NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Farm Shop hopes to take the idea of the micro-franchise to another level – the ground level to be precise.

Founded by Madison Ayer and Farouk Jiwa, Farm Shop is a Kenya-based social enterprise aspiring to grow into a rural network of agri-suppliers. With 25 stores in operation, proprietors supply smallholder farmers with a wide set of offerings – from basic fertilizers to more advanced hybrid seeds and drip irrigation systems. Farm Shop’s broader goal is to help their clientele increase productivity and the profits that go with it. To that end, Farm Shop also offers training to smallholders through product demos with suppliers, and even farm visits from agronomists to apply new techniques and tools.

Using a franchising model, Farm Shop has mainly worked with established, but struggling and ususally informal, agri-dealers to create its network of new stores, Ayer explained in a recent interview with Ted London, Senior Research Fellow at the William Davidson Institute. (Note: WDI is the parent organization of NextBillion).

Ayer, who is also the CEO of for-profit Kenyan firm Honey Care Africa, said Farm Shop was partly born out of the struggles that business had in finding bee keeping equipment. But the need expanded to all types of farming inputs that farmers needed, but for which there was little access. Farm Shop first launched as a nonprofit enterprise with startup financial support from a Canadian foundation grant. Management has tinkered a variety of types of models over the course of the last two years, with four shops serving as test sites.

“The first shop ended up being a disaster,” he explains. “We assumed it would be a disaster because we had to test all of these things.”

But he and co-founder Jiwa continued honing the model and the requirements for agricultural supply merchants to become franchisees. Those interested in establishing a Farm Shop of their own should anticipate about a 90-day process of training and renovating their existing shops with a Farm Shop decor. Managers are expected to come up with a down payment and complete significant training before becoming formal franchisees. But according to Ayer, shopkeepers are seeing a 500 percent increase in revenues after converting to a Farm Shop.

Ayer believes that by the time the enterprise reaches about 125 locations, the Farm Shop organization will break even. Each franchise has become cash flow positive within the first couple of months of coverting to a Farm Shop, he tells London in the interview.

“We believe as a market-based system, ultimately this should be self-sustaining,” Ayer said.

Check out the full video interview below.