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Cornell Student Articles on Topical Affairs

How Social Franchising Is Bringing Much-needed Jobs and Services to the Developing World

We’re all familiar with those often-heard success stories of business owners, some of whom identified a franchising opportunity back in the 1960s, bought it for a mere $20,000 and retired early because of it. Franchising is a business model that has led millions to financial success, each franchisee with their own unique story and set of challenges that had to be overcome. In the States alone, there are close to 3,000 franchise companies collectively contributing more than $1 trillion annually to the national economy, but in recent years international franchising has also grown significantly because of increased domestic competition, increased market saturation and the rising cost of living. Franchisors are increasing looking to foreign markets for expansion, attracted by favorable demographic and political conditions abroad – particularly in emerging markets.

With this expansion comes opportunities, wonderful opportunities to bring jobs, goods and economic growth to developing countries through the application of social franchising. By that I mean to say that at long last, a mechanism for bringing vaccines, healthy cooking fuel, health services, food, contraception and technology to the developing world has been found. It’s called ‘social franchising’. This type of franchising is modelled just as regular commercial franchises are, only the end aim is to promote social benefit rather than pure, private profit.

Social franchises are usually sponsored by an independent coordinating organization (typically an NGO or aid organization, but sometimes it will be a government body or private company) to create a local network of independent operators or entrepreneurs who act in accordance with the chosen franchise blueprint. Once they join the network, the independent operators have access to professional training, use of brand advertisements, subsidized supplies and equipment, support services, and advice in order to improve business operations.

As an example, World Health Partners, an India-based nonprofit launched in 2008, recruits people from rural villages with limited access to healthcare to connect their neighbors to a doctor in a larger city through a telemedicine session via cell phones and portable computers. This is social franchising at its best. Another example is the healthcare project working to help the 450 million people worldwide living with mental illness and epilepsy – 75 percent of whom live in the developing world. BasicNeeds – an international development organization dedicated to the fight against epilepsy and mental illness – embraces social franchising to replicate its tried and tested ‘Model for Mental Health and Development’ throughout developing countries. By supporting independent organizations operating in low or middle-income countries to take on the delivery of the Model in their region via a social franchise mechanism, BasicNeeds is having a monumental impact in terms of providing health services, and strengthening local leadership in mental health, epilepsy and development.

The likelihood of success when opening a business franchise is indisputable – in America, for example, over 95% of all franchises are still in business after five years because they are built upon proven success formulas used by franchisees across the country. In South Africa, up to 90% of independent start-up businesses fail compared to just 10% in franchising. Why is this? For a start, most black South Americans grow up in isolated economic circumstances, without a solid education and in places of serious poverty, where the average business is a ‘copycat business’ that mimics its neighbor’s shop, stall or business. As a result, these communities are rarely exposed to strong entrepreneurial role models or to businesses that truly thrive. Rather, business function for survival purposes alone. In communities such as these, having access to a tried-and-proven recipe for business success can be all that is required to shift from a survivalist economy to a thriving one. Social franchising can offer micro-business opportunities to the poor by providing them with everything required to start the business (barring the startup capital): equipment, products, marketing and advertising knowledge, you name it.

And social franchising is beginning to take hold. After a period of experimentation, the international aid community has now refined its approach and is making the changes necessary to allow for social franchising to assist the world’s poorest regions in ways more efficient than ever before possible.

In terms of job creation, social franchise businesses are making unprecedented progress in the developing world. VisionSpring, a company selling eyeglasses in more than 20 countries, employs more than 15,000 “Vision” entrepreneurs in dispensing and selling reading glasses. Not only is this a sizeable figure in terms of people employed, but the business is also helping equip some 703 million people worldwide with a pair of life- changing reading specs. In Ghana, Fan Milk Ltd. is bringing milk and dairy products to remote areas via bicyclists, who are employed en masse, and in Uganda, Living Goods is providing poor households with antibiotics, vitamins, sanitary pads and diapers – helping to reduce child deaths by 27 percent for less than $2 a year per person.

Social franchising can promote social good and generate employment in developing countries, that cannot be denied. But there must first be an ecosystem in which such entrepreneurial efforts can flourish. The private sector, non-profit organizations and local governments can help in this respect, by providing capital, legal advisory services and establishing regulatory frameworks. Private donors and aid organizations can also help by funding the development of business skills in such communities in order to create an environment that allows self-sustaining business models to thrive. In this way, we might see real change across much of the developed world in the coming decades.

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