CFWshops: The Subway of Global Health Delivery?

by Anjali Sastry on October 2, 2009

CFW shopsCFWshops is a business-format franchise of retail clinics operating in Kenya (and now Rwanda, Ghana, and Uganda). Our guide: CFW board member and expert on franchising–he actually wrote the book!–Michael Seid. We are are deeply grateful that came all the way to MIT to join us and it was fascinating to hear his take on the franchising model and its application to global health delivery in resource-limited settings. This Franchise Times piece presents his story about getting involved with CFWshops and a second one reports 2007 developments.

To follow along with what we learned, start by with the organization itself. We watched videos from PBS’s Now series, “Enterprising Ideas,”  featuring the CFWshops model and presenting a more recent update as the organization embarked on expansion in 2008. From the show’s page you can check out the additional materials posted on the show’s site.  A useful additional resource is a 2008 presentation by the organization’s CEO.

For the perspective of an Acumen Fund fellow who worked with the organization, please see Catherine Casey’s blog posts; also see this youTube video documenting a CFW franchisee’s point of view.

My earlier post on franchising as a solution contains many useful resources about research in this area, as well as some thoughtful comments from last year’s students.

In class we explored why franchising could be effective in this case, asking what are the advantages and disadvantages of this existing model?  We also looked at potential pitfalls. Where could you see scope for innovating around existing models like this one?

We asked students to come up with their own franchising ideas. There were some great ones–and we didn’t even hear all of them!  Post your ideas in the comments below.

{ 4 comments… read them below or add one }

Ron Gelberg November 22, 2008 at 4:00 pm

Here are some thoughts from a previous discussion on this topic:
When it comes to delivering a viable healthcare delivery model, I believe the key is a sustainable model. I personally do not believe that there is a difference whether it be a model for health delivery or for any other product. In addition, what I have read and understood, I think it also makes little difference whether it is for developing or developed world. True, there are different challenges encountered in different regions, services and products, however, the models do not differ.

The Aravind way, reminds me a lot of the “Toyota Way”. This methodology is where quality is king. The principles of implementing a management system that ensures continuous improvement, is a quality measure that has and will benefit any business. The ability to attract and train a specialized workforce, again is no new theory. Generation of patient volume is no different to increasing the market size. As you do so, your overall costs tend to decrease. While many readings and the video provided by PBS show that the franchising model is the answer, I believe that that it is one of many; however, I believe that whatever model is considered, it must ensure that quality is king. In addition, it must ensure that the market size increases so the overall costs of diminish.

The CFWshops use the franchising model, and while they do charge money (at least for 30% of its patient) it has a large advantage over the free government service. Again, it knows that the quality of drugs is high, it trains staff ensuring a sound profession and it avoids the long lines of HIV patients. Moreover, as it has many patients, it is able to improve its capabilities and be experienced in its field. In addition, being a franchise, it can really open anywhere. The challenges are that locals must purchase this franchise, and due to global economic challenges, this area probably suffers the most, and hence, franchises may not be able to be opened. In that situation, it may be worth to open a chain rather than a franchise, similar to what Toyota has done in the US.

I personally believe that unlike the belief of LAICO, or CFW shops or other franchises, I do not believe that this model is necessarily important for specializations. The advantage of specializations is that you are able to provide the same service and learn from it, and hence, improve the quality of service. However, the problem with specializations is that in developing countries, people need to go to one place where they can be provided healthcare, and not be sent elsewhere if they cannot be given any care. As my project looks at CIDRZ and HIV, it is interesting that this organization does not want to take the franchise model, but still provides the Hub and Spoke methods, the quality method, access to low cost technologies and generation of patient volume.

So, I believe that whatever model is chosen, one must ensure that it is sustainable, it has high quality, it provides proper service and has a local hand. If Africa continues to rely on grants and on doctors from overseas, its people may not cope. However, If Africa develops its own franchises, chains, healthcare system and educates their own people to treat each other (as CFW does), the likelihood of continuation and success will be much higher.

