MSMEs urged to tap micro-franchising model for growth, poverty reduction

…as GIZ pilot model for selected businesses in clusters

Experts in the country’s entrepreneurship landscape have called on operators of micro, small and medium enterprises (MSMEs) to tap opportunities in micro-franchising to scale their businesses and support reducing the alarming poverty rates in Nigeria.

The experts, who spoke at a roundtable workshop on micro-financing themed ‘Empowering MSMEs: The Benefits of Micro-franchising’ defined micro-financing as a business model that empowers individuals by providing them with the tools and support needed to start small businesses with numerous benefits.

According to them, in Nigeria, the model can significantly contribute to job creation, and foster economic growth by helping existing businesses reach more clients and partners to increase their revenue and promote sustainability.

They noted that these advantages lead to higher success rates and contribute to economic stability in local communities.

Chukwudum Akwah, a business consultant, noted that the micro-franchise model could significantly contribute to job creation and reduction, fostering economic growth by helping existing businesses reach more customers and partners to increase revenue and promote sustainability.

Akwah stressed that micro-franchising is much easier and more successful for MSMEs to start and doesn’t involve luxury products as it gives the advantage for expansion.

“You can start small and then scale up as you go further,” he said. “One of the benefits is that it is a ready-made business formula to follow, market-tested products and services, and in many cases established brand recognition,” Akwah said.

He added that in micro-franchising there’s a franchisor and franchisee who operates the business.

“The franchisor creates a business model or system that works, supports, and trains franchisees to equip them with essential knowledge and expertise, oversees the marketing initiatives for the franchise system, and also gives franchisees a licence to use such as log, images, and other branded materials.”

“Franchisees are representatives of the franchise brand in different localities who protect the brand identity and reputation, manage daily operations of their franchised location, utilising the franchisors’ established business model and operational manuals, which offers direction in essential areas like marketing, inventory, and quality control.”

He reiterated that franchising is a good business idea for MSMEs but comes with challenges in franchise relationships such as poor communication, responsibility (franchisor and franchisee), franchise compliance, technology compliance, and culture fit.

“To overcome these challenges, you need solutions like conflict resolution, communication, and collaboration,’ Akwah said.

Based on the benefits of micro-financing to MSMEs, the Sustainable and Inclusive Economic Development for Decent Employment in Nigeria (SEDIN), a programme of the German Development Agency (GIZ) is piloting micro-franchising for selected MSMEs in its supported business clusters as part of its access to finance intervention activities.

“As part of our efforts at empowering MSMEs through the promotion of micro franchising, we organised the workshop to facilitate franchising deals and promote exchanges among the ecosystem players,” said Akinwande Pearse, technical advisor – access to finance GIZ.

“The workshop is designed to achieve several key objectives. It aims to facilitate meaningful connections between franchisors and franchisees, creating valuable franchise linkages,” he added.