Microfranchising. Fostering the economic empowerment of the BOP

Outline 1.Main problems at the BoP 2.What is Microfranchising? 3.What Works? Successful cases from Asia and Africa 4.MIF’s Microfranchising Agenda

1. Main problems at the BoP Most poor and low-income people lack skills and access to formal jobs, and become entrepreneurs out of necessity Typical micro-business at the BoP Necessity entrepreneur Creative burden High risk businesses Limited access to products/markets Mostly informal

2. What is Microfranchising? A way to go into business for yourself but not by yourself

2. What is Microfranchising? Basic concepts Microfranchising is the replication of a proven successful business model tailored to low- income microentrepreneurs (BoP) Microfranchisor is usually a medium-large company or social enterprise which owns the brand and develops the business model and offers it to the microfranchisee to operate Microfranchisee is a low-income microentrepreneur with little formal education and capital that owns and operates the microfranchise Microfranchise is the business model that is provided to the microfranchisee Microfranchise Model

2. What is Microfranchising? Key elements Brand Initial and continuous training and knowledge transfer 3 S rule: Simple, systematized, sustainable Low capital investment + high expansion potential

3. What works? Successful cases from Asia and Africa International Rescue Committee (IRC) - Sierra Leona Pilot: Nov Jan 2010 (150 youth) 100% of youth still engaged in their microfranchises 7 months after start-up 83% of youth making a profit 7 months after start-up 100% youth in Freetown and 48% in Kenema opened savings accounts with local banks 43% of youth reported saving money as their primary investment for profits Three year strategy for scale planned: 4,000 youth

3. What works? Successful cases from Asia and Africa FanMilk - Ghana Leading manufacturer of ice cream 10,000 young men operating microfranchise US$72 million revenue 2009 US$20 Million profit % retention of microfranchisees Microfranchisees earning double their counterparts

3. What works? Successful cases from Asia and Africa Grameen Foundation - Rumah Indonesia Mobile services in a box 5,036 BoP entrepreneurs in network 348,451 customers served by entrepreneurs 47% of entrepreneurs crossing the $2.50/day poverty line after 4 months in the network

3. What works? Successful cases from Asia and Africa Barefoot Power– Uganda 2008 pilot: Firefly microfranchises – solar lamps to replace kerosene lamps 11 microfranchisees, sold 1,200 lamps in 10 weeks generating US$20,000 sales, improving the lighting conditions of 6,000 people, and provided US$10,000 in supplier credit Expand pilot: 150 Firefly microfranchisee, 100,000 households by end of 2010

4. MIF Microfranchising Agenda Systemic change we are looking for Position the microfranchising business model in LAC as a widely recognized valuable tool for economic empowerment of the people at the BOP How we are going to measure success 50 actors mobilized to adopt the microfranchise concept 20 microfranchisors have implemented microfranchise models 1,000 self-employment opportunities / microbusinesses created 50% average increase in income for microfranchisees vs. their average baseline income 70% of microfranchisees make it to the 3 rd year Our approach Demonstration projects Knowledge creation Communication and Catalyzing

Microfranchising Agenda Team