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Fundamentals of Micro Franchising

The concept of micro franchising has been quite popular internationally but now it is our turn to fully accept this business concept. Let us have an insight into this concept.

By Abha Garyali Sub Editor

Franchising no doubt is a beneficial concept and has gained huge popularity with availability of wide range of variety in such concept. 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 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. Most of us think that it is just the government’s and the NGO’s duty to empower the rural population. But now the multinational companies as well as many national companies have taken the responsibilities in their hands. They are not only keen to serve the rural market but also keen to do business out of this untapped huge potential market through micro franchising.

What is Micro franchising?

There is not a huge difference between Micro-franchising and traditional franchising. In franchising a successful business is copied and replicated at other locations by different franchisees. The strength of franchising 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.  Though the main focus of micro franchising is on the socio-economic benefits for the micro-franchisee and his or her community. In this franchising model, the successful companies offer franchises to people in villages with low socio economic status. Therefore, it’s a way to bring together the already successful entrepreneurs and the aspiring entrepreneurs to create their own small enterprises on the same platform. These people often lack skills and do not have sufficient capital that is required for starting a business. This can be provided to them by the companies. It is the social aspect of assisting the poor at the base of economic pyramid.

Stipulation of finance

Micro franchisees is a financially deprived class who can not afford to make huge investments.  It is the provision of small loans to the poor people to make them engage in small businesses at the village 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 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 into micro financing

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 preschool franchise has launched Kidzee Gramin. It is involved in opening preschools especially in the rural areas. VisionSpring (VS), formerly known as Scojo Foundation, is a nonprofit 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, ongoing support from staff.

Rural India having a huge potential

Rural India is considered to have a huge potential which is still untapped. It is 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. The 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 within a short span of time by offering franchise opportunity.

Comment
Jalia 05, Jan 2012 at 10:57 AM
Thanky Thanky for all this good ifnormatoin!
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