franchising aspects Nov, 19 2010

Empowering Entrepreneurs Micro Franchise Way

An initiative to prepare rural aspirants to own a business venture with the help of big business houses defines the concept of micro franchising. Read on to more about the concept

By Abha Garyali
Sub Editor
Empowering Entrepreneurs Micro Franchise Way

It is general notion among Indians that it is the government’s and NGO’s duty to empower the rural population. But with the rising popularity of Corporate Social Responsibility (CSR) concept, many national and multinational companies are taking initiatives towards such ventures. They are not only keen to serve the rural market but are also keen to do business out of this untapped huge potential market through micro franchising. Franchising is a beneficial business model and has gained huge acceptance with the availability of wide range of franchise concepts. One of such varieties is micro franchising. As per the 2001 census, 73 per cent of Indians live in the rural India. So is the 27 per cent of urban Indians are enough to make India grow into a developed nation? The answer cannot be affirmative as the larger part of the population is rural. So it is important to empower these 73 per cent to head for a progressive India.

Concept of micro franchising

Micro franchising business is a way to bring together the already successful entrepreneurs and aspiring entrepreneurs to create their own small enterprises on the same platform. Such aspirants often lack sufficient capital required for business start up. Thus, the financial aspect of business establishments is fulfilled by the companies interested in serving the less-privileged classes. It is the social aspect of assisting the poor at the base of economic pyramid. Nevertheless, there is not a huge difference between micro-franchising and traditional franchising. As in franchise business a successful business is copied and replicated at other locations by different franchisees and in micro franchising model, the successful companies offer franchises to people in villages with low socio-economic status. The strength of franchise business comes from its reliance on a business model that has been tested and proven to work. In the same way, micro-franchising follows the principles of franchising. The main focus of micro franchising is on the socio-economic benefits for the micro-franchisee and his or her community.

Funding resources

Micro franchisee is a financially deprived class who cannot afford to make huge investments. It is the provision of small loans to the deprived aspirants to make them engage in small businesses at the rural level. Many companies have turned to micro-finance to serve the rural masses. Micro finance companies offer loans to the rural people and franchise the centres to make them earn a decent living while reaching out to thousands others. Moksha Yug Access and Intellcash are few of the major companies that provide micro finance to the needy. These franchise companies tie up with micro finance institutions to serve the people in getting loans. Many other companies are now willing to provide a helping hand looking at these well established finance companies.

Companies offering micro finances

Influx of multinational companies involved in the process of micro franchising has inspired many Indian companies to follow suit. MokshaYug Access (MYA) is one such company with its focus on micro finance. The company has taken up franchising model for its new ventures of dairy farming and health care centres in rural India. Hughes Net, a company involved in providing broadband satellite services, products and network solutions, has established information kiosks across rural India. It has over 2,000 rural outlets which provide courses on skill enhancement, travel related services, e-commerce etc. Kidzee, a pre-school franchise has launched Kidzee Gramin. It is involved in opening pre-schools especially in the rural areas. VisionSpring (VS), formerly known as Scojo Foundation, is a non profit social enterprise creating jobs for local entrepreneurs and facilitating access to comprehensive eye care. It empowers local entrepreneurs (micro franchisees) to launch their own businesses to sell this powerful, affordable product in their communities. Vision franchisees undergo three-day training in basic eye care and business management and receive close, on going support from staff.

Potential rural India

Rural India is considered to have a huge potential which is still untapped. It is defined as the rising market place. As earlier, rural areas had been ignored by large companies due to various reasons. Low-purchasing power among the local population and the high delivery cost limited the business opportunities. However, micro franchisors have developed a business opportunity for the hidden untapped potential in the villages. As these businesses are designed basically for the village entrepreneurs, therefore, the target areas are health, education and sanitation. These are the fundamental areas, which should be worked at to raise the standards.

Challenges

With all the benefits of the rural masses, there exist some challenges in the concept of micro franchising. Targeting rural India is not an easy job. It holds numerous hurdles not only in terms of educating the rural masses about the products and services but also in making them accept these reforms. A rigid mindset and a patriarch society are some features which act as challenges. Such challenges can be overcome by allowing more and more rural people to become franchisees. A franchisee being a known face in a rural community can break the traditional barriers and establish the product or service of the franchise company within a short span of time by offering franchise opportunity

Related: Franchise contracts to avoid pitfalls

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