Klarissa Jackson and Dr. Kristie Seawright, Romney Institute of Public Mgmt
By merging business sense with their desire to end poverty, social entrepreneurs are ultimately changing destined cycles of poverty. Although the concept of social change is not new, the application of business principles to social causes is revolutionary. Microfranchising, a form of social entrepreneurship, offers proven business ideas and established organizational frameworks that enable microfranchisees to launch and operate successful businesses to alleviate poverty in developing countries. Experts can standardize a successful business model and provide this prepackaged business to a microentrepreneur who lacks the skill to build a business model of his or her own. Microfranchising has potential to become a method for reducing poverty.
Although numerous microfranchise organizations have operated for over ten years, theory development lags behind practice. The early stages of microfranchise implementation, combined with a lack of theory in the field, created a need to look to established theory in related fields in an effort to develop best practices in the area of microfranchising. By studying factors leading to microfranchise development and success, this research significantly benefits established organizations and, more importantly, developing microfranchises.
Qualitative research helped determine the cultural appropriateness of the microfranchise and other factors leading to franchisee success. Personal interviews with microfranchise pioneers provided common factors leading to a foundational framework for microfranchise development and success, thus expanding the global forum for, and the growth of, this form of social entrepreneurship. Research conducted in this study constituted an initial effort to establish best practices for microfranchise success. These identified factors are recommended as potential building blocks in the formation of a viable microfranchise organization. A collection of global best practices, as provided in this initial research project, supports the advancement of this global initiative by informing and educating social entrepreneurs on the following issues. The findings from this study advocate that microfranchisors:
Design a Global Business: Although each target country will vary in economy and culture, the core model of the microfranchise should be designed for replication. It is imperative to create both a broadly transferable and regionally adaptable business model. The microfranchise should be a global business, extend to different organizations, settings, and locations to maximize the social and economic benefits of the model.
Perform Ground Research Onsite: Local groundwork performed during the developmental stage of a microfranchise can significantly benefit the overall success of the entity. Developers should work in the country to identify key opportunities, understand local culture, obtain first hand research on the prospective market, perform onsite interviews and test phases, and act as the liaison between local partnerships and administrate staff. Onsite research provides developers with the opportunity to create meaningful relationships with the local citizens.
Create a Culturally Appropriate Model: With microfranchise efforts crossing new borders, organizations must culturally adapt their business in a box to the local environment. Extensive field research should be conducted onsite to ensure all cultural conditions are understood and included in the development of the model. Microfranchisees and their customers can be tested in a pilot program to determine the cultural appropriateness of the training, product or service, marketing, and overall presence of the microfranchise. If the model is considered culturally inappropriate, immediate action must be taken to reconcile any concern.
Include Adequate Training and a Pilot Program Prior to Implementation: Microfranchisees need sufficient training, tailored to skill level and culture, preferably provided by local participants. Pilot program results help determine feasibility and sustainability of the model. Throughout the phase, weaknesses are identified for further program improvement. Training should also be evaluated throughout the pilot phase and appropriate changes made to the training curriculum.
Balance Control Between Administrators and Local Implementers: Ultimate success depends on franchisees understanding the local market and administrators understanding the broader vision of the organization. The administrative level must analyze the team dynamics and determine what level of decision making to allocate each party and delegate all possible responsibility to local counterparts because they are working on solutions to local problems.
Work with Existing Onsite Organizations: Partnerships can be forged with existing infrastructures such as local NGOs and microcredit institutions. Microfranchises may avoid reinventing the wheel by leveraging the networks and expertise of these organizations. Microcredit partnerships, for example, may provide critical insight into local market forces as well as a database of loan recipients prequalified for the microfranchise business.
The application of these recommendations will enable future microfranchisors to incorporate these best practices into the development of their own models and will also strengthen existing microfranchises. By identifying key concepts of a successful microfranchising model, a platform for economic growth in developing countries has been created. The implications of this research suggest that microfranchisors, though diverse in background and expertise, experience comparable obstacles and successes that ultimately shape the future of the microfranchise. The tabulation of these experiences to create common themes throughout the interviews establishes a foundational framework for future microfranchise success. With a limited documentation of best practices in the field of microfranchising, this paper provides a collective source of personal accounts and recommendations from leading experts in the field of social entrepreneurship, previously undocumented. These valuable insights provide future leaders and participants with detailed accounts of organizational formation, development, setback, and success.
The results of this research are intended to be a first step in the journey to poverty reduction and self-sustainability through the medium of microfranchising. This qualitative research identified key constructs for future theory-building research. Future research endeavors requiring exploration include the financial aspects of development, such as start-up and manufacturing costs, the incorporation of key business principles, and the global growth and expansion of microfranchises. Additional interviews conducted with microfranchisors highlighted in this study, as well as those not yet involved, is highly recommended in order to establish comprehensive best practices in microfranchising.