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Social Franchising


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Social Franchising

  1. 1. Extending Microfinance: Social Franchising Valerie Hackl, June 20, 2009
  2. 2. Agenda <ul><li>Microfinance vs. Social Franchising </li></ul><ul><li>Concept of Social Franchising </li></ul><ul><li>Example CFWshops </li></ul><ul><li>Advantages of Social Franchising </li></ul><ul><li>Important principles </li></ul>
  3. 3. Microfinance and Social Franchising: Similar but different concepts Bank Beneficiary Microfinance: Social Franchising: Access to capital Bank Beneficiary/ Franchisee Access to capital Social Enterprise/ Franchisor Access to business concept/ know-how
  4. 4. What is Social Franchising? <ul><li>Application of traditional franchise principles to social sector  „McDonaldisation“ of social sector </li></ul><ul><li>Concept to replicate a social program and multiply social impact </li></ul><ul><li>Method to create meaningful job opportunities by partnering with / enabling franchisees </li></ul>
  5. 5. Example: CFWshops,* <ul><li>Lack of access to essential drugs and basic healthcare: ~30.000 children dying each day in the developing world </li></ul><ul><li>~70% of childhood illness and death: short list of preventable and treatable diseases </li></ul><ul><li>Launched in 2000 by The HealthStore Foundation in Kenya , expansion to Rwanda since 2008 </li></ul><ul><li>Branded franchise network of health outlets </li></ul><ul><li>~70 clinics and drug shops owned and operated by Kenyan nurses and health workers in rural areas </li></ul>Situation CFWshops Improve access to essential drugs, basic healthcare and prevention services for marginalized children and their families in the developing world * CFW stands for „Child and Family Wellness“
  6. 6. An actual CFWshop
  7. 7. How the CFWshop franchise is set up CFWshops HealthStore Foundation (Franchisor) Nurses, health workers (Franchisee) Families in rural areas CFWshops brand Control mechanisms Concept development Franchise fee (fixed/month) Information Diagnosis Prevention Price Marketing & Image Health sector Treatment
  8. 8. The CFWshop system in more detail <ul><li>D esign & equipment of CFWshops are very basic and standardized </li></ul><ul><li>Central sourcing of quality drugs </li></ul><ul><li>Three-week training program into the CFWshops franchise system for all future franchisees, ongoing training later on </li></ul><ul><li>Investment per franchise outlet: </li></ul><ul><ul><li>~ USD 1.200 (USD 600 for inventory, USD 600 for development costs and initial training) </li></ul></ul><ul><ul><li>Franchisee carries cost for his/her shop : USD 200 upfront , the rest can be financed by loan </li></ul></ul>
  9. 9. Advantages of Social Franchising <ul><li>Access to higher number of beneficiaries  Widening of social impact </li></ul><ul><li>Creation of job opportunities for franchisees </li></ul><ul><li>Exploitation of scale economies through centralisation of activities </li></ul><ul><li>High degree of control over system </li></ul><ul><li>Local embeddedness leading to access to local resources </li></ul><ul><li>Job opportunity </li></ul><ul><li>Use of proven social program for local implementation </li></ul><ul><li>Gain from franchise network, at the same time local autonomy (within certain borders) </li></ul><ul><li>Exploitation of scale economies (decrease of operating cost) </li></ul>Advantages for Social Entrepreneur / Franchisor Advantages for Franchisees
  10. 10. Important principles of Social Franchising <ul><li>Scalability : Application of one social concept to many locations </li></ul><ul><li>Standardization : Internal principles and guidelines to ensure proper diagnoses and treatments </li></ul><ul><li>Economies of scale : Increasing cost efficiency as network grows (in areas such as advertising, distribution, information systems, risk management, training, and supplies) </li></ul><ul><li>VisionSpring : Distribution of reading glasses for developing countries </li></ul><ul><li>CFWshops : Provision of health services in rural areas of developing countries </li></ul><ul><li>Dialogue in the Dark : Exhibition to discover the world of the blind </li></ul><ul><li>Science-Lab : Science courses for children </li></ul><ul><li>… </li></ul>Three principles inherent to Social Franchising … and other social franchises
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  13. 13. Example: VisionSpring, <ul><li>Significant percentage of people in developing world losing jobs due to poor eyesight </li></ul><ul><li>In most cases, simple non-prescription eyeglasses sufficient to solve this problem </li></ul><ul><li>Lack of access to basic vision care prohibiting purchase of these affordable eyeglasses </li></ul><ul><li>Launched in 2001 by Dr. Jordan Kassalow and Scott Berrie with headquarters in NYC, USA, expansion to more than 10 developing countries (India, Bangladesh, Guatemala, El Salvador etc.) </li></ul><ul><li>Branded franchise network of partner organisations and individual franchisees (“Vision Entrepreneurs”) </li></ul>Situation VisionSpring Reduce poverty and generate opportunity in the developing world through the sale of affordable eyeglasses
  14. 14. VisionSpring at work
  15. 15. Structure of VisionSpring Franchisor (VisionSpring headquarters in NYC) … Partner organisation Partner organisation Master-franchisees Einzelperson Einzelperson Einzelperson Einzelperson Vision Entrepreneur Franchisees Einzelperson Einzelperson Einzelperson Einzelperson Vision Entrepreneur Einzelperson Einzelperson Einzelperson Einzelperson Vision Entrepreneur
  16. 16. How the VisionSpring franchise is set up VisionSpring (Franchisor) Partner or-ganisations, individuals (Franchisee) People with poor eyesight VisionSpring brand Control mechanisms Concept development Franchise fee (per glasses sold) Information Diagnosis Affordable price Health sector Eye-glasses Concept/know-how
  17. 17. VisionSpring in more detail <ul><li>Central production of affordable, quality eyeglasses allowing for low production cost </li></ul><ul><li>“ Business in a Bag” as sales kit for franchisees containing all the products and materials needed to market and sell eyeglasses </li></ul><ul><li>Comprehensive training program for all partner organisations, three-day training for all individual franchisees (“Vision Entrepreneurs”) </li></ul><ul><li>Micro-consignment model: R epayment for the glasses once they have been sold </li></ul><ul><li> Social program empowering franchisees with a proven business model and opportunity to sell a high-impact, high-margin product </li></ul>
  18. 18. Various concepts for replication Dissemination Cooperation (E.g. Social Franchising) Subsidiary/ branches Resource requirement Control Speed of growth Source: Schöning, M. (2007), Multiplikation durch Franchising. In: Achleitner, A.-K. et al. (Hg.), Finanzierung von Sozialunternehmern, Stuttgart: Schäffer-Poeschel Verlag, 192-202.
  19. 19. Traditional franchising as starting point… Business concept Franchisor Franchisee Customer Brand Control mechanisms Concept development Franchise fee Information Product Service Price Marketing & Image
  20. 20. … for Social Franchising Social concept Franchisor (e.g. social entrepre-neur) Franchisee (e.g. NPO, individual) Customer and/or beneficiary Brand Control mechanisms Concept development Franchise fee Information Product Service Price Marketing & Image Social sector