Microfranchising
the licensing of "micro" business models, or business models sized to individual operators, in the BoP
Franchising is a process by which working business models (and their associated technologies and systems) are licensed to other parties. Microfranchising, therefore, is the licensing of “micro” or small-scale business models to operators in the BoP. The actual size of a microfranchise may vary, from business models that provide supplemental income to a single individual to ones that provide full-time employment to a group of owners or workers. In reality, the "micro" in microfranchising comes from its association with microfinancing - it's most common form of start-up capital - rather than its size.
One of the most well known example of microfranchising is the Grameen VillagePhone program, where women entrepreneurs offer public pay phone services via cellular phones in villages in Bangladesh. The women take out a microcredit loan of $100-$150 to purchase a cell phone and initial talk time; are trained by Grameen in operating the phone, in marketing their services, and in operating a phone business; and then offer the phone usage for fees in their village. The women generally make back their investment within a year, while their customers save money by being able to access local telecommunication services. From the entrepreneur’s perspective, the benefits of a microfranchise include a pre-packaged business model (thereby reducing risk) and access to training, support, a brand and potential technology (as in the VillagePhone case). For the organization offering the franchise, the benefits include expanded reach, the entrepreneur’s local knowledge and networks, and entrepreneurially motivated service providers.
It is worth pointing out that for many of these Village Phone operators, the franchise is used to generate additional income rather than to act as a sole source of income. This illustrates the BoP reality that people often rely on a diverse set of income streams rather than a single job, and reiterates the reality that microfranchises can actually be classified as “smaller” than an individual, in the sense that the franchise may not take up all of an entrepreneur’s time.
See the links and additional resources section for more examples of microfranchises.
