The Microfranchise Accelerator (The MFA)

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The Microfranchise Accelerator (The MFA)

Cape Town, South AfricaCape Town, South Africa
Organization type: 
nonprofit/ngo/citizen sector
Project Stage:
Start-Up
Budget: 
$50,000 - $100,000
Website:
http://theclothingbank.org.za ; http://www.tbp.co.za/Philippi/index.htm
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Project Summary
Elevator Pitch

Concise Summary: Help us pitch this solution! Provide an explanation within 3-4 short sentences.

The MFA grows and catalyzes a portfolio of franchise opportunities to empower low-income people in order to build commercially viable micro franchise businesses solutions, drive growth in the small, medium and micro enterprise sector (SMME) and generate socio economic development at scale, while creating a growth opportunity for franchisor. We are now looking for funds to scale up!

About Project

Problem: What problem is this project trying to address?

TCB (the Clothing Bank) and TBPP (The business Place Philippi) both work with hundreds of self-employed low-income people. More than 80% of them did not choose to be entrepreneurs, they are “necessity entrepreneurs”: they aim at being sustainable and supporting their family but clearly lack entrepreneurial attributes. On top of this a 40% unemployment rate in South Africa, low education levels, large skills deficit, poor access to finance and high business failure rates increase their struggle to find jobs that takes them out of poverty. Finally, without access to technology or information, they cannot even know where to find the right option: franchise options at their level, get products to trade or even a way scale up any of their operations.

Solution: What is the proposed solution? Please be specific!

The Micro Franchise Accelerator (MFA) addresses these challenges with a new complementary angle to our current entrepreneurial programs by providing a long-term scalable and viable solution for ‘necessity’ entrepreneurs. The MFA catalyzes and grows a portfolio of franchise opportunities to empower low-income people in order to build commercially viable micro franchise business solutions, drive growth in the small, medium and micro enterprise sector (SMME) and generate socio economic development at scale, while creating a growth opportunity for the franchisor. We not only act as a bridge between franchisors and franchisees but also support our franchisees for 2 years to make sure they get the support ecosystem they need to reach sustainability.
Impact: How does it Work

Example: Walk us through a specific example(s) of how this solution makes a difference; include its primary activities.

The MFA team runs focus groups at TCB and TBPP to understand what the potential franchisees want to do, post entrepreneurial programs. An interesting result is that 40% of the women at TCB seem to aspire to run kindergartens in their community. Talking to them though, even the most motivated ones struggle to implement their idea: where to get the certification to get started, where to get the start up materials or where to find a good organisation to support them, etc. This is what we are all about: to help necessity entrepreneurs empower themselves and access a viable and a good self-employment opportunity. Overall, the MFA supports franchisors in building adapted business models for the Base of the Pyramid, access a screened pipeline of franchisees and manage the network for them, allowing feedback and best practices to be identified and implemented. The MFA works closely with franchisees as well: we provide them with a portfolio of proven franchise business models, we train and mentor them for 2 years, create a strong support ecosystem around them by sourcing strategic partners and adding services that they often do not have access to at the micro level: access to premises, finance, technology (mobile bookkeeping, mobile banking, etc.) or others. An integral part of our project is the creation, for example, and use of simple electronic tools to support the entrepreneur & franchisor, such as mobile accounting & stock management software.
Sustainability

Marketplace: Who else is addressing the problem outlined here? How does the proposed project differ from these approaches?

Job creation being a core objective in South Africa, there are a lot of entrepreneurship programs and support available in the country. At the same time, franchise consulting and associations exist but not at the micro level yet and we feel that the micro level comes with its own specific challenges and requirements. With the MFA we are the only ones to not only focus on developing and growing micro franchise solutions, but also to complement our entrepreneurial program range, and finally mentor our entrepreneurs and franchisees for 2 years.
Team

Founding Story

Tracey from TCB and Egbert from TBP have been working with entrepreneurs within their organizations and kept trying to find solutions to the high business failure rates and the lack of entrepreneurial flair of more than 80% of them. They were invited to a micro franchise conference and they realized that franchise, at the micro level, could be a perfect solution for their necessity entrepreneurs. They both have been working on this new project for 2 years now and already see the success from the interest generated amongst their large pools of beneficiaries.
About You
Organization:
The Clothing Bank (TCB) in partnership with The Business Place Philippi (TBPP) for this project
About You
First Name

Tracey

Last Name

Chambers

About Your Organization
Organization Name

The Clothing Bank (TCB) in partnership with The Business Place Philippi (TBPP) for this project

Organization Country

, WC, Cape Town

Country where this project is creating social impact

, WC, Cape Town

Age of Innovator

18-34

Gender of Innovator

Female

How long has your organization been operating?

