Microfranchising is a

business model A business model describes how an organization creates, delivers, and captures value,''Business Model Generation'', Alexander Osterwalder, Yves Pigneur, Alan Smith, and 470 practitioners from 45 countries, self-published, 2010 in economic, soci ...

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 busine ...

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

es in the

developing world A developing country is a sovereign state with a lesser developed industrial base and a lower Human Development Index (HDI) relative to other 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 Acumen (formerly known as Acumen Fund, legally Acumen Fund, Inc.) is a nonprofit impact investment fund focused on investing in social enterprises that serve low-income individuals in United States. Acumen was founded in April 2001 by Jacquelin ...

, 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 The bottom of the pyramid, bottom of the wealth pyramid or the bottom of the income pyramid is the largest, but poorest socio-economic group. In global terms, this is the 2.7 billion people who live on less than $2.50 a day. Management schol ...

), 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 is a category of financial services targeting individuals and small businesses who lack access to conventional banking and related services. Microfinance includes microcredit, the provision of small loans to poor clients; savings ...

and

microcredit :''This article is specific to small loans, often provided in a pooled manner. For direct payments to individuals for specific projects, see Micropatronage. For financial services to the poor, see Microfinance. For small payments, see Micropa ...

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

Background

According to a 2012 article in ''

Innovations Innovation is the practical implementation of ideas that result in the introduction of new goods or services or improvement in offering goods or services. ISO TC 279 in the standard ISO 56000:2020 defines innovation as "a new or changed entit ...

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

Brigham Young University Brigham Young University (BYU, sometimes referred to colloquially as The Y) is a private research university in Provo, Utah. It was founded in 1875 by religious leader Brigham Young and is sponsored by the Church of Jesus Christ of Latter-d ...

Marriott School of Management The Marriott School of Business is the business school of Brigham Young University (BYU), a private university owned by the Church of Jesus Christ of Latter-day Saints (LDS Church) and located in Provo, Utah. It was founded in 1891 and renamed i ...

, 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 countrie ...

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

Background

Examples

Notes

Further reading