A look at microfranchises and the similarities and differences between them and standard franchise prospects

The idea of a microfranchise seems to have started at Brigham Young University, Utah, in the United States of America. BYU’s Marriott School describes a microfranchise as small firm that can simply be replicated by adopting proven marketing and operational ideas. The overall intention of MicroFranchising is to encourage economic development by developing sound business models that can be copied by entrepreneurs at the start of the pyramid; therefore, the start-up costs of MicroFranchises will be small. The key principle is replication, replicating success to scale.

The microfranchise is considered by BYU as a likely catalyst for third world economic development, but there are indications now that the concept might start to take off in developed economies as more and more individuals seek a franchise opportunity as an alternative to salaried employment.

The principals of a microfranchise which may make it so attractive to the individual boil down to making the franchise opportunity as close to a job as possible. The low cost franchise enables individuals with little finance and no credit opportunity to participate in the Franchise Opportunity.

The microfranchise is therefore characterised by the following features:

1. Very little franchise premium charged by the franchisor.
2. In general home based franchises.
3. Low overheads, by working from home franchisee avoids office expenses such as rent, rates and business insurance.
4. Proven existing business model reduces start-up timescales thereby minimising working capital needs.
5. Usually “sole trader” enterprises with no staff required.
6. Often service based, thus avoiding fabrication, manufacturing and distribution costs.
7. Little or no stocking outlay.
8. Little or no plant and equipment spend.
9. Pre franchise marketing carried out by the franchisor to reduce advertising costs.

Microfranchises are franchise opportunities that provide the closest approximation to jobs because they need so little preliminary initial investment, returns are reasonably quickly felt and they typically suit the sole individual who will generally work from home. These qualities make the microfranchise a much more practical option for many individuals than a full blown Franchise For Sale and can be accessible for all inclusive costs of less than