Recruitment Expansion · Map of Gran Asunción. Green points are offices of Fundación Paraguaya...
Transcript of Recruitment Expansion · Map of Gran Asunción. Green points are offices of Fundación Paraguaya...
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11.11.21.3
Introduction
Expansion Plan OverviewCurrent State of the MicrofranchiseGeneral Considerations
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2.12.22.3
2IntroductionRecruitment Structures Necessary for Expansion Implementing the Structures Necessary for Expansion
Recruitment Expansion121315
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3.2.1 3.2.23.2.33.2.4
3.13.2
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Initial Product Kit Launch Location Training Process Reporting Launch Results
Introduction Necessary Modifications for Launch Phase
Launch Expansion
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3.3
4.3
Implementing Launch Phase Modifications
Implementing Distribution and Restocking Modifications
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4.2.1 4.2.24.2.34.2.44.2.54.2.6
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Distribution Recommendation Product Restocking Recommendations Catalog Order Process Payment The Waiting Period
IntroductionNecessary Modifications to Distribution and Restocking
Distribution and Reordering Expansion
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5Introduction Necessary Modifications to Microfranchisee Management Implementing Microfranchisee Management Modifications
Followup and Management Expansion363740
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6.3.1 6.3.2
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Initial Expansion Recommendations
Recommendations for short-term expansion A vision for long-term expansion
Introduction
Steps for Selecting and Expanding to a New Office Specific Recommendations for the Expansion of the ONLY microfranchise
Expansion to New Offices
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1 INTRODUCTION
The objective of this document is to pro-vide guidance on how to expand the mi-crofranchise business division of ONLY. This document is comprised of Fairbour-ne Consulting’s recommendations on how to expand the business and is meant to be used in conjunction with the mi-crofranchise’s Operations Manual. These recommendations will help the team at Fundacion Paraguaya implement the ne-cessary changes to the business model in order to expand the number of micro-franchisees, the number of offices that offer microfranchise opportunities, and the geographic coverage of the micro-franchise. Many of these techniques and
recommendations are general in nature and can be used to expand the microfran-chise opportunity beyond those that are clients of Fundacion Paragauya.
Each section of this document is compri-sed of three main subsections. The first is an introduction that describes the business model component being ad-dressed and an overview of the recom-mended changes. The second subsec-tion describes these recommendations in more detail and the third subsection provides guidance on how to implement these recommendations.
1.1 EXPANSION PLAN OVERVIEW
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Each portion of the business model is also covered in detail in the Operations Manual for the business. The Operations Manual provides details on how the mi-crofranchise currently operates and this
Expansion Plan focuses only on the pie-ces of the business model that require modification in order to support on-going expansion of the business.
The Expansion Plan covers the following components of the business model that need to be addressed in order to expand the business:
1. Recruitment Expansion
Recommendations on the structural, procedural, and management changes needed in order to increase the reach and scope of recruiting new microfranchisees to the business.
2. Launch Expansion
Recommendations on the systems needed in order to launch new mi-crofranchisees located in areas that are far away from the company headquarters where launches currently take place.
3. Distribution and Reordering Expansion
Recommendations on how to modify the way in which products are ordered, delivered and paid for in areas outside of the current distri-bution system.
4. Follow-up and Management Expansion
Recommendations on how to design and create an organization to manage and follow-up with the increasing number and locations of microfranchisees.
5. Expansion to New Offices
Guidelines and examples of selecting which Fundacion Paraguaya offi-ces should be considered first for expansion.
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Since then, the microfranchise has seen substantial growth. As of Mid-December 2014, 76 in-dividuals had received initial product kits to launch their microfranchise – 68 of whom are not members of any other microfranchise associated with Fundación Paraguaya. These 76 micro-franchisees are spread across 6 different communities in Gran Asunción, including Asunción (13 microfranchisees), Luque (30), Lambaré (3), Mariano Roque Alonso (5), San Lorenzo (14), and Villa Elisa (11).
Map of Gran Asunción. Green points are offices of Fundación Paraguaya with active microfranchisees. Blue points are offices without any microfranchisees.
In partnership between Fundación Pargua-ya and the parent company TULUM S.A., the microfranchise was launched in late March 2014. Sharing the same brand name
of the popular, Asunción-Based clothing line, the microfranchise originally had only 9 microfranchisees and launched in 2 diffe-rent offices – Luque and San Lorenzo.
1.2 CURRENT STATE OF THE MICROFRANCHISE
1 INTRODUCTION
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The two main objectives of expanding a microfranchise should be to provide more individuals with the opportunity to be-come microfranchisees and to grow the potential customer base of the microfran-chisor. By expanding access to the micro-franchise opportunity, more people will have access to new and better sources of income. Expanding the reach of the mi-crofranchisor helps create a business that grows and is sustainable.
Caution should be taken to not expand too quickly. The systems, processes, and
management required to successfully ex-pand a business, especially a microfranchi-se, can be difficult to get right. Therefore, it is important to design the new compo-nents that will support the expansion and test them on 1-2 areas. This will give the team the time and flexibility they will need to fix issues that arise. Since it is impossi-ble to know beforehand all of the things that could go wrong, expanding little by little can help reduce the risk of failure.
1.3 GENERAL CONSIDERATIONS
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The recruiting methods currently in use should largely continue during the ex-pansion. The major changes to recrui-ting are structural in nature. Currently, microfranchise impulsoras work closely with asesoras to recruit from the aseso-ras’ clients. This may include a variety of methods, including attending and pre-senting the opportunity at loan group meetings, loan disbursement meetings, and through specific recommendations
from the asesora. The opportunity is presented and an application, the Loan Solicitation form, is filled out and submi-tted. The impulsora may assist with the preparation of the loan documents and follows up with the potential microfran-chisees until they are launched. These methods have proven to work well and should continue in the expansion.
The main recruiting difference will be in
2.1 INTRODUCTION
2 RECRUITMENT EXPANSION
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Since the basic methods of recruitment remain the same as those detailed in the operations manual, this section details the structures that need to be set up to support recruitment of larger numbers of microfranchisees and across broader
geographic regions. As mentioned in the prior section, Fairbourne Consulting re-commends a Central and Regional Office structure or an Assigned Office structu-re of the impulsoras.
2.2 RECRUITMENT STRUCTURES NECESSARY FOR EXPANSION
1. Central and Regional Office Structure
In this structure, groups of impulsoras work out of centralized, re-gional offices and visit offices located in their assigned region. They would report directly to the regional microfranchise manager.
