Microfranchising

Key takeaways

Microfranchising belongs to science; place it in that map before memorising details.
Learn the definition first, then one example that makes the definition concrete.
Connect Microfranchising to a quantity you can measure, compute or draw — that is where exam questions come from.
Reproduce the core statement of Microfranchising from memory before moving on to harder problems.

Reference excerpt

Microfranchising is a business model that applies elements and concepts of traditional franchising to small businesses in the developing world. 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, 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), 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 and microcredit, a form of microfranchising may have developed concurrently with microcredit in Bangladesh.

Background According to a 2012 article in Innovations, 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's Marriott School of Management, 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. 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).

Notes

Further reading Felder-Kuzu, Naoko: Kleiner Einsatz, große Wirkung. Mikrofinanzierung und Mikrofranchising – Modelle gegen die Armut. rüffer & rub, Zürich 2008, ISBN 978-3-907625-40-8 Fairbourne, Jason S., Gibson, Stephen W. & Gibb, W.: MicroFranchising: Creating Wealth at the Bottom of the Pyramid. Edward Elgar Pub, 2008, ISBN 978-1-84844-053-1 Fairbourne, Jason, ‘Microfranchising’, Marriott Alumni Magazine, Summer 2007, Marriott School, Brigham Young University, at https://web.archive.org/web/20110719155524/http://marriottschool.byu.edu/marriottmag/summer07/features/atwork1.cfm (accessed May 15, 2008) Oduor J, et al. (2009), 'Evaluating the impacts of Microfranschising the Distribution of Malaria Effectiveness in Kenya on Malaria Morbidity and Mortaliry', Journal of Development Effectiveness, vol 1 no. 3 372-384

Worked examples

Example 1 — a first encounter with Microfranchising

Start with the simplest possible case. Write down what Microfranchising claims or describes in one sentence, then invent the smallest concrete situation in which that sentence is true. In science, the smallest case is usually a single object, a single equation or a single measurement. Check that every symbol or term in your sentence has a meaning in that case.

Example 2 — changing one variable

Take the situation from Example 1 and change exactly one quantity: double it, halve it, or set it to zero. Predict what should happen to Microfranchising before you calculate. Comparing your prediction with the result is the fastest way to find out whether you understand the idea or only the words.

Example 3 — an exam-style question

Typical questions about Microfranchising ask you to (a) state it precisely, (b) apply it to given data, and (c) explain a limitation. Practise writing all three answers in under five minutes; the third part is what separates a full-mark answer from an average one.

Applications of Microfranchising

In research: Microfranchising appears in science research whenever the underlying quantities have to be modelled precisely. Papers usually cite it as a starting assumption and then explore where it breaks down.
In technology and industry: Engineering practice reuses Microfranchising in design rules, simulations and safety margins. Knowing the idea lets you read a specification sheet and understand why the numbers look the way they do.
In the classroom: Microfranchising is common in secondary-school and first-year university syllabi. It links to neighbouring topics Business models, Franchises, so understanding it makes those chapters shorter.
In everyday life: Look for Microfranchising outside the textbook — in sport, cooking, traffic, electronics or the sky above you. An example you found yourself is remembered far longer than one you were given.

How to study Microfranchising in 20 minutes

Read the reference excerpt below once, without taking notes.
Close the page and write down what Microfranchising means in your own words.
Compare your version with the excerpt and mark what you missed.
Work through the three examples above with pen and paper.
Explain Microfranchising out loud to somebody else — or to Teacher Smith in the lgStudy chat.

Frequently asked questions

What is Microfranchising in simple terms?

Microfranchising is a business model that applies elements and concepts of traditional franchising to small businesses in the developing world. It refers to the systemization and replication of micro-enterprises.

Why does Microfranchising matter?

Because it connects several science ideas at once: it gives you a definition you can apply, a quantity you can calculate, and a way to check whether a result is plausible.

How should I study Microfranchising?

Read the excerpt, restate it from memory, then work through the examples and applications listed on this page. The five-step study plan above takes about twenty minutes.

What does this page cover?

It gives you a compact reference excerpt plus original lgStudy explanations, examples, applications and study material on Microfranchising.