Students Use Summer Break to Research Microfranchising

Five students head to Ghana and Guatemala

Most students think the month after finals is a time for a well-deserved break from school and studies, but five BYU students hopped on planes to either Ghana or Guatemala soon after their last tests to spend May researching for the BYU Center for Economic Self Reliance (CESR).

Their job as field researchers is to collect information about three types of business owners. Those who have receive a microcredit loan, those who have started a business without a microcredit loan, and who are involved in microfranchising.

“This research will help identify how microfranchises compare to current small businesses in developing countries,” says David Richards, a senior majoring in accounting from Laguna Hills, California, and a field researcher in Guatemala. “The research could identify microfranchises as a significantly better model for international development.”

Microfranchises are small businesses that can be easily replicated by following proven marketing and operational concepts. With minimal upfront costs, individuals can invest in the equipment to be a part of franchise operation.

An example of microfranchising being studied in Ghana is Fan Milk. Prospective business owners can buy a bike, equipped with a small icebox on front for $25. They then sell ice cream in the streets and make a percentage of the profit. The $25 investment is usually paid back within a week. Other microfranchisees sell reading glasses, medicine, water filtration systems, and other needed products.

 “With this research we can get one of the most comprehensive pictures of what is actually happening under the microfranchising model,” says Amy Brennan, an MPA student with an emphasis in finance and nonprofit management from Aloha, Oregon, and a field researcher in Ghana. “Without this research, it is hard to see the impact that this movement is having on the ground.”
The longitudinal study has been conducted over a period of three years in Ghana, Guatemala, and Bangladesh. The Center for Economic Self-Reliance is trying to understand which type of business owner stayed in business and which business model produced the most profit.

“I expect we will see that microfranchising can be used most effectively among people who have limited resources but who are full of drive,” says Bryan Bennett, a senior majoring in business management from Alpine, Utah and a field researcher in Guatemala.

A challenge of the study is to find the same people each year. Since many of the research participants do not have cell phones or a consistent address, the researchers use pictures and descriptions from where participants were previously located to find the right people. Language and culture can also cause research issues.

“Many of the interviewees give very rough estimates for sales, profits, and costs,” Richards says. “Most of the time these estimates are lower than reality. This is because most people do not keep any form of accounting and many interviewees do not speak Spanish as their first language.”

The research is valuable to CESR as it helps developing countries find valuable business models; the students who participate in the research also reap benefits.

“We are going to be the next generation to implement improved tools for economic development,” Bennett says. “The opportunity to be current students in the Marriott School while carrying out hands-on research on the front lines of the fight against poverty serves as an incubator for new ideas for social entrepreneurship.”

To learn more about microfranchising and the BYU Center for Economic Self-Reliance Center, please visit selfreliance.byu.edu/microfranchise.