2. Assigned Offices Structure
In this structure, impulsoras would be assigned to one or more spe-cific offices and work out of those offices. They would report directly to the office manager and indirectly to the microfranchise manager.
the location and responsibilities of the impulsoras. There are two structures that
Fairbourne Consulting recommends as potentially feasible expansion plans.
1. Central and Regional Office Structure
In this structure, groups of impulsoras work out of a centralized office. At the present time this central office is located in the Mi-crofinance office in Asuncion. However, additional groups of im-pulsoras would be established at specific regional offices of Funda-cion Paraguaya as the microfranchise is launched in those regions. Impuloras would be expected to primarily represent one micro-franchise, though they would also be responsible for presenting other microfranchise opportunities as well. Impulsoras would re-port directly to the regional microfranchise manager.
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2. Assigned Offices Structure
In this structure, each office is assigned an impulsora. Offices with a sufficient number of clients or those in population dense areas (see 6 - Expansion to New Offices for office selection criteria) have an impulso-ra dedicated to that office. In the cases of smaller offices, an impulsora may cover 2-3 offices. The impulsoras work out of their designated offi-ces and are managed directly by that office manager and indirectly by the microfranchise manager from the central office.
a. Advantages
Communication is the key advantage in this structure. The impulsoras work to-gether and can learn from each other’s successes. The microfranchise manager has a more direct line of communication with the impulsoras and can better coordinate assignments and initiatives. The impulsora could also potentially co-ver more offices this way.
a. Advantages
The close proximity and working relationship means that the impulsora should have a stronger relationship with the asesoras, office staff, and microfranchi-sees from the impulsora’s designated office. It should be easier to recruit due to this relationship and comparative lack of travel.
b. Disadvantages
Although the impulsora would be managed directly by the office manager, they will likely not receive the same level of microfranchise-related guidance as they would if they were managed directly by the microfranchise manager. This could lead to miscommunication and it could take longer to fully roll out new initiatives. This method also adds additional burden on the office mana-ger, who will now need to stay on top of the performance of the impulsora as well as the other staff.
b. Disadvantages
The disadvantages relate to the distance between the central or regional offi-ce and the local offices. Being far apart means that a lot of time will be spent traveling to those offices. It also means that the impulsora will not have as strong of a relationship with the asesora since they only see each other a few times a month. This distance also means a weaker relationship with the micro-franchisees since the travel required inhibits the impulsora’s abilities to visit them more frequently.
2 RECRUITMENT EXPANSION
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2.3 IMPLEMENTING THE STRUCTURES NECESSARY FOR EXPANSION
Creating either of the structures outlined above requires a combina-tion of the right resources and activities. These resources and activi-ties are discussed in the following steps below:
1. Choose and set up management structure
a. Central and Regional Office Structure
The current management structure is already in place, though as the microfran-chise grows geographically, it will be necessary to hire new regional microfran-chise managers and establish new regional offices and teams of impulsoras. This should done for expansions to Encarnacion, Concepcion and Ciudad del Este. It may also be necessary to establish these offices in other rural areas such as Ita in order to reduce travel times.
b. Assigned Offices Structure
Office managers should be brought in and trained on the microfranchises and the duties of the impulsoras. They should be trained on the impulsora’s goals and methods for motivating microfranchisees. Impulsoras should then be assigned to offices and their resources should move with them accordingly (computer/tablet, desk, etc.). The impulsoras should plan to meet with the microfranchise manager at least once a month as a group and the microfran-chise manager should spend part of their time meeting the impulsoras and office managers at their designated offices.
2. Training for asesoras in new offices
Asesoras should also be trained on the microfranchise opportuni-ties and ways in which they should work with the impulsoras as a team. In many cases, the asesora is the key to good recruiting be-cause they know and have strong relationships with the potential microfranchisees.
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3. Hire additional impulsoras
Regardless of whether the expansion is within offices that already have microfranchisees or through the launch of new offices, additional impul-soras will be needed for the recruitment and management of new mi-crofranchisees. New impulsoras will require training and marketing ma-terials for recruitment.
4. Provide impulsoras with the necessary resources for recruitment
a. Central and Regional Office Structure
Impulsoras will need the ability to travel to various offices and to visit micro-franchisees in many different places. They will need resources for travel and communication to make this possible.
b. Assigned Offices Structure
Impulsoras will need to have the support of the local offices, with the neces-sary space, equipment and travel resources to do their job. In addition, they will need the ability to meet with the microfranchise manager on at least a monthly basis to report on their progress and to receive new direction and training.
5. Expand reporting syste
a. The reporting system should allow the impulsoras to call in or send their daily, weekly, and month results to the microfranchise manager (and the local office manager in the Assigned Office Structure). This could be done via call, text, email or online form (e.g. Google Forms).
2 RECRUITMENT EXPANSION
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3 LAUNCH EXPANSION
The launch phase of the microfranchise is an important stage. As outlined in the Mi-crofranchise Operations Guide, this phase a critical opportunity for the microfranchisee to gain long-lasting learnings about the mi-crofranchise overall, its internal operations, and a final first impression to set long-las-ting expectations for her performance and participation in the microfranchise.
While most elements of the launch pro-cess will be consistent with those steps outlined in the Microfranchise Operations
Guide, there are elements that will vary in the expansion. These same points will be distinct from one microfranchise to ano-ther. In this section, we will guide an ove-rall discussion of those launch processes that will be distinct from the Operations Manual in their expansion, providing a fra-mework for their implementation as the microfranchise expands across offices to eventually reach a national scale.
Launch Phase Definition – The activation of the microfranchise on the microfran-
3.1 INTRODUCTION
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In the case of the ONLY Microfranchise, the overall framework of the launch pro-cess outlined in Chapter 3 of the Micro-franchisor Operations Guide will remain unchanged. The microfranchisee will still be expected to sign for her initial microfi-nance loan in her respective office of Fun-dación Paraguaya. She will still do this on the same date that she receives her
product and initial formal training as a new member of the microfranchise. In the ex-pansion of the microfranchise, however, logistical changes will be necessary in the launch of the microfranchisee. They inclu-de issuing the initial product kit, logistics of the launch location, logistics of the tra-ining process and reporting the results of the launch process.
3.2 NECESSARY MODIFICATIONS FOR LAUNCH PHASE
Unlike microfranchisees launched on-lo-cation with the microfranchisor present, microfranchisees launched outside of la Gran Asunción will not have the option of selecting specific designs included in their initial product kit. Instead, the microfran-chisor will ship to the local office product items that it selects from its inventory for the initial product kit for the microfran-chisee. The microfranchisor will have to send initial product kits that comply with the descriptions in both the Microfran-chisor Operations Manual and the Micro-franchisee Manual.
