WASHINGTON, Oct. 8, 2013 – Scott Hillstrom, chairman and co-founder of the HealthStore Foundation, is the 2013 Entrepreneur of the Year awarded by the International Franchise Association.  The formal presentation is scheduled during the association’s Annual Convention, Feb. 22-25, in New Orleans. 

The Entrepreneur of the Year Award recognizes visionaries who see what might be and are willing to take the risks that traditionally accompany any new endeavor, and possess the management skills to create a successful business enterprise through franchising.  

Hillstrom’s work to meld franchising with the delivery of basic health care to families in developing countries mirrors the innovative, entrepreneurial spirit of franchising.  By bringing together social sector franchising and commercial franchising, he has illustrated the positive impact of standardization to build a brand and address an urgent need. “Commercial franchising can do more to spare the world’s poor from needless suffering and death than just about any other method presently being attempted in the developing world,” says Hillstrom.  

Hillstrom, an attorney, entrepreneur and business advisor, co-founded the HealthStore Foundation in 1997 after studying the causes of suffering and death among children in Africa.  HealthStore’s mission is to promote the use of the commercial franchise model to deliver more and better health care for less cost to the world’s poorest people.  Today, the HealthStore operates 65 micro-clinics under the CFWclinics brand in Kenya. These clinics are owned and operated by nurses who serve in poor communities to provide routine primary care and essential medicines along with health educational and prevention services.  

HealthStore’s franchise business model incentivizes health care providers to comply with standards of care necessary to effective health care in places where low-standards result in needless suffering and death. Since the opening of the first clinic in 2000, Hillstrom estimates that approximately 4 million people have been served. Last year, the HealthStore Foundation licensed its system to a sister organization that is now developing the Rwandan market.  This year it is supporting the implementation of a franchise clinic system sponsored by USAID, the foreign aid arm of the U. S. government, in Eastern Congo.   

Hillstrom presently maintains a small law practice and serves on two company boards in addition to an active volunteer role with HealthStore Foundation.  Prior to co-founding HealthStore, he was a volunteer president for 10 years with Steiger International, a global youth evangelism ministry.  He was a managing partner of the law firm Hillstrom & Bale, Ltd. in the 1980s and, in the 1990s, he served as co-founder and managing director of Rehab One, Inc., a multi-state network of hospital-based medical clinics.   

Hillstrom is a member of the IFA Social Sector Franchising Task Force. Hillstrom earned a Juris doctor degree, graduating cum laude, from the William Mitchell College of Law in St. Paul and a bachelor’s degree with honors in psychology and public health from the University of Minnesota in Minneapolis. 

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About the International Franchise Association
The International Franchise Association is the world's oldest and largest organization representing franchising worldwide. Celebrating over 50 years of excellence, education and advocacy, IFA works through its government relations and public policy, media relations and educational programs to protect, enhance and promote franchising. Through its media awareness campaign highlighting the theme, Franchising: Building Local Businesses, One Opportunity at a Time, IFA promotes the economic impact of the more than 825,000 franchise establishments, which support nearly 18 million jobs and $2.1 trillion of economic output for the U.S. economy. IFA members include franchise companies in over 300 different business format categories, individual franchisees and companies that support the industry in marketing, law and business development.

Contact:
Matthew Haller, 202-662-0770
Jenna Weisbord, 202-662-0766
[email protected]
[email protected]

by Michael Seid - Michael Seid is the founder and managing director of Michael H. Seid & Associates (http://www.msaworldwide.com/) an international franchise consulting firm with clients that include both established and new franchisors.

Michael can be reached at [email protected]

~ This article originally appeared in Franchise Times, and is reprinted here by permission ~

The interesting thing about using business-format franchising to solve the world’s social and health problems is that there is really nothing magical. The tools and techniques we are applying with some innovative modification are the same as the ones used successfully in a multitude of franchises in the U.S.

The difference is that we are working in the poorest parts of the world—our medical clinics are without running water or electricity and our customers do not have the resources to pay for the medicines and services we provide. Even so, franchising enables us to achieve a high level of consistency and quality standards of patient care and service unequaled in rural Africa.

The CFWshops franchise currently has 65 franchised locations, 48 of which are clinics and 17 drug shops, and we expect to have 225 clinics in Kenya within the next five years.  Within the next two weeks we will open two company-owned clinics in rural Kenya that will be regional training and support centers while serving the community in which they are located.

I made my second trip of 2007 to Kenya in August and will be returning in November to work with our management team and to hold our first franchisee convention. Scott Hillstrom, the remarkable founder of the HealthStore Foundation, Sid Feltenstein, past chair of the IFA and chairman of Sagittarius Brands, and Steve Greenbaum, next year’s IFA chair and chairman of PostNet, will travel with me. Jim Amos, former IFA chairman and CEO of Tasti D-Lite and Fred DeLuca, founder of Subway, who are also working with us, plan to make the trip in 2008.

