Running a franchise operation in africa

Franchise or retail/kiosk heavy operations are an obvious way to reach and deliver services to the masses. Cell phone top up vouchers are probably more widely available in parts of Africa than mosquito nets or a bottle of water. CFW shops are perhaps one of the most radical franchise/retail kiosk innovations I have come across- turning an inherently centralised service delivery method of hospitals, often crowded and inefficient, to a distributed lean operation empowering local entrepreneurs and distributing health services to rural areas.

These franchise approaches have the potential to innovate in everything from utilities, IT/telecomms and healthcare. Challenges are plenty though- start with the biggest- theft. Employees running any operation are likely to be tempted to steal given how much responsibility is put upon and especially if the turnover is high- take a popular bar with a large stock of drinks- it is inevitable that employees will sell drinks on the side or retain part of the sales for themselves- this extends even to other services, it is reported that vodacom in Tanzania lost millions of dollars through top of voucher theft until they finally made the distributors buy the full value of the vouchers for resell. Bottom line is it is hard to trust employees at such franchise or distributing operations without thought and some serious controls- some are obvious, but worth spelling out here:

- Make your operation process transparent and easy to account for service or inventory- don't assume employees will be fully trustful. This could be as crude as separating payment (with a manager you trust) from actual service or product delivery, new rank and file employees.
- reduce temptation by not having too much cash or inventory build up at each distributor or service location. Check and monitor operations regularly- show employees that you are detailed orientated to the very last penny.
- Hire the most trustworthy people and pay them enough to not be tempted to steal from you- provide enough incentives for them to stay around through bonuses and equity ownership. Too many businesses in Africa start without thinking about this- how will you grow and be successful if you don't give your employees a meaningful stake in the company and so are less tempted to steal but rather to work and improve sales.

- Finally, factor in up to 10-20% contingency for theft in business planning- established businesses have contingency for everything such a bad debts to potential lawsuits/legal fees. In an African retail or distributor operations- contigency for theft is just good business.