Hassani Turner October 7, 2009 at 11:58 am

I’d like to briefly explore some of the topics that Michael Seid expressed in his discussion to the G LAB class. Using a franchise based model to economically elevate Africa is a nice sentiment, yet it is incredibly flawed for a number of reasons. The franchise model assumes that entrepreneurs will have access to capital to invest in said franchises. Further, Michael Seid, though interesting in his approach, has underestimated the powerful impact of social investments. While jesting that this type of model was “ridiculous” he fails to see that individuals who may be investing in his franchises will be borrowing from social investment funds such as Acumen. Further these types of funds are the only institutions that have developed a model for assessing both social and financial valautions. Groupe Danone has created a social business model that addresses hunger while continuing to generate sustainable financial profits. By developing danone.communities, a venture fund which supports the development of social enterprises such as Grameen Danone, the Company created a solid pool of funds separate from core business activities. Capital risk was reduced significantly by strategically diversifying the funds portfolio. This fund reportedly outperformed Groupe Danone’s core stock in 2008. “Ridiculous”? I don’t think so.
Yunnus, the renowned father of social enterprise and Nobel Prize winner, and Dambisa Moyo former Goldman Sachs Investment Banker and author of “Dead Aid” have acknowledge that social enterprise investments are the only true way to integrate the bottom billion into an economy that has historically marginalized them.
Instead of expecting underdeveloped economies to “come on board” to westernized ways of conducting business, multinational firms should acknowledge the market opportunity for developing products and solutions that focus on the bottom billion. By figuring out ways to address these underserved communities’ needs and developing supply chain and pricing models specifically targeting them, sustainable business ventures can be achieved. Further, by also investing in local entrepreneurs and integrating them into these business models, profits are not extracted from the targeted communities, but reinvested which is the only way for the poor to realize REAL wealth. Local entrepreneurs are also legetimized due to their relationship with the targeted community and they have the ability to integreate specific tastes and needs into the said product or solution. Franchising as a solution only sounds good on the surface, but instead it ignores the diversity of taste and needs in targeted populations and fails to generate real wealth for targeted communities.
Finally, it is naive to assume that one sector can undue the negative effects of decades of neglect — coordination between multimational firms, governments, multilateral firms and NGOs is necessary to produce effective results.

Raj Bhatia November 9, 2009 at 11:34 pm

Posted on behalf of Hiroshi Matsuyuki, a student in G-Lab GHD this term:

“CFW Shop is the most successful social franchise network in Kenya, which operates drug store franchise, and provides services for two millions patients in their estimation. Their target is to treat short lists of easy to treat diseases and health problems. Since their establishment, CFW has successfully created wealth and job in Kenya by using the framework of Social Sector Franchise, while they have saved a lot of people in the area where it operates.
Key for CFW’s success is their approach to motivate franchisees and the way to make franchisees comply with their business standard. The franchisors provide basic business model and manual for the operation of the drug shop. Those manual are well-systemized and help local entrepreneur motivate to become franchisees for their own profits. To maintain the service quality, they investigate each franchisees, and, if it is necessary, give warning to some franchisees which violate their standard manual. Throughout their continuing efforts, most of franchisees value to enjoy profits with fully compliances with their business standard.
The one future problems of CSW is about how to expand their franchise network large enough to take advantage of scale economy. In the business franchise, systemized operational manual is very important but the expansion of network and scale economy with it are the most important part. In the developing countries such as Kenya, social infrastructures such as transportation are very poor. Therefore, even if they increases in the numbers of franchisees, it is not necessary to take enough advantages of scale. They tried to create their own infrastructure to develop local supply chain system which help entire franchise take the economy of scale. However, it seems to be quite difficult for one social franchise network. Therefore, the cooperation with government agency or NGOs are critical for their future success.”

Abbey Mutumba June 21, 2010 at 2:43 pm

As a franchising researcher since 2006, i recommend our government to learn more about health entrepreneurship success of CWFShop which has proven that health franchising is the way to go to increase access to quality health care in Uganda. Our governement through our ministry of health and our ministry of planning, finance, and economic development are enabling the use of public-private partnership in improving the provision of quality healthcare. An health franchising awareness campaign is needed among our current and retired healthcare professionals, health investors, social entrepreneurs, politicians, religious leaders, and other stakeholders. The success of this campaign will prepare more healthcare entrepreneurs like Dr.Ian Clark of IHK, Dr. Sebbale of Case Clinic, and others to exploit the expansion opportunities in the East Africa Common Market. Beside health/social franchising is a proven poverty reduction, job creation, and self-employment strategy. So it is a win-win situation for all Ugandans and East Africans. Abbey Mutumba is will to share his healthcare/social knowledge and competencies with stakeholders like you who is reading this comment.

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