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Monday, August 23, 2010

Final Post in the Series: Ramping Up Support for Microfranchising

By Francisco Noguera

This post is part of a series that introduces iuMAP, a web-based social enterprise directory developed by Ayllu and launched in media partnership with NextBillion. The purpose of the series is gathering feedback from the NextBillion community as the map unfolds and to share some of the information we've collected and analyzed. You can help triple iuMAP's size by submitting social enterprises and giving feedback. Read the first entry of the series here.

This post is the final entry in a series focused on microfranchising, a common way many social enterprises distribute their products.  There has been some great discussion of microfranchising recently (such as this SSIR article).  This series provides an overview of different types of microfranchising, profile many enterprises that are employing the method, and provide information for both investors and those looking for funding.  The last post focused on the investor perspective in microfranchising.  This final post focuses on existing support for microfranchising models. 

For the last month or so, we've covered the different types of microfranchises as they exist today.

For the final post in our series, we cover existing support for microfranchising.  As more businesses see the value in microfranchising, and as others try to learn more about the concept, building a support network will encourage information sharing, appropriate linkages, and fund efforts underway.  Often, there is talk of building an "ecosystem" for social enterprises to thrive; similarly, microfranchising will also require building blocks to propel it forward. 

As practitioners and academics explore this concept, valuable pieces of research have helped identify trends and gaps, and upcoming publications promise to provide even more context.  For readers that want to dig much deeper, there are a number of useful resources.  Jason Fairbourne out of Brigham Young University is leading the MicroFranchise Development Initiative, which aims to research and develop microfranchising as an economic development tool.  Dalberg's report on Franchising in Frontier Markets, covered by NextBillion here and discussed in our last post, provides a critical, global outlook and raises pertinent questions for further research.  Acumen Fund reflected on the experiences and lessons learned from their investees, Drishtee and VisionSpring, through a working paper.   

An upcoming book by Nick Sireau of Solar Aid is called Micofranchising: How Social Entrepreneurs are Building a New Road to Development and will focus on how microfranchising can be used as a tool for poverty reduction in Africa.  Kirk Magleby's book, Ending Global Poverty: The Microfranchise Solution, also focuses on microfranchising as the "most important business model on earth."  Books and papers like these not only serve to provide information and analysis, but are an important way to raise general awareness about microfranchise as a viable business option.  

Others are filling in gaps on missing links in building businesses.  Milaap, for example, is developing an online platform that offers loans to help franchises with their start up costs - a major hurdle for an infrastructure based model, as we discussed before.  The Microfranchise Development Corporation also supports different initiatives in this arena by helping to build businesses using microfranchises.  

Besides building knowledge and making links, money is always needed to fund efforts.  Several players have already started funding microfranchising projects.  The Clinton Global Initiative has a commitment focusing on market based solutions beyond microfinance, including microfranchise.  The World Bank Development Marketplace is another arena that has supported microfranchise models with IDE Cambodia.  Not surprisingly, there are not many funders in this space yet - whether this is due to the lack of viability of most models, high risk, or low levels of awareness amongst funders, without more sources of funding, microfranchise will see difficulty in moving forward. 

The research is growing, but the case study options are limited.  If funders encourage the development of microfranchises, and as organizations like Milaap provide the necessary linkages, we may see further implementation of this concept.  Perhaps the tendency to speak in a very general way about microfranchises or the common use of for profit examples, such as McDonald's, rather than successful hybrid models, points to the need for further support for microfranchising in the social enterprise sector.  As various stakeholders - universities, experts, umbrella organizations, corporations - get involved, we'll see an expanding support network for microfranchises, which will hopefully also lead to stronger, more established models.

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