1. Microfranchising in
Latin America and the
Caribbean
Elena Heredero| Senior Specialist
MULTILATERAL INVESTMENT FUND - IDB

2. CONTENT 1. WHY
MICROFRANCHISING
IN LATIN AMERICA
AND THE CARIBBEAN?
2. WHAT WORKS?
SUCCESSFUL
EXPERIENCES
3. MIF APPROACH TO
MICROFRANCHISING

3. Why Microfranchising in LAC?
Microfranchising can…
Become a tool for economic empowerment –
increase income, create jobs. There are 130
million people living with less than US$2 a day
and 83 million at the verge of poverty.
Be a platform to maximize the impact of
microfinance. There are over 10 million
microfinance clients in LAC.
Though still in its infancy stage, with 44
Microfranchises, LAC has a microfranchising
participation of 36% worldwide
(Source: Baseline conducted by MIF, Jun 2011)

4. What works? Successful experiences in LAC
GRUPO ZAIOM - Brazil
• Home-based microfranchise created in
2008
• 7 microfranchise networks
• 528 active microfranchisees (230%
increase from 2009)
• US$ 2,000 - US$15,000: start-up cost to
become a microfranchisee
• Challenge ahead: Enhanced synergy
between microfranchise &
microfinance

5. What works? Successful experiences in LAC
PAÑALERAS POTOTIN - Ecuador
• Company created in 1998, distributes
diapers and other care products
• Started microfranchising in 2003
• 150 microfranchised stores in 75
cities/17 states (300 employees)
• US$8,500 - US$ 10,000: start-up cost to
become a microfranchisee
• Approx. 6 months to break even
• US$ 8,000: average monthly sale per
microfranchised store

6. MIF Approach to Microfranchising
Move
microfranchising
from the margins
to the mainstream
Demonstration Communicating
Projects and Catalyzing
Knowledge
Creation

7. MIF Approach to Microfranchising
How we will measures success
• 50 companies, NGOs, MFIs mobilized to
adopt the microfranchise concept
• 20 new microfranchises created
• 1,000 low-income people running
sustainable microfranchises
• 50% average increase in income for
microfranchisees versus their average
baseline income
• 70% of microfranchisees make it to the
3rd year of operations

8. MIF Demonstration Project - Paraguay
• Partner institution - Fundación
Paraguaya
• 31,000 low-income women clients in
village banks
• Financing - MIF US$ 1.38 MM (Total
US$2.26MM)
• Expected results
– 5 microfranchise networks to involve
600 microfranchisees
– Increase family income, overcoming
poverty
– Microcredit products specifically
tailored for microfranchisees
– Increase in savings
– Impact evaluation

9. MIF Demonstration Project - Mexico
• Partner institution - FUNDES Mexico
• 26 years in MSME development
• Financing - MIF US$ 1.2MM (Total US$
2.3MM)
• Expected results
– Test three models: large / medium
companies, existing franchisors and
social enterprises / NGOs
– 3 microfranchise networks and 150
microfranchisees
– Increase in income and jobs
– Financing mechanism to fund 150
microfranchisees
– Parnerships with public and other NGOs
working with the BoP

10. MIF Demonstration Project - Jamaica
• Partner institution – The Private Sector
Organisation of Jamaica (PSOJ)
• Youth Upliftment through Employment
(YUTE) Program
• Create entrepreneurship opportunities
for youth at risk living in 8 poor inner-
city communities in Kingston.
Financing - MIF US$ 150K (Total US$
215K)
• Expected results
– 2 to 3 large companies implement
microfranchises with youth at risk
– 100 microfranchises run by youth at risk
– 50% average increase in income

11. THANK YOU