Thursday, March 19, 2009

Microfranchising - Building on Good Ideas

It is certainly not new (I learned that I should have been reading more carefully three years ago... their new look is great!), but diving into the topic of MicroFranchises today, I found some new ideas.

First, the BYU Economic Self-Reliance Center "broadly define MicroFranchises as small businesses that can easily be replicated by following proven marketing and operational concepts. The overall objective of MicroFranchising is to promote economic development by developing sound business models that can be replicated by entrepreneurs at the base of the pyramid; therefore, the start-up costs of MicroFranchises will be minimal. The key principle is replication, replicating success to scale."

This led me to another article I missed in the Stanford Social Innovation Review. This article, as an online PBS report on health care solutions, focuses on CFW Shops in Kenya.

I am still thinking through my reaction to this idea. It stirs up my interest in social marketing and social enterprise. I am very attracted to the idea that, at least in the CFW Shops, franchise owners are vetted, supported and trained. It seems to address the frequent criticism of Microfiance that its loans remain too small to really have an impact that money alone doesn't make an entrepreneur. On the other hand, the challenge of quality control seems to linger. Can you really take away a franchise in Kenya if the owner cuts corners in a time of crisis? (This is discussed in the PBS video.)

One graduate of BYU has set up a blog on microfranchising and the head of the Economic Self-Reliance Center, Jason Fairbourne, has written a book on the topic (cover above) and runs the university's wiki, which explains their MicroFranchise Toolkit.


David Stoker said...

Thanks for the hat tip. What's your background in social marketing or social enterprise?

I echo your thought in finding the idea very attractive conceptually but the success stories are still limited. VisionSpring continues to be the flagship example with the most recognition and most published about their successes and failures. They just issued a press release today announcing winning the Skoll Award.

I think there is huge potential and although momentum is building slowly I think that could actually be a good sign, not being a quick fad.

smooncakes said...

I'm not personally familiar with the CFW shops in Kenya, but they touch on an ongoing debate in the public health field about the relative merits of private sector health provision in developing countries. it's a mixed bag -- the public health system in many countries does not function well, and it could very well be that people get better care at private clinics -- as long as they have the capacity to pay. this is the crux of the problem, though: many people cannot afford the basic healthcare that they or their children need, and it is extremely difficult to implement certain pro-poor programs using private providers. One example is malaria diagnostics: in many rural areas of developing countries where malaria is endemic, people are diagnosed with malaria based on fever; however, not all fever is malaria, and a mis-diagnosis could mean taking drugs that won't work and leaving the underlying condition untreated. Proper diagnosis means better quality care, and also avoids expenditure on unnecessary drugs. However, free diagnosis is a policy that is very difficult to implement through private clinics -- in part because somebody must pay for the diagnostic tests, and in part because of the incentive to over-prescribe. While private provision of healthcare can surely offer some benefits, it is also an area that makes a dangerous mix (private profit and healthcare provision in which information asymmetries are severe).

Pavlusha34 said...

David, my background is mostly a hobby, though I try to incorporate the ideas in my work as much as possible. Thanks for your sharing on the blog!

As always, I appreciate your grounding comments, smooncakes. I think it will remain a mixed bag. Nothing is a silver bullet and the "crux of the problem" isn't going to be solved with microfranchise alone. I will keep wrestling with the ideas (and look forward to you starting a blog soon).

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