Avon in Uganda? How microfranchises create small, low-risk jobs

Social Enterprise

Avon in Uganda? How microfranchises create small, low-risk jobs

Living Goods' agents can sell door-to-door for a few hours a week while still keeping up with household tasks, giving them a low-risk chance to boost their income. Photo: Living Goods (flickr)

A door-to-door sales company in Uganda is giving a shot at entrepreneurship to would-be entrepreneurs who don’t want to risk everything.

In the developing world, your typical entrepreneur isn’t like Warren Buffet or Sir Richard Branson, says Cecilia Zevallos of SAB Miller. Zevallos's experience in Latin America has shown her that most entrepreneurs either inherited their business or started it to get a little extra cash for their families. These people aren’t rushing to bet their livelihoods on an industry with a 25 percent success rate. That's why Living Goods, based in San Francisco, is fighting malaria in Uganda with a solution that allows its entrepreneurs to squeeze in business around their daily activities.

It’s a model that was made popular in 1886 when David McConnell founded Avon, turning rural housewives into door-to-door saleswomen.

Living Goods trains women to sell health products door-to-door, advancing the fight against malaria through a micro-franchise model. To make the health products affordable, Living Goods franchisees also sell much-needed products like cookstoves and solar lamps at a profit, and the health products at a discount. For a few hours of work, agents can make $20 a month--enough to send the kids to school--and the model is profitable enough that after only five years, the company makes enough to cover its product sales.

Revenue was $500,000 last year--not a lot but enough to suggest that the model can work at a larger scale.

Living Goods is not alone in its success. Scores of social enterprises across the globe, from Accesso Chakipi in Peru to Grameenphone in Bangladesh and Solar Sister in Sub-Saharan Africa, are using micro-franchising and door-to-door sales agents to get their products to the hardest-to-reach areas of the globe. There are numerous advantages for the companies: access to remote areas, an existing trust-based relationship between the salesperson and customer, and the ability to sell products that achieve triple-bottom lines. In the case of Living goods, this can mean better health, raised income for women and reduced dependence on kerosene.

But microfranchising does something else that other successful social enterprise models don’t: it recognizes that most entrepreneurs aren’t risk-takers and might work more effectively as managers. As quoted in the New York Times, microfranchising consultant Jason Fairbourne said:

It’s much more realistic and simple to train someone to be a manager than an entrepreneur. ...Microfranchising is the provision of the full business package. The franchisee just has to follow the steps.

That’s exactly what Avon founder David McConnell recognized in 1886. Rural women lacked education but had the management abilities to become successful salespeople. Living Goods founder Chuck Slaughter saw the same potential when visiting a Healthstore Foundation clinic. He was impressed by how successful nurses were, especially when they left the clinics and went door-to-door offering health services. This inspired him to create a model that did away with the storefront completely.

Because Living Goods trains and employs agents who start businesses primarily to boost their existing income, their model is low-risk and flexible. Agents can manage the family farm in addition to selling much-needed health products. Micro-franchisees get a business in a bag containing everything they need to market and sell the 70-odd products Living Goods offers, and after some basic training, they’re open for business whenever it is convenient for them. Living Goods claims that their training and monitoring is rigorous enough that even without established business hours, agents provide high-quality products and services to their clients.

While the micro-franchise model may be a less flashy way to support entrepreneurship than investing $33 million to fund tech startups, it may achieve its development goals more effectively, and the entrepreneurs themselves might be more interested.

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