While the content of the initial product kit will always meet these parameters, the microfranchisor will select the specific de-signs of items included in the kit, not the microfranchisee. As the initial product kit is sometimes composed of products from previous seasons, microfranchisees will not consistently be able to select pro-ducts for their initial kit that are available in the online catalog. For more informa-tion on the shipping process and online catalog, see section 4, Distribution and Restocking Expansion.
3.2.1 Initial Product Kit
chisee-level. This includes receiving the initial product, paying for that product, andthe induction training to the micro-
franchise. This is the “turnkey” moment in launching the business.
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3 LAUNCH EXPANSION
Whereas the Microfranchisor Operations Manual describes the launch training ta-king place on-location with the microfran-chisor, microfranchisees outside of la Gran Asunción will launch in the local office of Fundación Paraguaya. The number of mi-crofranchisees that can launch at one time will be constrained by the space available for microfranchisees to receive their initial
product kit and training with other micro-franchisees. This change, however, will consolidate the launch process so that the loan endorsement, issuing of the initial product kit and microfranchisee training will all happen in the same location, ins-tead of across two locations as outlined in the Microfranchisor Operations Manual.
Results from the activation of the micro-franchisee should be promptly reported via the internal reporting system outlined in Section 4 of the Microfranchise Opera-tions Manual. Because of the inability of the microfranchise manager to directly
observe the results of launches from the Central Office, it is that much more impor-tant for microfranchise promoters (Impul-soras) to regularly and accurately report new microfranchisee launches.
3.2.2 Launch Location
3.2.4 Reporting Launch Results
3.2.3 Training Process
Section 2 of this plan, Recruitment Expan-sion, outlines two management structures for the microfranchise, the Central and Re-gional offices structure and the Assigned Offices Structure. In the case of the Assig-ned Offices Structure, the local impulsora will be responsible for launching the mi-crofranchisee and conducting her training.
This is distinct from the Microfranchisor Operations Manual, in which specific im-pulsoras are responsible for launching mi-crofranchisees of the microfranchise that corresponds to her. Alternatively, under the Central and Regional offices structure,
this initial training would be conducted by local loan officers (asesoras), or a dispat-ched impulsora from a regional office, as determined by Fundación Paraguaya.
It should also be noted that the microfran-chisor will be absent from this initial launch process, as the microfranchisor does not currently have a local presence outside of la Gran Asunción. This may change, howe-ver, as the microfranchise continues to grow and the microfranchisor sees oppor-tunities to become more familiar with mi-crofranchisees and microfranchise opera-tions in various regions of the country.
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3.3 IMPLEMENTING LAUNCH PHASE MODIFICATIONS
The following describes the resources and activities that are neces-sary to implement and support the modifications described above:
1. Establishment of Distribution Channels outside of la Gran Asunción
Please review in detail section 4 on the Expansion of Distribution Channels and Restocking Processes.
2. Payment Systems
Please review in detail section 4 on the Expansion of Distribution Channels and Restocking Processes. The launch and activation of a system that allows microfranchisors to withdraw payments for the initial product kit is needed for expansion to be realized.
3. Select and Implement Management Structure
Please review in detail section 2 on Recruitment Expansion. A manage-ment structure must be in place before activating and overseeing the launch of new microfranchisees.
a. This process must be complemented by training for relevant staff members under the expanded management system. In this case, this would namely re-fer to training on not only the launch process, but on how to train the new microfranchisees on their new business and the corresponding Microfranchi-see Manual.
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4 DISTRIBUTION AND REORDERING EXPANSION
Expansion of the microfranchise has its most significant implications in the Distri-bution and Restocking processes of the business. As the microfranchise current-ly has its base of operations in Asunción, a new national operation of the micro-
franchise will have meaningful logistical changes in communication, the delivery of goods, and how payments are made. In this section, we will discuss what tho-se changes will look like and a framework for their implementation.
Current distribution channels for the ONLY Microfranchise center on initiative of the microfranchisee. They require the micro-franchisee to locate and visit one of the microfranchisor’s local shops and select product for purchase. This current format requires the microfranchisee to have access to the local store front. In Asunción, the municipal bus network facilitates this. Less frequent are microfranchisees with priva-te transportation (car, motorcycle, etc.) or with reliable access to a family member that relies on this same resource. This mode of
distribution is possible because all current microfranchisees live within 1.5 hours of a microfranchisors’s store location.
With the national expansion of the micro-franchise, however, this will no longer be a possibility. Currently, the ONLY Microfran-chise does not have any store locations with presence outside of the Greater Asun-cion Region. As such, product will need to be delivered outside of the Greater Asun-ción region, and the additional costs will need to be considered.
4.1 INTRODUCTION
4.2 NECESSARY MODIFICATIONS TO DISTRIBUTION AND RESTOCKING
Fairbourne Consulting recommends that the ONLY Microfranchise distribute its product via a private parcel service (ser-vicio de encomienda). This arrangement would not require hiring a parcel service provider as a contractor for the micro-franchise. Initially, the low-volume ship-ments would not justify such a contract. Instead, the microfranchisor would ship the requested product via a selected parcel service to the local branch of the
parcel service that is closest to the local Fundación Paraguaya office that is assis-ting the microfranchisee. The microfran-chisee would report directly to the office of the parcel service to pick up their pro-duct, if full payment for the product was made in advance. In the case that only a down payment was made on the pro-duct request, a staff member of Funda-ción Paraguaya will have to pick up the product delivery from the parcel service
4.2.1 Distribution Recommendation
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delivery service, which the microfranchi-see will receive in the local office upon making their balance payment. See Pay-ments below for more detail.
Issuing an invoice request and payment for the product is outlined below, in the section on 4.2.2 Product restocking and inventory.
1. Advantages:
a. Pre-defined delivery routes regularly visited by established services
b. Pre-established delivery routes often align with established Fundación Paraguaya office locations
c. Size, weight and durability of the product will entail low shipping costs and litt-le-to-no risk of damage to product
d. Product can be insured for risks in shipping
e. Can operate in a “stand-alone” situation. In the long-term, these distribution chan-nels will not require the mediation of Fundación Paraguaya. Rather, for proven and reliable microfranchisees, the distribution and restocking process can be managed di-rectly between the microfranchisor and the microfranchisee.
