Definitions: What are Social and Micro Franchising?

Social Franchising is defined as “the application of commercial franchising methods and concepts to achieve socially beneficial ends” (International Franchise Association’s Social Sector Task Force, 2014).

Social Franchising is used to increase access to products and services across a range of socially oriented industries (e.g., education, health, agriculture, water, sanitation, clean energy), with its target market being underserved populations in low, medium, and high-income countries around the globe.

Providing access to critical socially beneficial products and services delivered to meet high brand standards, and also enabling local entrepreneurs to lift themselves out of poverty and to create jobs in their community, is the goal of all social franchisors.

Micro-Franchising is defined as "a small business whose start up costs are minimal and whose concepts and operations are easily replicated” (Fairbourne et. al, 2006). Micro-Franchising is used to increase access to business opportunities that enable people to lift themselves out of poverty. Its primary purpose is economic development and unlike social franchising, it is not necessary that the business being franchised deliver crucial services or products to the consumer.

For more information, contact ​Michael Seid, ​Managing Director, at (​860) ​523-​4257 or mseid@msaworldwide.com.

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MSA believes that enterprising people at the base of the pyramid (in both developed and developing countries) can have a world-changing impact if they are connected with the right resources. Franchising provides a bridge to overcome the resource gap, providing local business owners with a structured and supported system that can provide them with the necessary training, ongoing support, and access to capital required for them to succeed. Because of the professional rigor built into any well-designed and managed franchise system, funders of social franchisors have the capabilities to monitor the impact of their investments on a consumer-by-consumer basis, something critically lacking in traditional NGO approaches.

Franchising has been adapted successfully to hundreds of industries in the commercial sector, and its yet unrealized potential for solving societal problems in emerging markets is vast.

• The economy at the Base of the Pyramid represents $5 trillion in purchasing power worldwide translating into an immense opportunity for local entrepreneurs and communities.
• In 2014 the World Bank anticipated that over the next five years, economic growth in emerging markets will more than double the growth in developed economies.
• For funders, including impact investors, philanthropists, foundations, and government agencies, the ability to measure the performance of the enterprises they support at the consumer level, as done in commercial franchising, will extend the reach of their financial resources and allow for transformational change.
• Using franchising to scale social enterprises in health, education, water, sanitation, agriculture, and clean energy will have a transformational impact on health, the environment, and economies around the globe.

Even though much has been written about Social Franchising, there are surprisingly few examples of Social Franchisors that have been able to demonstrate the desired results. The fault lies not with the franchise business model itself, but rather with the social sector’s limited experience with and understanding of the franchise business model and the development of effective, sustainable, and well-managed social franchise systems.

• The goal for MSA, in extending its practice into the social sector, is to bridge the gap of understanding about how commercial franchising techniques can be applied and, by doing so, facilitate the growth of quality Social Franchising enterprises.

• MSA’s focus on social franchising extends back more than twenty years, when it led the development of Community Development Corporation’s acquisition of commercial franchises in the emerging “inner city” markets in the United States.

Through his work as a member of the board and executive committee of the HealthStore Foundation, Child and Family Welfare (CFW) Clinics (Kenya), and One Family Health (Rwanda), and through his role as Chief Concept Officer, Michael Seid has played a critical role in social franchising’s understanding of the standards and practices found in commercial franchising and how they can be adapted to providing critical services to the poor. Extending into its commercial practice, MSA has supported NGOs, donors, government agencies, and social franchisors in understanding the dynamics of franchising, and MSA is presently developing for one of its European clients a network of social franchise birthing centers in Ghana. Michael Seid established and chairs the IFA’s Social Sector Task Force.​