Microfranchising is a

business model A business model describes how a Company, business organization creates, delivers, and captures value creation, value,''Business Model Generation'', Alexander Osterwalder, Yves Pigneur, Alan Smith, and 470 practitioners from 45 countries, self-pub ...

that applies elements and concepts of traditional

franchising Franchising is based on a marketing concept which can be adopted by an organization as a strategy for business expansion. Where implemented, a franchisor licenses some or all of its know-how, procedures, intellectual property, use of its busines ...

small business Small businesses are types of corporations, partnerships, or sole proprietorships which have a small number of employees and/or less annual revenue than a regular-sized business or corporation. Businesses are defined as "small" in terms of being ...

es in the

developing world A developing country is a sovereign state with a less-developed industrial base and a lower Human Development Index (HDI) relative to developed countries. However, this definition is not universally agreed upon. There is also no clear agreeme ...

. It refers to the systemization and replication of micro-enterprises. Microfranchising is broadly defined as small businesses that can easily be replicated by following proven marketing and operational concepts. According to Acumen Fund, microfranchising is "a development tool that leverages the basic concepts of traditional franchising, but it is especially focused on creating opportunities for the world’s poorest people to own and manage their own businesses." The objective of microfranchising is to promote economic development by developing sound business models that can be replicated by entrepreneurs at the base of the socio-economic pyramid ( bottom of the pyramid), thereby providing self-employment opportunities to those who lack entrepreneurial skills. Key principles include replication, sustainability, and social impact. In developing countries, microfranchising attempts to solve the dilemma of the "necessity entrepreneur" by providing job opportunities to those who lack fundamental entrepreneurial skills. Many companies and organizations provide business opportunities and services to the poor by introducing scaled-down business concepts found in successful franchise organizations. Although it is sometimes seen as a new development in the social enterprise sector that follows in the footsteps of

microfinance Microfinance consists of financial services targeting individuals and small businesses (SMEs) who lack access to conventional banking and related services. Microfinance includes microcredit, the provision of small loans to poor clients; saving ...

and

microcredit Microcredit is the extension of very small loans (microloans) to impoverished borrowers who typically do not have access to traditional banking services due to a lack of collateral (finance), collateral, steady employment, and a verifiable credi ...

, a form of microfranchising may have developed concurrently with microcredit in Bangladesh.

Background

According to a 2012 article in '' Innovations'', a peer-reviewed academic journal, microfranchising "has its origins in Bangladesh’s system of community health promoters, or ''shasthya shebikas'' in Bengali, which is the core of BRAC’s approach to providing low-cost health care." Advocates of microfranchising include

Jason Fairbourne Jason Fairbourne is an American entrepreneur and social innovator. He is best known for founding greentech platforYoodlizeand developing the concept of microfranchising while teaching at Brigham Young University and running Fairbourne Consulting Gr ...

, Stephen W. Gibson
W. Gibb Dyer
and other faculty and students at the

Brigham Young University Brigham Young University (BYU) is a Private education, private research university in Provo, Utah, United States. It was founded in 1875 by religious leader Brigham Young and is the flagship university of the Church Educational System sponsore ...

's Marriott School of Management, who have also been involved in microcredit, microfinance, and other microenterprise development activities. A large percentage of the world's population has no choice but to survive on earnings from their own micro-enterprises. A 2002 report from the International Labor Organization indicated that 72% of sub-Saharan Africa's population, 51% of Latin America's population, and 65% of Asia's population operates within the

informal sector An informal economy (informal sector or grey economy) is the part of any economy that is neither taxed nor monitored by any form of government. Although the informal sector makes up a significant portion of the economies in developing countri ...

. Moreover, self-employment represented 70% of informal employment in sub-Saharan Africa, 62% in North Africa, 60% in Latin America, and 59% in Asia. Many small businesses operated by people in developing countries fail or exist on subsistence levels. Microfranchising is a tool designed specifically to assist these entrepreneurs to become more successful and reach economic self-reliance, through the provision of successful business models with the necessary initial and on-going training needed to succeed. Companies such as Bomgi Ltd. offer initial and on-going business training to their franchisees. Such companies have chosen to train franchisees in areas of business including leadership, entrepreneurship, marketing, sales, customer service, and finance.

Examples

Examples of microfranchises include BRAC's community promoters (in health, agriculture, legal services and other areas), Nuru Energy Entrepreneurs (East Africa and India), Village Phone Program by

Grameenphone Grameenphone LTD, widely abbreviated as ( d/b/a) GP, is a telecommunications service provider in Bangladesh. As of December 2023, its subscribers span over 82.20 million. It is a joint venture between Telenor and Grameen Telecom. Where Telen ...

, Living Goods (Uganda), and Fan Milk Limited (Ghana).

Background

Examples

Notes

Further reading