Microfranchising

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Overview

Microfranchising models are designed to create a constant stream of income for the deliverers of the product or service. They often work better if it is possible to structure delivery in a way that keeps the buyer coming back to the seller, such as with a rental model, or a recharge model, so that the market will not saturate. Part of the benefit of a microfranchising system is that the seller is from the community in which they are based, and this is reduced if they have to travel too far.

Pros

Under this model, many enterprises work in rural communities that trust local community members more than outsiders. These enterprises have a stake in maintaining a local presence. Finally, these enterprises have a standardizable model that makes operations simpler.

Cons

Aligning incentives between enterprise and franchisees is not always easy. Some infrastructure-based models require a capital investment. Therefore the franchisees need long-term credit, which can slow scaling.

 

Case Studies

Sunlabob has spent the past 10 years perfecting a distribution model for rural electrification in Laos.

Sunlabob has always worked with franchisees from whom customers buy or rent energy products. This both establishes customer trust since people associate the Sunlabob brand with someone from their community, and provides someone at village level who is responsible for and capable of maintaining systems over time. Sunlabob first tried selling fixed solar home systems, then tried renting them, with franchisees collecting a $4 monthly fee from customers and taking care of maintenance. To reduce costs and the burden of rent collection for franchisees, Sunlabob has now shifted to 1Watt portable LED lanterns, which customers bring to a central station to charge every 10 hours (3 days or so of use). This incentivizes customers to go to the franchisee for charging rather than forcing the franchisee to track them down for payment.

In order to sell its green charcoal briquettes, Eco-Fuel Africa works with communities to identify marginalized women and helps them set up small kiosks in their villages.  These women work in areas where Eco-Fuel Africa is not otherwise already operating and benefit from obtaining business skills and becoming empowered by having their own independent source of income.  This helps Eco-Fuel Africa not only deepen its impact but also broaden its reach.

Enterprises