Addressing Health, Quality-of-Life Issues
October 2009 Franchising World
One of the most promising developments in recent years is the use of franchising to meet pressing health and quality-of-life issues.
By Michael Seid, CFE
We are a fortunate people in the United States. We have the luxury to be going through a debate on whether or not to change the best health-care delivery system in the world. Our discussion may be lively and occasionally even colorful but in the end, regardless of the outcome, most American families will still have access to the medical care they and their families need.
Unfortunately, that is not the debate going on in major areas of the globe. According to the World Health Organization, nearly 30,000 children under the age of five die each day, and almost two-out-of-three of these children will die from common-and easily-preventable or treatable diseases and illnesses such as diarrhea, pneumonia, malaria, measles or tetanus. While huge financial and human resources are being invested by foundations, governments and other not-forprofit organizations, the developing world still faces serious health and quality-of-life issues including malnutrition, lack of clean water and the frequency of deaths occurring during childbirth. Even though diseases like HIV/AIDS can and are being diagnosed and treated successfully, the flaw in the medical supply chain in the developing world allows a significant amount of counterfeit drugs to be in circulation, with an estimate of more than 50 percent of the drugs in sub-Saharan Africa being substandard or outright fakes.
At the 2000 Millennium Summit, the United Nation’s Millennium Declaration was adopted, setting goals to reduce poverty and improve conditions in the developing world by 2015. One of the recent Millennium conferences I attended at the UN was aptly titled “Getting Back on Track” as we are now midway through the project and each of the presenters reinforced the fact that the targets that had been set in 2000 have all been uniformly missed. Substantially all of the discussions were focused on the availability of funds raised, but little was discussed about whether those funds were applied effectively.
What Gets Measured Gets Done
John Taylor, then under secretary for international affairs, in discussing the Millennium goals said: “Since we are here to talk about ‘getting the Millennium Development Goals back on track’, the first question one must ask is why they are off track, particularly in Africa. In my view, a significant part of the answer has to do with the lack of measurable results. What gets measured gets done, and my experience has been that aid is increasingly being delivered in a way that is disconnected from the results we are trying to achieve. Donors and recipients share responsibility in this. For example, donors are engaging in budget support operations without demanding a serious effort to measure how those resources result in progress toward meeting the [goals].”
One of the most promising developments in recent years is the use of franchising to meet these pressing health and quality-of-life issues. It’s not surprising as the success of traditional business format franchising is rooted in a successful franchise system’s ability to meet a basic “three point test:”
• Ability to maintain brand standards at each location–This ensures that the consuming public can rely on the franchisor’s brand promise regardless of the location the consumer visits.
• Ability to Scale Operations–This ensures that the franchisor can grow its channel of distribution to enable ease of access to its customers,
• Ability to Achieve Economies of Scale–As the system grows, the franchisor is able to lower the costs for franchisees for the basic requirements of the business including start-up development costs (construction, furniture and equipment), products, services, disposables and marketing based on the combined purchasing power of the system. The franchisor is also able to leverage the system to reduce the costs for headquarters, field and other support requirements necessary to meet brand standards. The system therefore has the capacity to deliver its products and services to its customers at a lower cost than independent operations.
These are the types of measurements that Taylor is advising are necessary for success and which we in franchising take for granted in our systems.
At last summer’s International Franchise Association board of directors’ meeting, then-Chairman Steve Greenbaum, CFE, (PostNet International Franchise Corp. CEO) and IFA Pres. Matthew Shay introduced to the board the work that several of the association’s members have been involved in with social-sector franchising. Out of that discussion, the IFA board approved the creation of a social-sector franchising task force to begin the work necessary to decide if a standing committee on social-sector franchising was appropriate.
The initial task force members included IFA Past Chairmen Sid Feltenstein (Sagittarius Brands chairman) and James H. Amos Jr., CFE, (Tasti D-Lite chairman and CEO), board members John Kujawa (McDonald’s U.S. vice president of franchising) and Eric McCarthey (Coca-Cola Co. president, 7-Eleven Global Business Team ), Chuck Merin (BKSH & Associates managing director) and myself. We have been joined at recent meetings by others including Marisa Faunce (Plave Koch partner) and Andrew Loewinger (Nixon Peabody partner).
The task force has looked at some of the unique challenges in adopting business-format franchising to the social sector that differ from what most of us are accustomed to in our traditional franchise systems. These include, but are not limited to:
• The qualifications and literacy of potential franchisees, unit management and staff,
• Lack of entrepreneurial and brand experience of potential franchisees,
• Inability of the consuming public to pay the full price or to pay any of the price for products and services provided by the system,
• Poor transportation, road conditions and infrastructure including lack of running water and electricity,
• Poor communications infrastructure and lack of information technology,
• Poor supply chain capabilities in market, including but not limited to counterfeit or sub-standard products,
• Inability to use broad based consumer marketing approaches,
• Local management, headquarters and field staff capabilities for franchisor personnel,
• Government regulations, interference and corruption, and
• Donor requirements including restricted grants available for products and services outside of the mission or delivery capabilities of the franchisor.
Education and Mentoring
We have also begun to look at our mission and purpose and have concluded that much of our initial resources will be applied to educating and mentoring those agencies currently involved in the delivering and support of aid to the developing markets. Non-government agencies, not-for- profit providers, governments, foundations and other granting organizations will make up our initial audience. A preliminary education program on the requirements to develop and manage a social-sector franchise has been developed and other education programs are being created as well.
We met during IFA’s Public Affairs Conference where we continued our work and discussed the expansion of the task force membership. Those interested in joining the Social Sector Franchising Task Force should inform IFA Staff Liaison Terry Hill at email@example.com .
Most of us in franchising have been fortunate and we have all, in one way or another, measured our success in the profits earned through our businesses. For those of us involved in social-sector franchising, we have come to understand that the measure of our success here will be in the number of lives saved and the impact we in the fund-raising community will have on the quality of lives throughout the world. It is a testament to the leadership and the membership of IFA that our association has chosen to address these global issues.
Michael Seid, CFE, is managing director of Michael H. Seid & Associates. He can be reached at 860-523-4257 or firstname.lastname@example.org .