2. Disadvantages:
a. Delay between order dates and product delivery
ONLY’s products would be expensive to ship in very large quantities. However, or-ders large enough to be cost-prohibitive are unlikely to occur. Use of a parcel service will introduce new costs to the microfranchise distribution system. Fairbourne Con-sulting recommends that the microfranchisee pay a flat fee for the cost of shipping a parcel for product requests that are below a value set by the microfranchisor. For example, all product requests under Gs. 200.000 in value will be charged an additional Gs. 20.000 shipping fee. However, product requests above Gs. 200.000 in value will include no shipping fee, as this cost will be assumed by the microfran-chisor. Both the shipping charge and the minimum product request value without a shipping charge will depend on the shipping costs charged by the parcel delivery service selected by the microfranchise. As a general guideline, Fairbourne Consul-
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Implementation of a distribution policy by parcel service will have immediate impli-cations for the restocking of product. Be-cause order shipments require microfran-chisees to make their requests in advance,
it is important to consider how microfran-chisees will be making their orders. What will the order process look like? What are its logistical aspects?
Ordering product in advance will require mi-crofranchisees to have a product selection from which to order. As such, expansion of distribution channels will require the micro-franchisor to allow microfranchisees to or-der new product via catalog.
This is no simple endeavor. In order to know which specific product designs interest their clients, and to select those specific product, microfranchisees will need access
to images of product samples. For national distribution channels, this will necessitate the introduction of a product catalog, re-leased at regular, predictable intervals and always up-to-date. Such a catalog is most effectively maintained online. An online ca-talog will help control costs by foregoing printing costs as well as the implied logisti-cal costs in distributing new catalogs to mi-crofranchisees across the country.
4.2.2 Product Restocking Recommendations
4.2.3 Catalog
4 DISTRIBUTION AND REORDERING EXPANSION
ting recommends that microfranchisors should cover the shipping costs of product requests that generate more than Gs. 50.000 of profit for the microfranchisor, after accounting for the cost of shipping the product request.
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Among other challenges, a microfranchi-see’s access to an online catalog is key. Many low-income microfranchisees with low educational attainment will not have the skills to confidently use the internet. Furthermore, those that do feel comfor-table online may not have regular compu-ter or internet access. As a result, an on-line product catalog may prove exclusive for many microfranchisees, inaccessible to microfranchisees without internet. Recognizing this challenge, Fairbour-
ne Consulting recommends that new product orders should take place in the microfranchisees’ local Fundación Para-guaya office with the assistance of the microfranchise promoter (impulsora) or a local loan officer (asesora). This will de-pend on the expansion strategy Funda-ción Paraguaya selects of the two options outlined in section 2 of this document.
In the office, the microfranchisee will find a printed version of the product catalog.
4.2.4 Order Process
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4 DISTRIBUTION AND REORDERING EXPANSION
The local office staff will have printed out the online catalog using their office prin-ter. This simple version will be available in the office for the microfranchisee to re-view, alongside an order form that she will give to the indicated local staff member.This staff member will then be responsi-ble for entering the product request into a corresponding online form that will be
electronically submitted to the microfran-chisor. If the local office is willing to leave a printed version of the product catalog with microfranchisees, Microfranchisees can use this same printed product catalog in their regular sales to customers. Howe-ver, in doing so, Fundación Paraguaya would be assuming catalog printing costs for microfranchisees.
There are several options for payment selection. These options can be handled by third parties facilitating a direct pay-ment between the microfranchisee and the microfranchisor.
Fairbourne Consulting recommends that Fundación Paraguaya leverage its current structure to receive cash payments from microfranchisees that will later be recei-ved by the microfranchisor. Serving this role will require Fundación Paraguaya to internally create monetary holding ac-counts for the microfranchisors, where all cash payments by microfranchisees will be received. Fundación Paraguaya will then produce check payments for the micro-franchisor for each withdrawal from the microfranchisor’s holding account. These withdrawal payments should be made at regular intervals, once or twice a month. This standard policy will facilitate coordi-nation between Fundación Paraguaya and the microfranchisor.
Results from the Live Market Test demons-
trate that microfranchisees are unlikely to make full payment for a product restocking until they receive their ordered product. However, a system that allows microfran-chisees to forego making their payment until product delivery requires the micro-franchisor and Fundación Paraguaya to run the risk of making their product deli-very only to have the microfranchisee not meeting their final payment obligation. To manage this risk, Fairbourne Consulting recommends that microfranchisees be re-quired to make a down payment for their product restocking when they making their initial order. The remaining balance will be due when the microfranchisee vi-sits the local Fundación Paraguaya office to pick up their product request.
The down payment amount should be mi-nimal so that it is accessible even for mi-crofranchisees that have little operating capital. The purpose of the down payment is to minimize the number of microfranchi-sees that may decide to not pick up their product request, after filing their restoc-
4.2.5 Payment
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Fairbourne Consulting recommends esta-blishing a schedule of order deadlines and shipment/delivery dates set by the micro-franchise. The structure of this distribution system hinges in large part on clear commu-nication with microfranchisees, so that they understand by what date they will need to place their product request, in order to re-ceive their product request in a timely fas-hion. These product request and shipment/delivery dates should be determined accor-
ding to an estimation of the Microfranchi-sor’s standard “turn-around” time for pro-duct requests, and the shipping time frame of the selected parcel service. Understan-ding this “waiting period” will permit the microfranchise to schedule in advance not only product request and delivery deadli-nes, but also deadlines for microfranchisees to make their down payment and balance payments on product requests.
4.2.6 The Waiting Period
king order with Fundación Paraguaya and the microfranchisor.
As an alternative to monetary holding ac-counts with Fundación Paraguaya, the mi-crofranchise can also arrange payments directly from the microfranchisee to the microfranchisor via Banco Visión or the fi-nancial transaction service Aquí Pago. In either case, the microfranchisor will have
to open an account with the respective service. Between these two alternative op-tions, Aquí Pago is recommended because payments via this service can be made in local offices of Fundación Paraguaya. Fur-thermore, although deposits to the micro-franchisor via Banco Visión have no addi-tional monetary charges, the frequency of bank branches varies outside of the Grea-ter Asunción region.
The recommendations of section 4.2 will require investments by both the micro-franchisor and Fundación Paraguaya to see an expansion of microfranchise into new regions across the country. By the microfranchisor, these investments will largely focus on the development and maintenance of an online catalog, as well
as internal systems for receiving product requests and delivering them to the selec-ted parcel service. By Fundación Paragua-ya, investments will focus on leveraging its current capacity and systems to esta-blish a product request and payment sys-tem as managed in its local offices.
