When you read the word “franchising,” what comes to mind? Most people probably think of McDonalds or Burger King. That’s not surprising, as franchising is one of the most powerful business models because it enables efficient delivery of goods and services to the masses at affordable prices. The food industry has successfully tapped into that power.
But what if franchising could be used not only for food and retail, but also to bring basic life necessities to the developing world? What if we could develop franchise models to bring vaccines, clean and efficient cooking fuel, basic medical supplies, food, and other necessities to communities that don’t have access to them?
What is Social Franchising, and Who is Doing It?
This idea, known as “social franchising,” or “micro-franchising,” is still in its infancy. In general, a social franchise, often sponsored by, or spun off from, an NGO or aid organization, (although there are many independent social franchises) creates a network of local entrepreneurs who sell products or services door-to-door from their homes. World Health Partners, a non-profit launched in 2008 in India, recruits people in remote rural villages with limited access to healthcare. Through cell phones and portable computers these reps connect their neighbors to a doctor in a larger city for a telemedicine session. Vision Spring, which works in over 20 countries, sells reading glasses through its reps. Health Store Foundation currently franchises 65 child and family wellness shops in Kenya and Rwanda, which are small scale drug stores and health clinics.
How Does Social Franchising Work?
The basic structure is that the franchisee receives a micro loan to purchase the beginning inventory of goods or the product necessary to provide a service, such as a cell phone or computer with internet service. The product could range from basic medical supplies, vaccines, healthy foods, high efficiency stoves, solar lights, safety products, etc. The franchisee then marks up the product or service by 15-25%. He, or she, goes from house to house selling the product or service. The profit provides the living expenses for the franchisee and the ability to repay the low interest micro loan.
An example of how the process unfolds is Living Goods. It is the creation of Chuck Slaughter, the founder of the clothing and travel gear company, Travel Smith. Living Goods was created in 2007, based upon the “Avon Lady” model. It gives micro loans to local “franchisees” in impoverished Third World countries to purchase the original inventory and a form of transportation, if necessary. The inventory consists of basic medicines, healthful foods, high efficiency stoves, solar lights, and various other health and safety products. The franchisees are encouraged to use a 25% mark-up on the products. They are also encouraged to recruit franchisees in other locations that will not compete with theirs. The result is employment for the franchisee, and, hopefully, other employees and franchisees recruited, plus the provision of quality life improving medicines and products to the customers.
The Impact of Social Franchising
The “Avon Lady” model changed the face of entrepreneurship in America by offering opportunities to women, who didn’t have other work opportunities, to make their own income. The model was simple – the real work of creating a business was done by the company, while the real work of selling, distributing, and earning income was done by real people who needed jobs. Avon paved a new path for franchising and direct sales in America. It put beauty products at the doorstep of households and job opportunities in the hands of women.
This model, tailored for third world contexts, has the same potential power to change the face of entrepreneurship in developing communities. It puts much-needed products at the doorstep of people in need and job opportunities in the hands of those without other options. New, innovative, and life-saving products can more easily reach remote people and places while men and women take pride in having a good job.
The positive effect of social franchising has not gone unnoticed by the for-profit franchise community. The International Franchise Association has created a Social Sector Franchising Task Force to explore ways that the for-profit franchise community can help social franchise entrepreneurs. They have already undertaken the creation of a mentorship program that will enable franchising leaders to advise social entrepreneurs. They are also creating model operations manuals and guides for NGO’s on how to operate franchises effectively. Can we imagine what could be accomplished if for-profit franchise operators donated even 1% of their billions of dollars of profits annually to social franchising?
Agora is uniquely structured and positioned to be a key player in this arena. As a 501(c)3 nonprofit organization catalyzing for-profit social entrepreneurs around the globe, imagine what could be accomplished if Agora could help launch for-profit social franchises? In fact, Agora has plans to do this with our business-in-a-box opportunities coming in the near future. When this happens, real needs will be met, quality jobs will be provided, societies will be transformed, and local economies will be improved!