Changing the Face of Rural Entrepreneurship with Micro Franchising

Micro franchising is helping change the face of rural entrepreneurship

The concept of franchising is not new in the world of entrepreneurship. A cost-effective yet highly rewarding business model, franchising is a way to expand businesses by granting license to a third-party individual or company to sell products or services under their brand and providing them with the required training and support while ensuring mutual benefits to both the parties. Many franchise businesses often target Tier II and III cities for deeper product penetration and they have various models to do that. One such model that is helping them in targeting the overlooked rural market is micro franchising.

The Concept

The concept of micro franchising is nothing but the same as traditional franchising; it is just that the objective of a micro franchise is not profit-centric but it has more to do with deriving socio-economic benefits out of franchising.  It is a model that envisions the empowerment of rural entrepreneurs in embarking on an entrepreneurial career. So, tapping a huge chunk of population that resides in rural India becomes inevitable to ensure the development of the nation itself. Micro franchising gives the small entrepreneurs an opportunity to create their own enterprises on the same platform with the principles of franchising.

 

As most of the business aspirants in rural areas lack sufficient capital required for a business start-up, companies that are interested in serving the less-privileged class take it as an advantage to reach out to the untapped market and, at the same time, help the aspirants in starting their franchise with lesser investment. By offering the aspirants an opportunity to start their own franchise, companies help in uplifting the poor at the base of the economic pyramid. A notable example of micro franchising is KidZee Gramin, an initiative by KidZee, one of the world’s leading names in the preschool market, which focuses primarily on tapping the rural areas.

Financial Aspects

As mentioned above, micro franchisees are selected among aspiring rural entrepreneurs who lack sufficient investment capabilities. Therefore there is a provision of small loans to the deprived aspirants to help them carry out operations at a rural level. Franchise companies that are interested in serving the less-privileged communities often turn to micro finance companies to serve these aspirants. Micro finance companies offer loans to rural people and franchise the centres to carry out business operations.

The Benefits

As mentioned earlier, rural India is considered to have huge potential due to a big market size and various unexplored market segments. Once considered as a stagnant and unorganised market, rural areas were often ignored by large companies due to reasons like low purchasing power, high delivery costs, lack of awareness, etc. With time, the hidden potential is being unlocked as various initiatives like ‘Make in India’ have helped to kick-start rural entrepreneurship. A plethora of business ideas ranging from healthcare to sanitation and education can be explored via micro franchising to reshape the situation of village entrepreneurs. Franchisors are reaping the benefits of their easily replicable business model to help the government achieve its goals.