4.3 IMPLEMENTING DISTRIBUTION AND RESTOCKING MODIFICATIONS
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1. Product Request and Delivery System
a. Select Parcel Delivery Service
The microfranchise should select an Asunción-based parcel service that will be the exclusive provider for product deliveries outside of the greater Asunción region. This selection should be based on service reliability, low shipping costs, delivery routes that overlap with Fundación Paraguaya offi-ce locations outside of la Gran Asunción, and delivery punctuality.
b. Build Online Catalog
The microfranchisor should build an internet-based catalog for products available to be shipped to microfranchisees outside of la Gran Asunción. An image-based, pdf version of the catalog should be available for print on the online website. The online catalog should be updated regularly and only in-clude product currently available from the microfranchisor. The microfran-chisor should have staff designated for catalog maintenance. If the catalog is publicly available, product requests should only be available via authori-zed microfranchisees or Fundación Paraguaya.
i. The microfranchisors should develop an internal process of daily reception of product requests and restockings made online. Reception of product re-quests should trigger an immediate process of filling the product request and delivery of the requested product to the parcel service on scheduled delivery dates, set at regular interval periods.
ii. Fundación Paraguaya’s local office staff should establish a process for re-ceiving product from the parcel service’s local branch. The process should include steps advising microfranchisees of the arrival of their product, for storing product in the local office until the microfranchisee has arrived to receive it, and for confirming reconciliation of the product balance before releasing the product to the microfranchisee.
The following describes the resources and activities that are neces-sary to implement and support the modifications described above:
4 DISTRIBUTION AND REORDERING EXPANSION
c. Processes for Staff Reception and Release of Product Deliveries
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2. Payment System
a. Selection of Payment Service
The microfranchise should select a payment service that will allow microfran-chisors to receive payments for product requests that microfranchisees make. Although the recommendation is that this service should be performed by Fun-dación Paraguaya, Banco Visión and Aquí Pago are two additional alternatives.
d. Building Supporting Materials
Supporting materials will include materials that clearly map out the newly desig-ned processes. They should also include accessible communication materials to be used by the microfranchisees, to assist their navigation of the system
c. Payment Structure
The microfranchise should develop a down payment-payment balance system that allows microfranchisees to pay the remaining balance of any product re-quests in the moment that the microfranchisee receives the ordered product. Down payments should be required of all microfranchisees unable or unwilling to pay their entire product request upon issuing the order. These down pay-ments should minimal and/or proportional to the value of the product request. The down payment should incentivize the microfranchisee to pay their product balance and pick up their requested product once it becomes available.
b. Opening Microfranchisor Accounts and Regular Payment Schedules
: All three of the payment service options mentioned will require the crea-tion of accounts for the microfranchisor to which payments will be transfe-rred. In the case of Fundación Paraguaya, a scheduled procedure should be created for the issuing of check payments from the microfranchisee account to the microfranchisor’s.
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5 FOLLOWUP AND MANAGEMENT EXPANSION
Ensuring that the microfranchisees are pro-perly managed and supported is critical to the success of the microfranchise. This is a very important role of the impulsora, along with recruiting and launching new micro-franchisees. Most of the follow up techni-
ques described in the operations manual still apply. However, there are a couple modifications that are necessary in order to efficiently provide the necessary support to a growing number of microfranchisees. These modifications include:
5.1 INTRODUCTION
1. Monthly microfranchisee group meetings
Impulsoras should organize and meet with groups of microfranchi-sees on a monthly basis.
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This section describes the necessary mo-difications to the current microfranchisee management structure and process outli-ned in the operations manual that will help the impulsoras assist greater numbers of microfranchisees. Over time, the impulso-ra will maximize the number of microfran-chisees that can be managed. This should be apparent when the impulsora is no lon-
ger able to connect with all of their assig-ned microfranchisees at least once every other month. At that point, recruiting should slow to a pace that simply replaces microfranchisee attrition. A new impulsora should be added to the team to continue the expansion. This will help ensure that the microfranchisees receive the ongoing support they need from a trusted source.
5.2 NECESSARY MODIFICATIONS TO MICROFRANCHISEE MANAGEMENT
2. Bi-monthly call or visit
The impulsora should strive to connect with every one of their mi-crofranchisees at least every other month to provide them with su-pport and encouragement.
3. Data collection and analysis
Data should be collected via electronic communication (email, onli-ne forms, etc.) on a weekly basis and analyzed by direct and indirect managers.
4. Performance Notifications
Individual and group performance notifications should be sent out to the microfranchisees through either text or Whatsapp to provide encouragement and incentive to the microfranchisees.
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ii. Supporting Existing Microfranchisees
Currently the impulsora is asked to connect with their microfranchisees at least once monthly. Due to travel constraints, these meetings often take pla-ce over the phone. This makes it difficult to build lasting relationships, deliver materials or communicate new initiatives at the detail that is often required. However, doing so in person would take time away from focusing on unders-tanding the microfranchisee’s problems and helping them overcome them. A monthly group meeting provides a more efficient way to deliver materials, communicate key initiatives, and provide training, while also allowing the im-pulsora to focus on the individual performance issues when they connect with the microfranchisees on an individual basis.
iii. Potential Source for Future Recruiting
It is possible that these groups can become key sources for future recruitment as the groups identify and refer potential microfranchisees.
5 FOLLOWUP AND MANAGEMENT EXPANSION
a. Key Advantages
As the number of microfranchisees grows, it will become increasingly difficult to maintain contact with them and give them the time they need on an indivi-dual basis. Building groups of microfranchisees helps solve several problems.
i. Training and Supporting New Microfranchisees
When a microfranchisee is new, they require additional training and su-pport. This is currently accomplished by visiting them on a weekly basis for at least three weeks. This can be reduced to two visits if the microfranchi-see is added to a supportive group of existing microfranchisees. They can receive the support and guidance they need from those that are already successfully operating their business. This frees up the impulsora’s time to spend on their other duties.
The following describes these necessary modifications in more detail:
1. Monthlymicrofranchisee group meetings
Impulsoras should organize groups of microfranchisees of the same microfranchise in general geographic areas. These groups should meet with the impulsora at least monthly to report to the group their progress, key learnings, and status. The impulsora should provide the microfranchisees with training, feedback and other messages from the FundacionParaguaya and the microfranchisor. These messages may include changes to the business model, new promotions, new products, etc.
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2. Bi-monthly call or visit
The impulsora should strive to connect with every one of their micro-franchisees at least once every other month to provide them with su-pport and encouragement. Ideally this should be a physical visit, but even a call can be helpful. Once the impulsora has too many micro-franchisees to contact without allowing their other responsibilities to suffer, a new impulsora should be added to the team and respon-sibilities should be divided between them. When the impulsora con-nects with the microfranchisee, they should focus on the problems the microfranchisee is facing and help them develop strategies to overcome them. All other communications should occur during the monthly group meeting.
