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Aug, 06 2018

SMALL IS BIG

Here are two big low-cost franchise trends that will take shape this year, writes Paulo C Mauro

The franchise system is one of the most important tools for companies to grow and for investors to reduce their investment risk when starting a new business. In addition, we must understand that franchising is an integral part of the economy and so if our country’s economy is down for any reason, franchising also reduces the speed of growth. However, the good part about the franchise model is that even if there are inherent risks, these are not as high as in an independent business venture. In recent times, when investments have dried up to some extent and funding is difficult to find, the smaller investment franchises have taken the lead. Given below are some examples of this new trend:

Micro Franchise
The term ‘micro franchise’ was introduced in the world economy by Inter-American Development Bank (IDB). It has stated that the micro franchise maximum investment was three times the average annual income of the respective country. The IDB has implemented micro franchise projects in several countries with the objective to reduce poverty by creating sustainable income through owning and operating self-owned businesses, and also increasing the employment avenues. The model has been incredibly successful in countries like India, Brazil and Mexico.

Nano Franchise
Now we have a much stronger idea to impact the franchise system. It is the concept of nano franchising, which means that franchise investment is lower than the average annual income of the respective country, and is much more accessible to the lower income population. That idea becomes more effective when the country also provides micro credit or nano credit to those investors interested in buying a micro or nano franchise.

Assisting Entrepreneurs
Entrepreneurship is one of the key factors for economically developing countries striving to lift their populace out of the clutches of poverty. Both micro franchising and nano franchising are business models that apply elements and concepts of traditional franchising to small businesses in the developing world. Mainly, nano franchising is a development tool that leverages the basic concept of traditional franchising, but it is especially focused on creating opportunities for the world’s poorest people to own and manage their own businesses.

It provides self-employment opportunities to those who lack entrepreneurial skills. A large percentage of the world’s population has no choice but to survive on earnings from their own micro enterprises. Many small businesses operated by people in developing countries fail or exist on subsistence levels.

Micro franchising and nano franchising are tools designed specifically to assist these entrepreneurs to become more successful and reach economic self-reliance through the provision of successful business models with the necessary initial and on-going training needed to succeed. The forecast for these two great ideas is strong growth over the next
five years, mainly in countries where the government provides micro credit and nano
credit.

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