Microfranchising at the Base of the Pyramid
3Working Paper —Copyright © 2008 Acumen Fund
As the search for market-based approaches to alleviatingpoverty continues, microfranchising is quickly emerging as apowerful new tactic. Microfranchising is a development toolthat leverages the basic concepts of traditional franchising, butit is especially focused on creating opportunities for the world’spoorest people to own and manage their own businesses.
Recognition of microfranchising’s eectiveness is growing,
but there remain many questions about how this emergingdevelopment tool is working and exactly what we can expectfrom microfranchising in the future. Few comprehensivestudies have been conducted, and to date only anecdotal stories
from the eld have been available.
To begin understanding the promise and the mechanismsof microfranchising, Acumen Fund India led a workshop
inlate 2007 on the more general topic of franchising in India.This paper builds upon the cross-cutting issues and insightsuncovered at that workshop by paying particular attention tothree leading microfranchising organizations that partner with
Acumen Fund. Specically, this paper introduces and explains
the business models and lessons learned from Drishtee, VisionSpring (formerly Scojo) and HealthStore Foundation.This paper starts with an introduction to microfranchisingand its potential. It then takes an in-depth look at how theseorganizations actually work and the challenges and successesthey have encountered to date. The paper ends with a brief
discussion on micronance, another very successful approach
to poverty alleviation, and some recommendations on
how microfranchising and micronance can build on each
other. Details on the models that Drishtee, VisionSpring andHealthStore Foundation have implemented are included in the Appendix. Examples from other franchisors that support thelessons learned are also highlighted.
Franchising and Microfranchising: A Brief Overview
Microfranchising has its roots in traditional franchising, whichis the practice of copying a successful business and replicating it
at another location by following a consistent set of well-dened
processes and procedures. In traditional franchising, thefranchisor (who owns the overall rights to the business) sells orlicenses its systematized business approach to a franchisee. Thefranchisor typically controls many of the macro aspects of the business such as creating and marketing the brand, procuring
inputs, continuously rening the model, and recruiting and
training franchise operators.
About 40 minutes away from the capital of Assam, India, is the village of Amlighat. With around 1,000 residents, Amlighat isno different from other small, and often impoverished, villages nearby – except for the presence of a Drishtee kiosk. JamunaSharma, the kiosk’s owner, used to spend her days helping run her husband's local dairy farm and looking after their twochildren. Early in 2008, however, she became a provider of health services in Amlighat.At a Drishtee-sponsored gram sabha (community meeting), Jamuna learned of the opportunity to manage her own business,
a Drishtee microfranchise offering basic medicines and healthcare products. With an investment of $150 (nanced with a
one-year microcredit loan), Jamuna has begun selling products ranging from women's health and hygiene (contraceptives
and sanitary pads) to supplements (ber and glucose) and medicines targeting gastrointestinal maladies. With the money she
earns each month – roughly $30 – Jamuna now exercises a degree of choice that was just not possible before. This choice – a
function of greater nancial freedom – may perhaps be the greatest return on Jamuna's investment.
Drishtee – Providing Opportunity Through Microfranchises
Acumen Fund is a 501(c)3 social venture fund that invests in enterprises that oer access to critical, aordable products and services to the poor through
scalable, market-oriented approaches. Acumen Fund India led a workshop in October 2007 in conjunction with the Indian School of Business, Wadhwani
Centre for Entrepreneurship Development, to examine franchising in India. Attendees included leading academics, Acumen Fund sta, and senior
management from Acumen Fund investees VisionSpring, Drishtee, Medicine Shoppe, Ziqitza Healthcare and LifeSpring.