2010 SEEP Annual Conference: Creating Employment: Microfranchising as a Complement to the Work of MFIs

Shital Shah of ShoreBank International Ltd. is guest blogging at the 2010 SEEP Annual Conference.

Franchising brings up images of Subways and McDonalds, but microfranchising is taking the concept and applying it to economic development in developing countries. In the workshop “Creating Employment: Microfranchising as a Complement to the Work of MFIs,” the panelists, Lisa Jones Christensen (Kenan-Flagler Business School at the University of North Carolina), David Lehr (Mercy Corps), and Malini Tolat (Grameen Foundation) discussed what microfranchising entails, examples of microfranchising around the world, and whether MFIs can serve as good partners with microfranchises. 

Microfranchises provide an opportunity for an individual to go into a business with less risk and a proven brand.  Examples like VisionSpring and FanMilk Ghana show that challenges like profitability, distribution, and financing remain unresolved. However, the ability to generate employment and make a social impact proves the nascent concept promising. 

The Grameen Foundation example of microfranchising provided a more in depth look at the challenges of working with MFIs.  Most MFIs do not have the capability to adapt processes and products to serve business needs; they may be better suited to work on financing issues alone. And while MFIs may be structured as a distribution network, if the focus or strategy is not present, then the MFI network may not be the best route for microfranchises. 

Microfranchising has the possibility to bring good business models to more remote areas in a standardized and stable approach. The development field will definitely hear more about microfranchising as the concept is further tested and developed.