4. Performance Notifications
The top performing individuals and groups should be recognized on a monthly basis by sending out messages to all of the microfran-chisees. This provides incentive for individuals to work hard and for groups to collaborate. Ideally, this recognition should come with awards, such as better margins for the next month or an ac-tual physical prize. There should be two types of notifications sent out: one that highlights microfranchisee performance and one that recognizes impulsora performance.
3. Data collection and analysis
Data should be collected via electronic communication (email, online forms, etc.) on a weekly basis and analyzed by direct and indirect ma-nagers. This data should include performance information on the indi-vidual microfranchisees as well as the impulsora. This data should be collected and submitted by the impulsoras. How this data is collected and analyzed will vary by the management structure selected:
a. Central and Regional Office Structure
Data is collected and reported weekly by the imulsoras through an online form. The microfranchise manager analyzes the data individually and with the impuloras as a team on a monthly basis to identify areas for improvement.
b. Assigned Office Structure
The impulsoras submit data collected weekly through an online form. This data is accessed by the local office manager on a weekly basis to review their work relative to their goals and by the microfranchise manager on a monthly basis. The microfranchise manager then works individually with the impulso-ras during their monthly/bi-monthly visit to increase performance. The local manager should hold the impulsora accountable to their performance goals on a weekly basis.
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c. Preparation
The impulsora should spend time on a monthly basis coordinating with the mi-crofranchise manager on the topics that should be discussed with the micro-franchisees. This may include collecting materials to distribute, new trainings, or communicating new initiatives.
d. Group construction
Groups should be limited to 30 members and may be further limited due to tra-vel constraints. These meetings should be designed to provide enough value to the microfranchisees to justify the time and travel expense associated with attending. Taking this into consideration, an impulsora should launch groups of 5 microfranchisees that geographically close. New microfranchisees in these areas can be added to the group until it reaches the maximum of 30. This way groups can help new microfranchisees and the travel required can be kept at a minimum. This will also allow the impulsora to quickly evaluate the number of groups that can be managed based on the travel time required to visit each one.
5 FOLLOWUP AND MANAGEMENT EXPANSION
1. Monthly microfranchisee group meetings
a. Communication tools
A communication tool should be selected that can be used to coordinate mee-tings with the microfranchisees. This tool should be selected based on the re-sources the microfranchisees have. In urban areas, this could be Whatsapp, though in rural areas, text message may be the preferred method.
b. Transportation
The impulsora should have the resources and ability to travel to where the mi-crofranchisee groups can easily meet. When possible, these meetings should be held near the closest FundacionParaguaya office and should coincide with other reasons that the microfranchisees are traveling (such as loan repayment or disbursement meetings).
5.3 IMPLEMENTING MICROFRANCHISEE MANAGEMENT MODIFICATIONS
The following describes the resources and activities that are necessary to implement and support the modifications described above:
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a. Microfranchisees
Ideally, microfranchisees will receive messages via text or Whatsapp. If pos-sible, images of the top producing microfranchisees and their awards can be helpful motivators. The top performing groups and individuals should be iden-tified, though care should be given not to point out poor performers.
b. Impulsoras
Impulsoras should receive a monthly email that lists performance of all of the impulsoras and where they rank relative to their peers and goals. If possible, bonuses should be paid to the top performers that surpass their goals.
2. Bi-monthly call or visit
The impulsora should have adequate resources to communicate with the microfranchisees (such as enough cell phone credit). They should also have an online data collection form that allows them to collect, store, share, and analyze data collected during their in-person or pho-ne meetings. This data should be accessible to the microfranchise ma-nager, but is separate from their weekly and monthly reports regar-ding performance. This is because the data collected will typically be qualitative in nature and should detail the individual microfranchisee’s problems, proposed solutions, and progress.
3. Data collection and analysis
A data collection tool should be created that allows the impulsora to ea-sily store, share and analyze data collected on the microfranchisee. This data should allow the microfranchise manager to access and analysis the data and should provide the local office manager, where appropria-te, with a weekly report of the impulsora’s activities and performance relative to their goals.
4. Performance Notifications
A system should be built that is able to send out messages to all of the microfranchisees and impulsoras to report on performance.
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6 EXPANSION TO NEW OFFICES
This section provides general guidance on the steps and criteria for selecting a new office for expansion. It also provides Fair-bourne Consulting’s recommendation on how to begin the expansion process. It is expected that the microfranchise manager and other officers of FundacionParaguaya will use these guidelines and recommen-dations to select the offices to which the
microfranchise opportunity will be expan-ded. These steps are described in 6.2 Steps for Selecting and Expanding to a New Offi-ce. Section 6.3 Specific Recommendations for the Expansion of the ONLY Microfran-chise provides specific guidance on how to apply these steps to expanding the ONLY microfranchise opportunity.
6.1 INTRODUCTION
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6.1.1 Initial Expansion Recommendations
Fairbourne Consulting recommends a slow approach to expansion where each piece of the model can be tested and refined. This usually means limiting expansion to 1 to 2 offices at a time. This could be expanding re-cruitment within an existing office or by ex-panding to a new office. Moving too quickly and expanding to too many offices at once can multiply the seriousness and impact of the problems that will arise.
However, this does not mean that expansion must always be limited to just 1 to 2 offices.
For example, if the goal is to expand geogra-phically, it would be important to select an office that represents the type of office desi-red. By selecting and expanding to just one office, perhaps in a rural area near Asuncion for example, the recruitment, management, and distribution processes and structures can be tested and refined. Once the expan-sion to this new office types is found to be successful, expansion to several offices of this type can occur simultaneously.
In general, there will be four types of office expansions. Expansion to these offices types should occur in roughly the following order:
1. New office types near existing offices
These are offices that are located close enough to existing offices that they can be managed by regional management. For example, an office inItá is close enough to Asuncion to be managed by that regional offi-ce, but far enough way to be different from the offices that are now in operation. Recruitment, management, and distribution will all be important components to test and refine. However, once the office in Itá is operating successfully, new offices can easily and quickly be launched in Ypacaraí, Pirayú, Yaguarón, and Guarambare.
2. Similar offices
The goal is to leverage the systems that are currently operating success-fully in one type of office and expand to similar office types in a region. This is done only after the initial offices of the same type are operating successfully and the systems and processes can be easily replicated to the new offices. Since the systems and processes are already functio-ning properly, the focus can be placed on expanding to several new offi-ces simultaneously.