During my last visit I presented the board of directors and senior management team a going-forward strategic plan which looked at our Brand Promise and detailed how we will meet our brand commitment in Kenya.  We examined our customers’ needs, recognizing the limitations of servicing a population with little or no resources to pay and acknowledging that this challenge must be accomplished in a way that preserves the dignity of each mother, father and child we serve.

Part of our plan includes instituting a third-party payment system, funded by donors, so that our patients can readily access our services regardless of ability to pay.  The system will reimburse franchisees for the medical services, medicines and other products they provide to patients.  Franchisees will then pay, as in any traditional franchise system, a royalty based on sales. Our goal is not only to serve the needs of the poor, but also to ensure franchisees can earn a good living, while keeping the costs of operating the franchise system as low as possible.

Our management team in Kenya is learning to flex our product and services to meet the needs of the marketplace, just like every other franchisor. An example of this comes from visiting a clinic in Kibera.  Kibera is the most densely populated and poorest slum in Africa with about 1 million people living in a two-square-mile area. It is estimated that slightly more than 2 million Kenyans currently have HIV, and one- fifth of them live in Kibera. AIDS has orphaned about 50,000 children living there. While the CFWshops franchise model does not have midwife or birthing services, we discovered recently that some of our franchisees—qualified clinical nurses—are providing these services in emergencies and sometimes in the patients’ homes.

Hillstrom; Esther Njuguna, CFWshops executive director; and I visited one of these clinics in Kibera to discuss these unauthorized services with one of our franchisees, expecting the conversation to be about clinical standards and our Brand Promise since, after all, nowhere on our menu of services is midwife services listed. We had no standards in place to ensure quality and consistency and when dealing with health care, especially in such challenging conditions, having clear standards and medical protocols are essential.

When we got to the clinic our franchisee had just delivered a baby at three in the morning, the sixth live delivery that week. In a country of high infant mortality this alone was impressive, but what made this a brand-changing experience is that our supply chain team at headquarters had been able to secure for her a drug that when given at birth reduces a child’s chances of contracting HIV/AIDS from his or her mother.  While our services are primarily focused on a short list of preventable and treatable diseases which account for approximately 70 percent of childhood illnesses and deaths, such as malaria, respiratory infections and worms (approximately 25,000 children die each day in the developing world because they lack access to essential drugs and basic healthcare), we did not provide services to stop the greatest killer, which is the death of children and mothers in childbirth.

Outside the clinic I chanced upon a mother with her small baby and asked her why she came to CFW rather than the free clinic down the road. She paused and simply pointed at the sign and told me that here she got good service and good drugs that cured her children. In a country where approximately one-half of the drugs on sale are counterfeit—so that half the time patients don’t get the proper medicine—CFWshops delivers on its brand promise, in true franchise fashion.  We have a secure and tested supply chain of authentic medicines, another part of our brand promise, and the impact is easy to see.  By providing care that exceeds our customers’ expectations, and providing them with “real” medicine, we are meeting the needs of Kenya’s poor and at the same time creating a business opportunity in which our franchisees can prosper. Our franchisees are no different in that way from other successful franchisees in the world and meeting the needs of our patients in Kibera is no different than successful franchisees serving their customers in Pasadena, California, or Dallas Texas.

What is also no different is that our brand platform has the ability to adjust to consumer needs and desires. Armed with what we learned from our franchisee in Kibera, the MSA team is working with the franchise team in Kenya and medical experts to write medical protocols and standards to update the manuals and training systems to provide midwife services. We have some added hurdles of obtaining government approval to provide midwife services, but are addressing those, as well.

Philanthropic funding

Effective funding of a franchise model is a challenge because funds are used differently than what is traditionally found in impacted countries. Grant organizations have to be educated on why the franchise approach works better than traditional service models: In addition to serving the community, franchising has the side benefit of creating wealth in the community through the ownership of the clinics by local nurses, job creation to staff the clinics and the development of a local supply chain to supply the needs of the franchise system.  Our model accomplishes this at a much lower cost because franchising it is a more cost effective platform than other models being used.

As part of our fund raising efforts, the board of the HealthStore Foundation, the parent company in the U.S. which launched the CFWshops franchise, is continually looking for ways to match CFW with corporations, such as we now have with ExxonMobil and P&G and with government agencies such as USAID as well as with private grantors.  In addition, individuals from the U.S. franchise community are making donations of $5,000 or more to sponsor the development of new medical clinics in Kenya. While our franchisees still pay a franchise fee of $300, which in the Kenyan environment is a huge investment, they will be freed from the burden of additional debt to build their business. The franchisor is also freed from its investment of supplementing each franchisee’s clinical development costs and working capital requirements. Through the generosity of U.S. franchising, we will be able to expand our services to our franchisees and to begin to open more clinics and save more lives.

