Franchising

1
Franchising

• An arrangement between a franchisor (a
  manufacturer, a wholesaler, or a service sponsor)
  and a retail franchisee, which allows the
  franchisee to conduct a given form of business
  according to a given pattern of business and
  under an established name.

2
Franchising

• Find 10-20 rural entrepreneurs (franchisees)
• Show them that running a branch can be profitable
• Sell them the business package and training (how
  to open and run an MFI branch as a bank agent)
• Provide on-going monitoring and support, plus the
  link to private banks for on-lending funds
• In return, take an up-front fee and a share of
  income

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Franchising
4
Advantage of Franchising

• For Franchisee
• Driven purely by entrepreneurial motivations
• Franchisees access funds through franchisors
  relationships with banks
• Incentive to grow rapidly to recover their
  initial franchise purchase payment
• For MFI
• Franchisees help expand brand to new areas
• Franchisor incentivized to build systems to
  maximize the number of franchisees and hence
  expand rapidly
• Additional source of revenue for franchisor
• Option to expand products to include savings,
  insurance, money transfers, and others

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Why Franchising can be a possible solution?
Constraint on MFI Growth Possible Franchising Solution
Lack of start up/expansion capital Franchise model attracts capital from entrepreneurs and investors
Need for local understanding Entrepreneurs are rural and will build MF operations in own locales
Organic, branch-by-branch growth Franchisees make profits for franchisor from day one. Incentive open as many franchisees as possible at once
Systems cant handle wide network Franchisor business model becomes training and monitoring, not operations
MFIs hire loan officers, not skilled branch managers Find franchisees to run branch operations, let them hire loan officers