What is MicroFranchising?

MicroFranchising is an economic development tool currently being researched and tested at the BYU Center for Economic Self-Reliance. The impetus behind the idea is to provide sound business opportunities and services to the poor by introducing scaled-down business concepts found in successful franchise organizations. Faculty and students at the BYU Marriott School have been involved in researching and participating in microcredit, microfinance, and microenterprise development activities for over ten years. Our perspectives on MicroFranchising are often seen through that lens.

We broadly define MicroFranchises as small businesses that can easily be replicated by following proven marketing and operational concepts. The overall objective of MicroFranchising is to promote economic development by developing sound business models that can be replicated by entrepreneurs at the base of the pyramid; therefore, the start-up costs of MicroFranchises will be minimal. The key principle is replication, replicating success to scale.

It is well known that there is a lack of employment opportunities in developing countries leaving nearly one half of the world’s population (3 billion people) living in acute poverty (living on less than two dollars a day). Therefore, many people have no choice but to start microenterprises in order to survive. The International Labor Organization’s 2002 report indicates that 72 percent of Sub-Saharan Africa’s population operates within the informal sector, eking out a hand-to-mouth survival. In Latin America 51 percent operate within the informal economy, and 65 percent in Asia. Furthermore, many of the small businesses operated by people in developing countries fail or exist on subsistence levels, leaving hundreds of millions in poverty. MicroFranchising is a new tool designed specifically to assist these entrepreneurs to become more successful and reach economic self-reliance, through the provision of successful business models with the necessary initial and on-going training needed to succeed.