1‐5 years

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Innovation
How long have you been in operation?

Operating for less than a year

Social Impact
What solution(s) does your initiative address to help emerging entrepreneurs and small businesses grow and thrive in underserved communities? (select all applicable)

Access to financing, Access to supply chains, Access to technology, Access to economic opportunity.

What has been the impact of your solution to date?

TCB has trained more than 250 women that run successful businesses, of which 91% have improved their whole family living conditions and 88% have started saving.

TBP has since 2000 helped more than 40,000 entrepreneurs across South Africa. It highlights that there is a vibrant market and that with the right business opportunities jobs can be created.

At the moment, we developed and are rolling out two franchise models for 50 franchisees, impacting the lives of 250 people indirectly for the first 6 months. The idea is to make sure that our franchisees can generate at least R5,000 profit per month, which is above the R3,500 tipping point we have found from our research on our entrepreneurs.

What is your projected impact over the next 1-3 years?

1) Western Cape region for the 1st year, national level from year 2, following TCB and TBP branches
2) Create portfolio of 30 franchise models to choose from for potential franchisees and create about 2,000 jobs (2/3 employee per franchise)
3) 600 franchisees with successful businesses (30 franchise models replicated 20 times) who are empowered, earn more than R5,000 profit per month, have started saving, are sending their children to school and have increased standard of living in general
4) Creation of network of franchisees who shares knowledge and benefits from workshops, on-going trainings and a full range of support and services from the MFA

What barriers might hinder the success of your project? How do you plan to overcome them?

Main barrier for large companies or investors to enter the micro-franchise market is that the small scale of operations means that a high number of profitable franchisees are needed to reach break-even. With the MFA providing generic systemization & operational tools, market info, as well as support services the market entry costs are drastically lowered. Furthermore there’s a pipeline of screened, experienced and mentored franchisees.
For the MFA to tackle this same challenge, we are working directly with more than 4,000 entrepreneurs available at TCB and TBPP at any point in time and keeping our costs low by using our partner organization’s premises, staff and equipment.

Winning entries present a strong plan for how they will achieve and track growth. Identify your six-month milestone for growing your impact
Identify three major tasks you will have to complete to reach your six-month milestone
Task 1

Finish a successful pilot of 4 months on the 50 screened franchisees with the 2 franchise models selected and designed

Task 2

Start the mentorship programs, workshops (life-skills, business skills, best practices) and organize the network of franchisees

Task 3

Refine and scale up the use of the electronic tools under test to support our franchisees and franchisors such as mobile banking

Now think bigger! Identify your 12-month impact milestone

Be a sustainable micro franchise center that provides a portfolio of franchise opportunities for our necessity entrepreneurs

Identify three major tasks you will have to complete to reach your 12-month milestone
Task 1

Replicate each franchise model and scale up to 100 successful franchisees in the network, all using the same systemized process

Task 2

Grow from 2 franchise models in our portfolio to 3-5 depending on the complexity of the models selected

Task 3

Consolidate the network and grow to the national level, following the national branches of TBP and TCB

Sustainability
Tell us about your partnerships

In addition to providing direct support for the franchisor and franchisees, the MFA has established partnerships with service providers and a range of mentors who will offer Advisory (business development, process improvement, market research, etc) or Support Services (accounting, legal, marketing & PR, technological support, etc) to the network, thereby capitalizing on the economies of scale and specialist knowledge of micro-franchising in BOP markets.

Please elaborate on any needs or offers you have mentioned above and/or suggest categories of support that aren't specified within the list

The MFA need investment and funding to continue to scale up. We are always happy as well to hear about mentors and potential cooperation with service providers. Finally, Franchise models need technology to manage the network: we currently use some innovations but are interested in learning from more.