Microfinance has become a sig-nificant and proven poverty alleviation tool by providing the necessary capital to the poor for starting their own businesses. However, although there are some successful cases, critics of microfinance argue that many of the poor still don't have what it takes to be an entrepreneur, to start a business from scratch and then continue to expand it. "Many of the poor who take microfinance loans are starting copycats micro-business with low profit margins and therefore questionable sustainability." Moreover, the high interest rates and forced loan recovery practices of Microfinance Institutions (MFIs) have been held responsible for the suicides of several farmers in Andhra Pradesh. Though microfinance has got its own limitations yet not all people are entrepreneurial and they lack the necessary training and skills to start and manage a successful business. Against this backdrop, microfranchises are emerging as a solution to global poverty. Microfranchising adds value as a "turnkey" business because it can rely on the franchisor, who provides high quality initial and ongoing training, thereby reducing the risk of failure.
In the developing world, around three billion people are suffering from unemployment and living on less than two dollars a day. Micro enterprises are showing the way in order to move up the economic ladder for all these marginalized masses. In short, microfranchising refers to a network of small, locally-owned successful businesses, designed for replication, providing essential goods and services in addition to job opportunities for the low-income communities. The core objective of microfranchising is to promote economic development by developing sound business models. These models can be replicated by entrepreneurs at the bottom of the pyramid, easily, as the costs are at an affordable level. Microfranchising can be easily replicated by the formal franchises proven marketing and operational concepts. |
