Everything begins small, and eventually, it grows when properly handled. This is where micro business franchising is at its best. Delving on that pint of difference between the traditional franchising style and its sub-conceptualize one – micro franchising – is another story.
Micro franchising is a scaled down business contracting specially designed for low-budget class in the society who wants to engage in their own business. Moreover, claims from various business enthusiasts suggest that micro franchise is one key of alleviating poverty especially in Third World countries. Why is this so?
First, according to study, there is a direct relation between the potency of the franchise economy and per-capita GDP in every country on earth. In 2008, US per capita reached $47 ,500 with 15,000 franchise systems in operation. While the Philippines have GDP of $3,300 with 150 operating franchise systems.
Secondly, micro franchising bridges the gap between successful businessmen and aspiring entrepreneurs. Underprivileged ones who can’t afford to make huge investments have been previously reached out by companies who engaged in microfinance in a rural set-up.
Thirdly, with deviation from the usual microfinance and microcredit business, micro franchising helps the aspirants uplift their socio-economic status through their own ground. The money lent to them through loans which is used to purchase their basic commodities are diverted into profit-gaining ones. In the long run, micro franchisers may leave microcredit and be their own boss.
Fourth, it does away with the risky and uncertain booming business plans. Almost 99% of low income individuals do not possess skills in starting up their own business from scratch. Franchising guarantees assurance of product longevity through its all-in-the-box business offers. Micro franchisors also adapt the traditional franchising mechanism of acquiring license over an already established products’ name, operation, and business plan.
Various levels of micro franchising arise in the market. It has already been patronized mostly by stay at home moms, fresh graduates, student entrepreneurs, and OFWs.
Micro franchising can be done in different ways. But most trends in the market can be categorized into four:
1. One popular trend can be seen among personal care and cosmetic products. This is popularly known as trade in the bag. Dealers and retailers as what these business micro franchisors are usually called engaged in the company’s standardized and administrative trainings to make the ordinary individuals their direct-sales micro entrepreneurs.
2. We have what we can call as conversion and absorption micro franchising. In this kind, franchisee incorporates his desired well-known product into ones existing business to gain association and strong grounds.
3. Most franchises are also infrastructure-based. This is common in purified water business. In this set up, the mother company may engage in rent-to-own agreement and in the process, through installment basis, the micro entrepreneurs got their claim in the product.
4. There is also the more techie, agent network, like the mobile money transfer and mobile bank transactions. Micro business franchising made economists and policy makers think twice about their macro solution to