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The list above is in order of the priority that should be given to each type of ex-pansion, though several may be in pro-
cess at any given time, depending on the resources available for expansion.
6 EXPANSION TO NEW OFFICES
The following steps provide a framework for deciding which offices should be se-lected first for expansion. This decision framework can be used for each office expansion type described above. While
circumstances and short term objectives may vary, this framework should be a use-ful tool when deciding where to expand the microfranchise.
6.2 STEPS FOR SELECTING AND EXPANDING TO A NEW OFFICE
1. Determine office expansion type
It is important to first determine the type of expansion being pur-sued. Below are guidelines on when to perform each expansion type.
a. New office types near existing offices
An office type refers to the characteristics of the offices. For example, offices in rural areas surrounding a major city share many of the same characteristics. They have similar distribution problems, customer needs and wants, and po-pulation densities. The team should select an office time that they want to ex-pand to. Typically this will occur once the offices types in a specific area have been launched and are operating successfully. (Operating successfully does not mean that there aren’t any problems, but rather means that the recruitment, management and distribution functions are working well enough to increase and support the number of microfranchisees). For example, once all of the ur-ban offices are operating successfully, the team may decide to expand to pe-ri-urban offices. This expansion types refers to expanding to 1 or 2 of those new offices as a test.
3. Offices in new regions
These are offices that are located far away from the current center of operating microfranchises. In this case, they could be offices in Concepcion, Encarnacion, or Ciudad del Este. Expanding to the-se offices would be an expansion into new regions. Typically it is best to start in the urban areas and model the operations after successful urban offices in Asuncion. All aspects of the operations will need to be addressed, including recruitment, management, and distribution. Distribution should be given extra attention due to the far distances of these offices from the microfranchisor. Once 1 to 2 offices are successfully established in the urban area, expansion can start at the beginning of this list: expansion within existing offices, expansion to similar offices, and expansion to new office types near existing offices in the new region.
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b. Similar offices
Expansion to similar offices should occur once 1 to 2 offices of a specific office type are successfully operating. The key learnings and modifications to the mo-del can then be applied to the other offices in that office type. This expansion should not occur before those initial offices are operating successfully – otherwi-se there will be an increased likelihood of failure across all offices. Expanding too quickly could even have a negative impact on the rest of the business if it takes too many resources away from other offices/areas. For example, with the urban office operating successfully, the team expands to two of the five nearby peri-urban offices. Recruitment, management, and distribution are tested and refined in these two offices. Once they are operating successfully, expansion to the other three peri-urban offics occurs.
c. Offices in new regions
This type of expansion should occur when the team is ready to launch in a new region. Fairbourne Consulting recommends expanding to a new region either once all of the urban offices are operating successfully or once all of the office types in a region are operating successfully (though this may not mean that all offices in that region are operating successfully; at least 1 to 2 offices of each type should be operating successfully). The first is a very aggressive expansion approach relative to the second since it may require significant investment in order to support only a few offices. The better approach is to wait until the bu-siness is operating successfully throughout a region and then work to replicate the entire structure in a new region (though it is still recommended to start with just a few offices in a new region).
2. Office Selection Criteria
Several criteria should be evaluated when determining which office to expand to first. The guidelines below outline the various criteria that should be evaluated for each expansion type.
a. New office types near existing offices
i. Location
First, it usually makes sense to expand to new offices that are near existing offices. Fairbourne Consulting recommends first starting in urban areas due to the infrastructure and high population density. These two characteristics will often provide the highest likelihood of success. Peri-urban areas should be focused on next for similar reasons. Expansion to rural areas should occur last due to the large distribution problems and potentially smaller markets.
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ii. Office type quantity
All things being equal, it is better to focus on areas that have the greatest expansion potential. The office type (urban, rural, peri-urban) with the highest number of offices will often have the highest potential because once the model is tested and refined in a couple offices, it can be expan-ded quickly to the rest.
iii. Client quantity
In addition to the number of offices of a specific office type, it is also impor-tant to consider the total microfinance clients that those offices represent. In population dense areas, one office may service more clients than several rural offices combined, and should therefore be considered for expansion.
iv. Population density
High density areas offer a few benefits. It can be easier to find new impulsoras that already live there and it should be easier to find and sell to customers.
6 EXPANSION TO NEW OFFICES
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v. Distribution routes
Is the office located on an existing distribution route or at least a major road? It is recommended to select an office on a main road or along a distribution route. Since new offices will likely have a variety of problems, reducing the complexity of distribution can be helpful in allowing for more attention to the other aspects of the expansion (recruiting and management).
i. Office type
Expansion to these offices occurs when the first test offices are operating success-fully. Therefore, the office type should already be selected.
i. Distribution
Perhaps the biggest issue entailed in launching a new region is the challenge of getting the microfranchisor’s products to that area. Ideally, the microfran-chisor will set up a distribution point where the product can be shipped and stored. This will require coordination with the microfranchisor to select a re-gion with a sufficient number of shipping and storage options.
ii. Office quantity
Areas with higher concentrations of offices should be selected before others due to the greater potential for expansion.
iii. Client quantity
Similarly to the quantity of offices, the quantity of microfinance clients should influence the decision of which region to choose to expand.
iv. Population density
The population density of an area can be an indication of the number of po-tential customers and microfranchisees. The higher the density, the greater the number of potential customers.
ii. Ease of access
Although it is expected that expansion will reach all of the offices in this office type quickly, it is advisable to start with those that are closest and easiest to access from the test offices. The tougher offices to reach should be saved for last when the team can give them the focus they need should any new issues arise.
b. Similar offices
c. Offices in new regions
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i. Impulsoras
It is best if a successful and experienced impulsora is willing to accept the responsibility of expanding to a new office. This will allow the team to leverage the impulsora’s experience to operate the microfranchise so that the team can focus on building all of the support mechanisms for the expansion to be successful.
ii. Local staff
All local staff at the test offices should be trained on the microfranchise, the expectations, and opportunities. They should also be made aware that their office is a test office and that during the following month or two, the team will be working to troubleshoot issues and create a successfully operating model. Doing so will require the support and knowledge of the local staff.
iii. Travel expectations
The impulsora’s goals should be adjusted based on the travel required to visit and recruit from loan groups in the area.
iv. Distribution
The distribution model should be reviewed and revised if necessary to ensure that microfranchisees can gain access to products in a cost effective and timely manner. Keep in mind how distribution will work to the other offices once the test offices are successfully operating.
v. Management
In rural areas, it may be necessary to allow the impulsoras to do a larger number of follow up visits via the phone compared to urban areas. All goals should be re-evaluated to ensure that they are realistic given the circumstances of expan-ding into a new area.
a. New office types near existing offices
3. Activities and Resources Required for Expansion
v. Demographics
In addition to population density, the demographics of that population can be equally important. High frequency sales products such as food will do better than slower moving farm equipment in an urban area. However, there may not be enough people in a rural area to sustain a low margin, high sales food company because people are so spread out and don’t have a need for those types of products. High margin farm equipment on the other hand may be a great fit for rural areas. What are the demographics of the region and how do they compare to the target market for the business?
