FIP 49: Social Franchising Series 2/4: Social Micro-franchising with Beth Meadows

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Beth Meadows is a psychologist turned entrepreneur. She built a travel franchise that grew to over 250 locations in just 5 years, which was purchased by an American Express affiliate before the age of the internet. She’s still in the travel business, as part of the internet of things, but she has turned her focus to using her commercial successes and failures to help the BOP. Beth is passionate about the franchise model, and specifically micro-franchising at the BOP, because it provides opportunities for entrepreneurial, hard-working people, regardless of their wealth status, to earn meaningful incomes and live dignified lives.

In today’s episode, we learn several lessons from Beth, including:

How she started Mercado Fresco, her franchise in Nicaragua, including the research and inspiration behind the concept, starting with the insight that 80% of the income of those living under $2/day was allocated to food purchases.
The importance of knowing your market and customer, and why that foundation is necessary before building your social business.
A dive into their early-stage set-up, including their social mission, product mix, business case, quality control oversight, and the number of locations at launch.
Early-stage risks and how they were mitigated by taking time to know the customer base, product testing, and maintaining close and constant communication with franchisees.
How continuous feedback loops between the franchisor and franchisee were established early-on, and what types of information was exchanged and collected.
How they standardized among franchisees and what it took to monitor compliance, as well as when and how standards were designed.
The uniqueness of branding and franchising at the BOP in their community, and how Mercado Fresco markets itself.
Franchisee screening and onboarding: what the process entails, who is deemed a good fit, and what types of training is involved.
Mercado Fresco’s consignment model, which was designed for franchisees who have low educational attainment and little access to capital. We learn the approximate investment capital required for each franchisee to open and how that effects franchisor cash flow.
Growing to 100 stores in a few years, we learn how their franchise business has changed and what milestones they have reached with respect to how this reduces their business challenges.
Key indicators for you to consider whether your social enterprise may be poised for franchising: namely the existence of established, detailed, documented processes; and good legal advice and contract arrangements between franchisor and franchisee.
What’s next for Mercado Fresco: a new micro-consignment model that provides daycare and shorter work days for women who cannot operate home-based brick-and-mortars.
What Mercado Fresco’s advisory and consultant ecosystem looks like, from commercial franchising professionals with the likes of Subway and Chic-fil-a, to academic institutions and MBA students.