength, and some sample reading material. The NGO will conduct 3 days of training and work out the pricing and financing detials.
A while back there was another article about another NGO providing cell phones / satellite phones to rural village woman, one per village, in remote areas. The women are trained on how to use and troubleshoot the devices. It provided a lifeline for local villagers, who can receive advice for everything from farming to medicine, and contact relatives who had moved to the cities and such. The phones are "franchised" by the NGOs to the women, who them charge villagers a modest fee per use. All parties benefit.
Of course, there is no need for this idea to be third-world charity world only.
When you think about it, those hot dog carts and mobile food vendors are basically mini-franchises. Most of their food is pre-prepared in a central kitchen every morning, and the carts basically heat, pack, and serve. There really is little reason for a food franchise to be fixed to a location except "tradition", given the capabilities of a modern food vending truck.
What services or products are widely needed, small enough to carry in quantity, AND can be sold for reasonable profit yet be affordable, in your area?
If your business already provides goods or services for sale, can it be micro-franchised?