Dairy Products in West Africa
See below the Fan Milk example of microfranchising. It is one of the most notable and successful cases in the implementation of the business model.
The Fan Milk Group operates in seven West African countries. For more than 50 years, the group has produced and sold affordable frozen dairy and juice products directly to consumers through a unique street vending system. Through persistent leadership and innovation, Fan Milk has adapted to the local environment and proven its business model is sustainable for long term growth. Over the years, the Group has created thousands of jobs and today employs 1,700 people and engages with 25,000 agents and vendors. The Fan Milk Group contributes positively to all stakeholders; shareholders, employees and the Societies in which we operate.
Fan Milk is a pioneer in the development of sales and distribution systems, in which it uses the microfranchise principles. Bicycle vendors were introduced in the early days in Ghana and today consumers can still see thousands of Fan Milk vendors on their bicycles all over West Africa. We have added push carts and more recently we are experimenting with new vending equipment including motor cycles and solar-powered kiosks.
The Fan Milk product portfolio has developed over time. Today, the most important products are frozen yoghurt, ice cream and chocolate milk packaged in serving sizes either in plastic sachets or carton. Fan Milk also provides ice cream in serving size cups and larger packages catering for families, hotels and restaurants. In addition to the milk products, Fan Milk produces and sells juice and juicedrinks in sachets, bottles and cartons.
The results are encouraging. Compared to standalone dairy businesses, Fan Milk’s micro-franchisees had significantly lower start-up costs and an incredibly low start-up capital recovery time of less than seven weeks. Most importantly, micro-franchisees worked harder (more hours) and ended up with significantly higher savings and lower debt than their standalone competitors, while at the same time being younger and less educated. While this is only some first evidence, it suggests that micro-franchising can actually help people with low education get out of poverty easier than more traditional business approaches. (Hürlimann, 2011)
Fan Milk also provides bicycles, deep freezers, coolers, as well as credit facilities and on-the-job training to the micro-entrepreneurs that act as its sales agents. Vendors have the option of returning the bike if they leave the company. Vendors average 8 years with the company. Vendors can move up in the company or purchase additional bikes and sub-lease them out to new recruits.