September 2007 Franchising World 

Franchised health outlets bring affordable health care to sub-Saharan Africa.
By Hilary Strahota

Picture this:  in the span of one year, every single person in seven major U.S. cities dies.  Boston, Chicago, Los Angeles, Miami, San Diego, San Francisco and Washington, D.C. are decimated.   Inconceivable, right?  Such staggering numbers are unheard of in first-world countries such as the United States, but in other areas of the developing world, it’s a reality that stings. 
 
The population of those U.S. cities is comparable to the 10.5 million children under the age of five who die annually in developing countries, nearly half of which occur in Africa from easily treatable diseases.  That means, per day, nearly 15,000 children die from ailments that can be remedied with basic drugs and prevention education.  Prevalent diseases include malaria, diarrhea, worms and respiratory illness.
 
But, change is on its way—starting in Kenya.  The HealthStore Foundation founder Scott Hillstrom decided that it was time to take action and in 2000 formed the Child and Family Wellness shops in conjunction with the Kenyan NGO and Sustainable Health Care Foundation.  The first shops were set up in central and western Kenya where people support their families on $1 to $2 U.S. earned in agricultural jobs.  With such low income, the chance that these families had money left over to pay for medicine is even less likely. 

A Plan for Africa’s Health Crisis
The government clinics that exist in those areas could not sufficiently provide for those communities.  According to the Child and Family Wellness shops, there are less than three doctors per 10,000 people in some sub-Saharan countries and clinic locations are few and far between meaning less than half of Africa has access to doctors or hospitals alone.  Those that do operate frequently run out of stock and may not be able to provide low cost, effective medicine.

Thus the mission for the CFWshops was clear:  target treatable illnesses, increase access to the rural poor, lower mortality rates and educate about prevention.  But while the objective of launching a sustainable health-care program was a large component of CFWshops, the key piece to expanding a network of trusted, reliable and low-cost clinics was business-format franchising. 
 
“Poverty consists in people not having what they need,” said Hillstrom. “Solving it is mainly a distribution problem. Franchising has proven to be the most effective distribution model where standards matter.” With his own funds, Hillstrom and his Kenyan business partner opened 11 of the first drug shops.
 
The demand was there, but adjustments had to be made to accommodate the high level of poverty in the region.  A benefit of franchising is that as a company’s network of franchises increases, the costs for products decreases because of mass production.  Hillstrom knew his clinics would be able to provide high-quality, mass-produced drugs at increasingly lower costs for patients once they started to expand the buying power of the network with opening more locations.

An Expanding Network
Currently there are 65 CFWshops operating in Kenya, 20 of which are drug shops and 45 of which are full medical clinics.  Because the clinics are run by experienced, registered nurses, they have more extensive diagnosis and treatment options than the shops.  Thus, the CFWshops system is only opening new clinics and converting existing shops into clinics.  Since opening more than seven years ago, the CFWshops have served more than 1 million patients.
 
The members of the communities in which CFWshops are given the opportunity to visit with experienced nurses who can prescribe them proper treatment with affordable drugs.  Patients can also purchase bed nets that significantly reduce the risk of receiving mosquito bites that spread malaria.
 
Another benefit of the CFWshops is that other community health workers can find employment through prevention-outreach programs that are an integral component to battling the spread of rampant disease.  CFWshops staff and these workers combine to host periodic outreach events where they provide information on how to prevent malaria with something as simple as a bed net.  Other topics covered include water purification, child health, hygiene and immunization.  The workers can also conduct similar health programs in the local schools.

The Franchising Model
The consistency and compliance to high standards on regulations for drug handling and administration of the CFWshops franchise operating system has enabled the clinics to succeed.  The system leaders devised an operating manual that outlines its strict requirements and protocol.  The policies, procedures and forms included in the manual enable franchisees to properly manage their units with brand consistency.  When new CFWshops open, the patients recognize the brand and trust that it will provide the same high-quality experience of the others, which was not their experience with the government- run clinics. 
 
The CFWshops system leaders, in conjunction with HealthStore Foundation, recruit and screen potential franchisees primarily for their experience level as nurses.  All franchisees must be registered nurses with at least 10 years of working experience, and the majority of which happen to be female.  Once the franchisees have been selected, they pay a start-up fee which typically costs $300 and finance the remainder of required costs through a micro-loan. 
 
Unlike most U.S. based franchise systems, the CFWshops provide 88 per cent of the required start-up capital.  They also help the franchisee select a proper location for their unit in a region that is accessible to 5,000 to 10,000 people and enlist the franchisee in a four-week training period prior to the clinic opening.  Once the franchisees abide by the manual and guidance from the parent company, they are set up to conduct business and provide necessary compliance reports to The HealthStore Foundation.   The CFWshops parent company staff then periodically visits franchisees to ensure that brand integrity is being maintained and that all requirements outlined by their policies are being met. 
 
After the clinic owners have covered monthly operating costs, they are entitled to keep the remaining profit to support themselves and their families.   The average charge to the patient per transaction is 51 cents, meaning profit margins are not sky high, but in these rural poor communities, even small profits make a substantial difference. 

A Success Story
A year into owning and operating her first CFWshops franchise, Margaret Mumu Njeru has proven herself to be an outstanding franchisee.  Having paired her 29 years of nursing experience with her love for community health, Njeru has been able to provide services for more than 1,200 patients per month.  Her salary per month translates to $136—well above the average of $30 per month.  In addition to supporting her family of eight children, Njeru has made a favorable impact in her community as she continues to engage others in outreach programs.  She has likely spared thousands of lives.
 
The fact that the franchise system underwrites a large portion of the costs to set up new CFWshops begs the question: From where are all of these funds appearing?  Fundraising and donations. The HealthStore Foundation’s Hillstrom also consulted several of franchising’s leaders for some expert advice on how to continue growing his health concept and generate further awareness to this global crisis. 
 
The years of combined experience in the franchising industry between Michael H. Seid, CFE, managing partner of franchise advisory firm Michael H. Seid & Associates, PostNet International Franchise Corp. Pres. and CEO Steve Greenbaum, CFE, Sagittarius Brands Chairman Sid Feltenstein,  and Tasti D-Lite CEO Jim Amos, CFE, and the rest of the 15-member board of directors aid in the progress of the CFWshops. 
 
“Seeing the results of our franchisee’s work on the faces of mothers and fathers and their children is a very humbling experience,” said Seid.  “There is no way we could have not been part of this.” The dedication of the franchisees and others involved in CFWshops position the network to reach their goal of opening 254 outlets by 2011 and serve more than 2.5 million people.
 
The CFWshops rely on outside donations and fundraising to help start new stores.  From donations as low as $500 to sponsor a malaria prevention outreach event to a larger sum of $4,700 to sponsor the opening of one CFWshops clinic for a year, franchise systems across the United States are in the position to contribute their help toward the greater good.  It is the company’s hope that as greater awareness is brought to the overwhelming fatality numbers in Africa and other developing countries, health franchising will keep flourishing.
 
“When our organization has as many micro-clinics as Subway has sandwich shops, we’ll serve more than 100,000,000 patients per year sparing millions from needless suffering and death while also creating jobs for tens of thousands of families and improved prosperity for whole nations,” Hillstrom said.
 
For more information on the CFWshops, visit www.cfwshops.org.

Hilary Strahota is manager of public relations of the International Franchise Association.  She can be reached at 202-662-0791 or hstrahota@franchise.org. 

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