What is the microfranchise?

The women who receive business training in the Clothing Bank buy clothes from the company, and resell them, using methods they learn in the classroom or invent themselves. The clothes come from retail companies all over South Africa, and are donated to the Clothing Bank in great amounts and on a daily basis. This allows the Clothing Bank to sell the clothes to the women for a low price, and allows the women to resell the clothes with a reasonable amount of profit.

Next to clothing retail, the Clothing Bank is an umbrella organization, encompassing the Microfranchise Accelerator. This part of the enterprise develops microfranchises that can serve as employment for Clothing Bank graduates. Amongst these are the Growth Centers. This branded daycare center spreads high-quality daycare into areas that lack the service altogether, or only have access to low quality centers.

“Clothing Bank takes this microfranchising one step further”

Why is the Clothing Bank a best-practice microfranchise?

The Clothing Bank takes microfranchising one step further, and uses microfranchising to empower women and teach business skills. As Jason Fairborne remarks, not every person in this world should be assumed to want to be an entrepreneur. But in the developing world, people are often forced into this role by circumstance. Microfranchising allows people to avoid being an entrepreneur per se, and hooks them up with a ready-made concept. The Clothing Bank combines this with business training, psychological councils and creative concept development to forcefully and sustainably stimulate female employment.

In conversation with Tracey Chambers

In a Skype conversation, Chambers shared some of the lessons she came across in the past years, developing the Clothing Company. These are some of her messages.

Microfranchises can provide both economic and social development

Chambers has identified some creative business gaps that do not only support the changes of success of these businesses, but also develop the neighborhood. The concept franchising Beauty Salons was born from the knowledge that women in South Africa had in the past financially compromised their energy bills for maintaining their physical appearance. The pride they took out of a cared-for appearance was of considerable value to them, and the Clothing Bank developed a business answer to this problem.

Delivery services, in a second example, were developed to cater to poorer areas, when it turned out that bigger brands were reluctant to extend into these areas. This allowed the inhabitants here to enjoy services that were available in any other normal neighborhood.

Running a microfranchise is a combined effort

To maximize the potential of the microfranchise, the initiative must be well informed by experts with all sorts of insights. While the initiator, the mother company, is at the center, it is important that branche experts are involved in expanding the business. Microfranchise experts can optimize the efficiency of the ‘branding’ process, creating a simple, outstanding brand. But mostly, all feedback from customers, potential clients and franchisees form the franchise.

This necessary network makes it complicated to spout a microfranchise abroad. The concept is only the start. The development then relies on knowledge of the local market and the creative input of entrepreneurs at the local level.

Simplicity is key

Branding and spreading a microfranchise already poses a wide array of practical difficulties. Keeping the brand as simple as possible, it will be more easy to ensure the quality of individual franchisees and rapidly spread the business.

The simplicity of the retail section of the Clothing Bank makes it ideal for educational purposes. The Growth centers are already more complicated, and require not only training of the franchisees, but also active monitoring of their practices. People interested in franchising the Growth centers need close cooperation with the original company, because they need to learn about the complicated process of opening a new franchise.

Microfranchising is hard to make profitable for the mother company

The Clothing Bank is a social enterprise. Chambers stresses that it takes a few years before the franchise, let alone the mother company, becomes profitable. Preferably, the first investment in the new branch is a donation, to reduce the risk of failure. However, when the aim is to make not the mother company, but at least the franchise profitable, and the mother company self sustainable, this allows for a sustained source of employment for franchisees. Risks can further be reduced if the franchisee buys into the company.

The franchise concept must be sensitive to the restrains of the market

The franchise will draw on certain resources: supplies, skilled labour, perhaps real estate. Sometimes the spreading of the microfranchise, with all the benefits this would have entailed, must be compromised to ensure that these resources do not become scarce. The Clothing Bank, for instance, relies on on donated clothes. Therefore, it cannot be franchised without careful consideration of sufficient supply.