B2B Markeplace

The theory of a microfranchise would appear to have started at Brigham Young University, Utah, in the United States of America. BYU’s Marriott School defines a microfranchise as small company that can simply be copied by following proven marketing and operational concepts. The overall objective of MicroFranchising is to promote economic development by developing sound business models that can be copied by entrepreneurs at the base of the pyramid; therefore, the start-up costs of MicroFranchises will be small. The key principle is replication, replicating achievement to scale.

The microfranchise is viewed by BYU as a likely catalyst for third world economic development, but there are signs now that the model might start to take off in developed economies as more and more individuals search for 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 allows individuals with little funding and no credit opportunity to participate in the Franchise Opportunity.

The microfranchise is therefore characterised by the following features:

1. Very low franchise premium charged by the franchisor.
2. Generally home based franchises.
3. Low expenses, by working from home franchisee avoids office costs such as rent, rates and business insurance.

4. Proven existing business model minimises start-up timescales thereby reducing working capital needs.
5. In general “sole trader” enterprises with no staff required.
6. Often service based, thus avoiding fabrication, manufacturing and distribution costs.
7. Little or no stocking expense.
8. Little or no plant and equipment investment.
9. Pre franchise marketing carried out by the franchisor to lower advertising costs.

Microfranchises are franchise opportunities that present the closest approximation to jobs because they need so little preliminary initial investment, returns are reasonably quickly observed and they typically suit the sole individual who will generally work from home. These qualities make the microfranchise a much more feasible option for many individuals than a full blown Franchise For Sale and can be available for all inclusive costs of less than £5,000. This contrasts with lots of other low cost franchise opportunities which, although featuring low Low Cost Franchise premium costs, normally end up costing considerably more to establish because of the supplementary costs of stock, equipment, overheads, plant and machinery, advertising and staff.

So it would seem likely that the microfranchise may well become a new feature in working life in the UK and other developed countries as individuals look for self employment, but with the safety net of an established business model which they can access at very low cost.