Is Micro-Franchising a Solution to Fighting Poverty?

IS MICROFRANCHISING A SOLUTION TO FIGHTING POVERTY?

Micro-franchising is one of the recent business approaches that has its roots in the concept of traditional franchising systems. It is a model fundamentally designed for low-income communities, such as the ones in Nicaragua, to make their way out of poverty. Self-starters get the opportunities to become business owners without undertaking any significant entrepreneurial risks such as building from scratch, funding, brand recognition, distribution, etc. The concept seems relatively new, but its success rate is quite high.

WHAT IS THE BIG DEAL ABOUT MICRO-FRANCHISING?

Micro-franchising is one of the most effective and successful solutions to fighting poverty by creating multiple locally operated SMEs. The model seamlessly adapts to the ground realities for helping the communities to grow. It may not be the sole solution, but is indeed a superior approach for replicating private/ social enterprises in underdeveloped or developing economies.

The concept basically treats the causes rather than the symptoms, which accounts for its success. When people are hungry, we give them food. When they are sick, we provide them medical care and start schools for the uneducated. What holds more importance is to give communities the skills and means to help them work their way out of hardships.

Lifting individuals or families out of poverty solves a multitude of other associated problems.

And as it is rightly said, “empowering solutions work better than donated or imposed solutions.” This means that poverty would yield growth when local enterprises prosper.

CAN MICRO-FRANCHISING ALLEVIATE POVERTY?

Micro-franchising employs the local poor, for the poor to affordably and sustainably help reduce poverty through business. Such a model focuses on minimizing costs while maximizing outcomes. It combines the structure of a traditional job with the autonomy of self-employment and the franchisor’s hand-holding.

For instance, Supply Hope in Nicaragua is one of many major organizations that helps create sustainable and scalable income opportunities for the population that barely makes between $1 and $3 per day. Micro-franchising provides stable jobs and livelihood to people living in low-income groups who may have never been employed or observed a steady paycheck.

Franchisors provide the necessary financial and technical assistance to help these people stand their micro-enterprise, in fact, build upon a tested model and reverse the dynamics of poverty. It is a model that provides a regular income stream to communities in need based on a ready-made business plan. It uses the same marketing, management, and operational strategies as a traditional franchise system, but on a lot cheaper and simpler level. This is why it is called a business in a box.

People like Elizabeth Valente are much noted for their efforts and initiatives concerning micro-franchising in Nicaragua. She is part of the Supply Hope non-profit organization that believes micro-franchising to be a prolific solution for expediting local enterprise creation that will ultimately reduce poverty to a great extent. Franchisors provide the needed operational and management training, finances, business plan, and inventory to develop the operators’ skill set and help them give their best in running their micro-level business. The concept is, in fact, believed to be a disruptive plan to cater to the global BOP (bottom of the pyramid) markets from the local innovations.

In summary, micro-franchising is an excellent way to create jobs and wealth in low-income communities by leveraging local brands through local entrepreneurs while accomplishing the most good for the most significant number of people.