Scaling social franchises: lessons learned from Farm Shop
Abstract
Background: The challenge of enhancing food security and livelihoods for smallholder farmers has been a significant concern in the agricultural development field. To increase farm productivity and enable smallholder farmers to rise out of poverty, several organizations have initiated social franchising business models to create sustainable social enterprises. Social franchising has recently gathered increased interest in lower-income countries for its potential to address social and ecological issues, support local entrepreneurs, and reach financial sustainability to allow for scaling through market forces. Social franchising combines the principles of business franchising (standardized systems and other supports that reduce risk for the entrepreneur) with a social mission. To gain deeper insights into the opportunities and challenges for scaling social franchises, we gathered quantitative and qualitative longitudinal data on Farm Shop, a social franchise with a network of 74 agricultural input shops seeking to reduce food security through improving productivity, incomes and food security of smallholder Kenyan farmers.
Results: We derived five critical lessons from our findings. First, social franchising can create jobs and profitability for farmers and strengthens the rural entrepreneurial ecosystem. Second, economics of scale is critical for profitability and sustainability of the social franchisor. Third, building trust with farmers is crucial for a successful social franchising model. Fourth, social franchisors should be aware of the variety of options to ensure the sustainability of the social franchising program. Fifth, to develop a scalable business model, cost-effectively gathering the right data to validate key assumptions is essential.
Conclusions: Farm Shop is one of a cohort of pioneering social franchises that have applied the principles of franchising to address particular social needs. In this case, the needs were food security, livelihoods, and prosperity for smallholder farmers. Farm Shop uncovered important lessons relevant for all social franchises at similar stages in the business model development process. With these lessons in mind, Farm Shop and other social franchises can be better equipped to live up to social franchising’s promise of achieving social objectives in a more resource-efficient and sustainable way.