So, what’s next? 

Besides our work in Kenya, we are beginning to expand into other markets, including Rwanda where we will launch the next CFWshops franchise network. We are completing the design of an Indoor Residual Spraying franchise called HealthGuard in Uganda, which eradicates mosquitoes which cause malaria. The manuals and training systems already have been developed by MSA’s team and we are working with local leadership in Uganda and Rwanda to complete the strategic plan and launch the programs early in 2008.  On my way back from Kenya, Rwanda and Uganda in November I will spend a few days in Lagos, Nigeria, to assess franchising in that country and consult on establishing franchising there.

One important lesson learned is how volunteering can benefit a business. Our involvement in Kenya clearly takes some of my time, and both my partner Kay Ainsley and our staff work as hard as I do in making certain that the franchise systems in Kenya are operating to world-class standards.  We have set up an affiliation with a Kenyan-based franchise consultancy that works with us in implementing and providing management support in country.  While my vacation time is now spent mainly in Africa, we continually see MSA’s practice in the United States and internationally grow, possibly because companies like to work with professionals who contribute a bit of their resources in this way.

I am appreciative of the IFA and our client’s support as well.  Unfortunately the opportunities in Africa are limitless—a good thing for a hamburger chain, but daunting when it comes to applying franchising to saving lives.

by Nancy Weingartner

“I miss my country. I want to come home,”
D.C. resident John Mwangi lamented after he fed a gentle giraffe named Laura a handful of pellets.

Pictured left:  Maasai tribe members in traditional dress are part of the tourist industry in Kenya. Here, two warriors pose with coffee exporter John Mwangi, who was raised in Kenya before moving to the U.S.

Mwangi was born and raised on a coffee farm in Kenya, but educated in the U.S. Now a coffee exporter living in the D.C. area, he was one of the hosts for my Kenyan coffee tour, and had graciously agreed to accompany me to some of the local sights while we waited for Dunn Bros Coffee CEO Chris Eilers and VP of marketing Mark Christenson to return from the first leg of their coffee pilgrimage to Ethiopia and Uganda.

What’s so startling about Mwangi’s sentiment at the giraffe park is that we had just left Kibera, a 1.5-square-mile slum that houses an estimated 1 million people, outside Nairobi, the capital of Kenya. It’s hard to describe the magnitude of the slum, which is row upon row of mud and rusted, corrugated-metal sheds that serve as both tiny, cluttered shops of mismatched merchandise as well as homes. The pothole-infested dirt roads are littered with garbage that turns into a slip-and-slide when it rains. Men, women and children are everywhere, standing in doorways and on dirt porches, cooking alongside the road, walking everywhere and nowhere.

I wanted to visit Kibera because it houses two CFWshops locations, the social-sector franchise profiled in our May 2007 issue. The Child & Family Wellness shops are rural healthcare clinics and pharmacies that provide medicine to a population that can’t trust the government’s drugs not to be counterfeit. Franchisees are entrepreneurial nurses, and for the most part the shops operate like typical franchises, with one noticeable exception: “We don’t turn away people” who can’t pay, says Spencer Ochieng, the country program manager.

Franchisees use their “own local judgment” to decide who can afford to pay for services on the spot and who needs to be extended credit. There is no health insurance, therefore payment is out of pocket in an area where some people are living on less than $1 a day. But they can afford to pay, Ochieng stresses. “In other areas, the pockets are much heavier, then you don’t give credit,” he adds. He tells about a franchisee in a more “suburban” location who sends patients who come with empty pockets home to get money before treating them.

“You have to be very wise,” says Dorah Nyanja, the franchisee of the first CFWshop we visited in Kibera. “On a weekly basis we know the outstanding balance; you know who pays and who doesn’t.” When someone who owes money shows up a second time: “You pretend you don’t remember they didn’t pay last time,” she adds.

By noon on the day we visited, Nyanja had already seen 23 patients, only five of whom she said paid–and even those five didn’t pay the full fee. The problems she treats include malaria and diarrheal diseases, along with what she refers to as opportunistic diseases, infections that grow in people with compromised immune systems. Clean water for washing or cooking is a rarity, as is proper sanitation. According to one report, there is one toilet for every 500 to 1,000 people in Kibera, therefore necessitating the use of the “flying toilet”–defecating into plastic bags and then tossing them as far away from you as possible. This results in the bags breaking and fecal matter getting into the water or splattered on pathways and picked up by bare feet. AIDS and HIV-related cases are also prevalent in all of Kenya, but nowhere more so than in Kibera.

