Franchising as a low risk, cost effective business model for revenue generation.
Franchising is one of many business models adopted by companies to generate revenue. However there is a dire need for these organizations to consider very wisely their specific business environment, market or product before jumping on a bandwagon solely because it has yielded results for other companies. This article will analyze Living Goods’ Franchising decision.
Living Goods, founded by Chuck Slaughter, was born out of a trip to Africa and the need to reduce child mortality. Slaughter was in Kenya visiting the Health Store Foundation’s clinics. They were busy in spurts but idle much of the time, so nurses started traveling out into the community. This was so successful that Slaughter wondered whether the clinic was necessary at all. Slaughter saw this not only as a call to social action but also as a revenue generation opportunity.
Living Goods franchises its brand and business model to women entrepreneurs who work as independent agents. To launch their Living Goods franchise, agents receive a below-market inventory loan and a free “Business-in-a-Bag” that includes uniforms, signs, a locker, basic health and business tools. The Living Goods franchise is very similar to the Avon-like networks of independent entrepreneurs. They make modest incomes by going to door-to-door selling affordable and effective solutions designed to improve the health, wealth, and productivity of their community. Living Goods uses the Avon model to sell items like sanitary pads, soap, de-worming pills, iodized salt, condoms, nutritionally fortified foods, kits for clean delivery of babies, malaria treatments, bed nets, high-efficiency cook stoves, solar lamps and cellphone chargers. They utilize all the key characteristics of successful franchises: methodically screened agents, expert training, strict quality...