Micro-Franchising:- An innovative approach in Micro-Finance

Topics: Poverty, Franchising, Microfinance Pages: 13 (3354 words) Published: September 26, 2014
Micro-franchising :-An innovative approach in Micro-finance BY
( Assistant Professor) Email id : decentsimmi@gmail.com MS.PALLAVI DUA
Entrepreneurship is a key factor for economic development and one of the most recent tools to foster such entrepreneurship is micro-franchising. The primary objective of micro-franchising is to promote economic development by developing sound business models, at its core a poverty alleviating tool. This paper reviews the current level, obstacles and hurdles faced by micro, small & medium enterprises. It examines an innovative approach in microfinance i.e. micro- franchising, taking a close look at eliminating poverty, unemployment through developing entrepreneurial skills among poor sector of India. The development method conceptualized to promote economic self- reliance by providing job opportunities, specific training, peer support & access to capital. The purpose of this paper is to explore an innovative commercial method to expand enterprises of poor. This paper discusses the state of micro-franchising services in India &opportunities untapped due to lack of finance as well technical assistance. An exploratory method of research design has been undertaken with the help of two case studies at national and international level- Hindustan Unilever Ltd. (HUL) and IDEASnet to study the contribution provided by micro-franchising organizations to eliminate the problems faced by emerging economies. This paper reveals that micro-franchising is likely to be the next major growth phenomenon with in enterprise development sector. Thus the paper suggests that there is strong need to provide technical assistance & training to micro, small and medium scale entrepreneurs.

Key Words: - Poverty, Micro-franchising, entrepreneurs, unemployment

About 350 million people in India are below poverty line. Their education level, health condition and social status in the community are miserable. Socio-economic development is the only solution to develop the poor people. Developments have to occur at micro level for economic up gradation of such people. When the standard of living of the poor would change, it can only change the quality of life and social value. Micro-credit is a proven poverty reduction tool, providing the necessary capital for entrepreneurs to start their own businesses and lift themselves out of poverty. But not all people are entrepreneurial. And not all entrepreneurs have the necessary training and skills development to start and manage a successful business. That's where micro-franchising adds value - as a 'turn-key' business, a micro-franchise can rely on the franchisor, who reduces the risk of failure by providing high quality initial and ongoing training. Thus microfranchising is a way to go into business for yourself but not by yourself PROBLEMS FACED BY SMALL AND MEDIUM SCALE ENTERPRISES.

As shown in the above figure the various types of problems are faced by SMEs in order to solve these problems various actions are evolved and one of such effective method is Microfranchising. Simply franchising means arrangement where one party (the franchiser) grants another party (the franchisee) the right to use its trademark or trade-name as well as certain business systems and processes, to produce and market a good or service according to certain specifications. Microfranchising is a development tool that seeks to apply the proven marketing and operational concepts of traditional franchising to small businesses in the developing world. The primary feature of a microfranchise is its ability to be streamlined and replicated. The businesses are designed for microentreprenuers and...

References: 1. http://en.wikipedia.org/wiki/microconsignment
2. www.hllshakti.com
3. www.ideasnet.org
4. www.microfranchises.org
5. “Microfranchising at the base of the pyramid,” working paper from the Acumen Fund (August 2008)
6. J. Fairborne, S. W. Gibson, W. G. Dyer: “MicroFranchising: Creating Wealth at the Bottom of the Pyramid”, Edward Elgar Publishing (2007)
7. L.J.Christensen, H.Parsons, J.Fairbourne: “Building Entrepreneurship in Subsistence Markets: Microfranchising as an Employment Incubator”, Journal of Business Research 63 (2010), p.595
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