Nyanja has her work cut out for her. She’s been a franchisee for seven years, after finding work at a hospital repetitive. She commutes to Kibera, works 12-hour days and sees about 65 patients daily. While she makes her home outside the community she serves, some residents of Kibera actually choose to live there. They work in the city, then return to sleep on dirt floors at night. It’s their community, the only home they’ve known, Ochieng explains.

It’s also a community with few secrets, since people live just a few feet away from each other behind thin walls. Which is how the franchisees know so much about their patients’ finances.
In order to ensure the brand stays strong, Kenyan franchisees need to be both empathetic and give good service. Because it’s a franchise, there are standards and procedures, and people are starting to trust the brand.

At a second CFWshop a few blocks and several tens of thousands of people away, we see an unusual sight–a father who brought his child in for treatment. It’s usually the women who are the caregivers.

Nyanja says that when a man comes to the clinic, it’s because he’s in dire need of care. The clinics are known as mother/child centers, since they are the most vulnerable population. But when she treats a man, Nyanja says she knows he can then go back to work and therefore pay her fee.

In a 2008 documentary for PBS, the show’s host posed the question: “Can the fast-food business model save lives in Africa?” But those in franchising know that statement is an affectation. Franchising is much more than fast food. As Michael Seid, a consultant helping design the franchise program and a board member for the  shops’ parent organization, the Healthstore Foundation, said in the 2007 Franchise Times article about his trip to Africa: “This is …commercial business-format franchising applied to the human condition.” The difference between an overcooked french fry and selling bogus drugs, however, is worlds apart. “In Africa, ‘mistakes equal a coffin,’” Seid said. (OK, so can E. coli and mad cow disease, but let’s not go there.)

The reason franchisees stay in business, not to mention the franchisor, is because it’s part of the HealthStore Foundation, a 501(c)3 charity, started by Scott Hillstrom, an attorney and businessman in Minneapolis. London-based Gunther Faber, a former vice president for GlaxoSmithKline, an international pharmaceutical company, has come on board as CEO. In addition to his impressive Rolodex and 29 years of work experience in Africa, Faber has a passion to see sustainable health care become a reality in Africa. He says that when he received the call from a headhunter about the CEO position, his reaction was, “We may have just found the Holy Grail” to supply drugs to the masses. He saw it as a “magical business opportunity, and then came the economic meltdown.”

He had envisioned utilizing social venture capitalists, but the foundation’s 3-percent return on investment wasn’t enticing enough. “We have to rely on donor money,” Faber says. But, the good news, he adds, is that the nurse/franchisees do make money. The foundation currently has a $1.5 million grant from his old pharmaceutical company to develop 60-plus CFWshops in Rwanda.

Other good news is that the International Franchise Association has approved a task force to investigate social-sector franchising, such as the Healthstore Foundation.

Another model

At a recent fund-raising event for CFWshops in Minneapolis, I sat next to Kojo Benjamin Taylor who is in the process of setting up a franchisable healthcare model in Ghana, his home country, and Uganda. His 2-year-old model, MicroClinic International, works with the governments and other sources to pay for the care patients receive at the clinics, in a program similar to health insurance. He claims people earning just $1 a day can’t afford health care, much less, preventive care.  MicroClinics are run by physician assistants, Taylor says, who also work to prevent the short list of diseases that cause 70 percent of the childhood illnesses and deaths in Africa.

Also at the event, which was awareness-raising as well as fund-raising, I met David Jones, who is helping design a fund-raising program for Healthstore. He founded Geneva Global in 1999, which he has since sold, a philanthropic company that researched “global south organizations.” “I was most impressed with the Healthstore Foundation’s work,” he says. The quality of the health care and the “pure medicine it delivered because of its franchise supply chain was superior in its field.”

Half-full glass?

Kenya seems to be shedding its past, which was the reason for our coffee exporter’s optimism. Next door to Kibera, the government is building high-rise apartment buildings, and a traffic-jammed main artery in the city is being widened to eight lanes. A blip on our U.S. economic impact radar, but the beginnings of progress and a middle class in Kenya.

Mwangi told me to look at the faces of the people we drove past. I noticed smiling faces; clean, Western-style clothes; neighbors talking to each other and working side by side to sell their hodgepodge of goods. Children laughed and played–the only visible difference from American kids is their backdrop.

“Poverty is not something that stops them from feeling good about themselves,” Mwangi says. And perhaps using franchising for social-sector projects is something that will make Americans feel good about ourselves.

This article was reprinted by permission of http://www.franchisetimes.com