6 EXPANSION TO NEW OFFICES
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iv. Distribution
It is important to spend time working closely with the microfranchisor to set up a distribution model that is cost effective and efficient. New regions can pose a number of problems for transporting product and distribution will only be sus-tainable in the long run if the microfranchisor is adequately involved in the distri-bution model design and implementation.
v. Management
An entire new regional office, complete with a regional microfranchise mana-ger and support staff will need to be established in new regions.
i. Impulsoras
Impulsoras should be recruited from the area when possible since locals will know the area better, have more connections, and live in these communities.
i. Impulsoras
Impulsoras should be recruited from the region when possible since locals will know the area better, have more connections, and live in these communities.
iii. Travel expectations
The impulsora’s goals should be adjusted based on the travel required to visit and recruit from loan groups in the area.
iii. Travel expectations
The impulsora’s goals should be adjusted based on the travel required to visit and recruit from loan groups in the area.
ii. Local staff
All local staff at the test offices should be trained on the microfranchise, the expectations, and opportunities.
ii. Local staff
All local staff at the test offices should be trained on the microfranchise, the expectations, and opportunities.
b. Similar offices
c. Offices in new regions
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As mentioned in the introductory section of this document, the ONLY microfranchi-se has already seen and tested substan-tial growth since March 2014. As outlined in section 6.2, the expansion strategy employed so far has been under the New office types near existing offices strate-gy. ONLY’s first microfranchisees were recruited out of the San Lorenzo and Lu-que offices – primarily from peri-urban regions. Since then, ONLY has recruited a total of 76 microfranchisees across 6 offices in Gran Asunción, with microfran-
chisees operating in semi-rural, urban and peri-urban markets.
In broad terms, microfranchisees have been most successful (as measured in number of repositions and product sold) in the peri-urban markets of Luque, San Lorenzo and Villa Elisa (55 microfranchi-sees recruited). Microfranchisees have been more reluctant to participate in the urban markets of the Asunción, Lambaré and Mariano Roque Alonso offices. With only 23 microfranchisees recruited, urban
6.3 SPECIFIC RECOMMENDATIONS FOR THE EXPANSION OF THE ONLY MICROFRANCHISE
6 EXPANSION TO NEW OFFICES
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All of the Fundación Paraguaya offices with ONLY microfranchisees are within the municipal region of the country. These six offices host the same micro-franchise model, reflecting the same
recruitment, management and distribu-tion strategies. Again, this is consistent with the New office types near existing offices strategy currently in place.
6.3.1 Recommendations for short-term expansion
markets have recruited less than half of the number of microfranchisees from pe-ri-urban markets. This is partly driven by stronger competition from similar pro-duct lines in urban markets. Additionally, the microfranchise’s basic value propo-sition – quality, brand-name clothing at an accessible price point for low-income
households – is truer in peri-urban and rural markets, where clients have access to a narrower selection of product and typically face higher price points for their clothing than urban customers. These are key observations to consider in identif-ying next steps for the expansion of the ONLY microfranchise.
Fairbourne Consulting recommends that the ONLY microfranchise continue em-ploying this strategy within the municipal region. The objective is two-fold and will
have implications for later expansions outside of the municipal region: 1) explo-re what it means to run a microfranchise across an entire region and 2) to test the
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6 EXPANSION TO NEW OFFICES
microfranchise’s performance in more ru-ral markets. One of the remaining offices in the municipal region, Caacupé, is located in an urban/peri-urban community located along a main transport route. Despite this, Caacupé has many clients operating in the surrounding rural markets. This will be an important opportunity to test the ONLY microfranchise’s performance in rural mar-kets before expanding the microfranchise model into a new region of the country. New learnings from this market may have implications for the microfranchise model that can be applied to later expansion into other regions.
An immediate expansion into Caacupé ca-rries additional advantages. As of Septem-ber 30th, 2014, its office had the second lar-gest number of active micro-credit clients of all the Fundación Paraguaya offices offi-cially included in the scope of the project. This represents a large pool of potential microfranchisees to recruit from.
Furthermore, one can infer that the lower population density of the region means that this large quantity of borrowers are dispersed across area, introducing a va-riety of rural and peri-urban markets that can be tested from this one office. Lastly, working within the same region where the microfranchise is currently present allows Fundación Paraguaya to test expansion under the same regional manager, someo-ne who already has experience working with the microfranchise in the other Asun-ción-based offices of Fundación Paraguaya. Expansion under a manager who already
understands the microfranchise model reduces the risk that an expansion entails when working with team members who are learning about the microfranchise mo-del for the first time.
Because of its distance from Asunción, the Caacupé office presents an opportu-nity to build a prototype of the expansion plan recommendations included in this document. This pilot will be necessary in order to test for unanticipated challenges in national expansion, and the capacity of the microfranchise to implement a natio-nal scaling-up. Its location among major transport links makes it ideal for testing the new distribution model. Also, Caacu-pé’s proximity to Fundación Paraguaya’s Asunción-based headquarters and the mi-crofranchisor will allow for either party to directly and quickly intervene and mana-ge unforeseen challenges in the pilot sta-ge of the expansion process.
The observations above are consistent with the 6.2 expansion criteria under the new office types near existing offices strategy. These criteria include location (within a re-gion of existing offices), office type quan-tity (the first of many rural offices), client quantity (over 2,000), population density (lower than Asunción, but higher around Caacupé) and distribution routes (located along key transport links). Because of the lower competition and higher costs of qua-lity jeans in rural areas, the ONLY micro-franchise should see more success in these rural communities.
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A successful test in Caacupé will prepare the microfranchise for a similar expansion following the guidelines of the offices in new regions strategy, into the nearest offi-ces of the next region of Fundación Para-guaya offices. These next offices include Pa-raguarí, Itá, and Carapeguá. An expansion
into these offices would be a similar replica-tion of the model implemented in Caacupé, and would be supported by an average of over 1970 active clients per office. Success-ful replications in these offices would pave the way for a more rapid replication across these offices’ respective regions.
6.3.2 A vision for long-term expansion
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