Back to Africa - Why doing good is good for business

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.

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