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Many people with limited funds are getting a start in business with the revolutionary idea of micro-franchising. For a very low investment, entrepreneurs can own their own proven franchise with relatively low risk.

 

What is micro-franchising?

 

This is a concept that applies the traditional franchising model to very small businesses. The idea originated in less developed countries as a means to help lift people out of poverty. Today it is applied around the world. Micro-franchising is a systematic approach to creating limited versions of simple businesses.

 

The franchise model

 

A company (franchisor) with an established service or product contracts with an individual(s) who operates under the franchisor's guidance and name in exchange for a fee,  or the franchise contract spells out the responsibilities and obligations of both parties. The franchisor provides marketing, support, and training while the franchisee manages working operations. The same basic concepts drive micro-franchises. In micro-franchising, the franchisee usually accepts jobs booked by the franchisor, or may rent space for a kiosk or cart to do business from. Usually this is a shopping mall or other public market, but even some large retailers have leased space to micro-franchises.

 

Benefits of franchising

 

Apart from lower starting costs, franchisees have the advantage of not needing to test new business ideas, as the franchisor's supporting resources are already in place, and is able to reap all the benefits of an established business:


  • Product recognition thanks to the name and brand of the parent company

  • Advertising and marketing support run by the franchisor at a national level

  • Area franchises that limit competition

  • Administrative support such as IT services, call centers, or bookkeeping

  • Low cost supplies that are usually purchased by the parent company at large volume discounts

 

Franchising is a successful means of business startup, compared to the fact that only two-thirds of small businesses survive beyond their first two years. But it's also a successful development model when it's scaled back to the idea of micro-franchising, which helps bring success even to those with very limited funds or experience. Low-cost products or services such as coffee kiosks or grout cleaning become a means of income.

 

A working model

 

In countries such as South Africa and Bangladesh, the concept of micro-franchising was implemented to provide income opportunities to the poor and proved highly successful. In Liberia, almost 100% of young micro-franchisees were still in business after seven months.

 

The strength of franchises is that they are a proven system, offering a clear roadmap to success by following a proven system. Franchisees are buying into not just a brand, but established supply chains, marketing, routes, and equipment. Franchise opportunities such as floor refinishing service, for example, will entail access to all the tools, materials, and training required to complete the job satisfactorily.

 

The business skills required are much less demanding of micro-entrepreneurs; rather than having talent for innovation or marketing they need only be able to copy ideas and follow guidelines. Micro-franchising allows people to learn about business in a limited, structured way with strong support systems in place. This learning experience is invaluable should the time come to embrace other business opportunities.

 

Steps to success

 

The key elements of operating a successful micro-franchise are to focus on the core concepts of franchising as a business model:

 

Social-minded entrepreneurs

 

Franchisors are industry experts providing brand awareness and skills training to entrepreneurs. The right approach for the franchisee is simply to deepen their understanding and familiarity with local clientele.

 

Support

 

Micro-franchisees should take every opportunity to exploit provided resources, including training and back-office help with things like bookkeeping and taxes. These ideas involve basic business skills which are much more difficult to acquire in a less structured environment. A franchise can be thought of as a mentoring arrangement. And not to be ignored is the value of emotional support and self esteem from being immersed in a successful business model.

 

Lee Flynn is from the Wasatch Mountains near Salt Lake City, UT. After Lee spent years preparing himself, his home and his family, he decided he had to do more. In his free time, Lee helps educate those who want to do the same. Through small local workshops and articles, Lee trains and teaches others on home preparation, food storage techniques, wilderness survival and self reliance. After obtaining a bachelors degree from the University of Utah, Lee moved to the Salt Lake Valley where he now lives with his wife and daughter.

 

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