A Great Micro Franchising and Micro Enterprising Opportunity: Indian Cyber Cafes

This is an idea I’ve been kicking around, particularly since reading C.K. Prahalad’s “The Fortune at the Bottom of the Pyramic: Eradicating Poverty Through Profits.”–which incidently I highly recommend for anyone looking into microenterpise in the developing world (and even in the developed word).  Sramana Mitra at Seeking Alpha has a great post about the micro franchising and social entrepreneurial opportunities around cyber cafes, particularly in the case of India:

Sify’s iWay cyber cafe chain has expanded to 153 cities with the addition of 58 new cities in the last one year. The company has added 836 new iWays during the year, at an average of more than two cafes a day. The Microsoft deal is a great way to leverage and monetize this asset. For those unfamiliar with India’s consumer situation, Cyber Cafes are a key piece of the internet penetration equation in India, and will continue to remain so for the next decade, since PC/broadband costs are still not at a point where India’s vast population can afford them easily.

In many ways, Sify’s Cyber Cafe strategy represents a fantastic Micro Franchise opportunity that can take its iWay brand out to the thousands of smaller towns and villages in India. In so doing, Sify would position itself as a very powerful channel into these otherwise difficult-to-access markets/consumers.

While Corporate Connectivity may be the current bread-and-butter revenue generator for the company, I am far more excited about Sify’s Cyber Cafe strategy. In the long run, Corporate Connectivity is a highly competitive, commodity business, whereas this Cyber-Cafe channel will become, if executed well, a supremely differentiated, high value platform, from which they can impart many applications, from Distance Learning to Tele-Medicine.

David Stoker also pointed to the advantages of micro franchising as a business model:

1. Replicates the performer’s winning business
2. Removes the creative burden from the potential franchisee
3. Provides a superior method of transferring technology
4. Reinforces vital business skills and practices necessary for greater financial growth.
5. Forces a mentor relationship
6. Reduces the odds of failure during the start up process
7. Speeds the exit out of poverty and to economic self-reliance
8. Enables more small business owners to take advantage of market opportunities.
9. Allows for economies of scale in purchasing and advertising.
10. Eases the challenges of a fresh start-up because systems are in place.

Specifically in the case of cyber cafes, internet connectivity has the potential to enable efficient e-government processes, increased transparency, communications, the potential for micro-enterprise business transactions, and increased incomes. (although there may be both physical and virtual security issues). However, certainly the Sify model indicates these risks can be overcome.

For more on microfranchise resources and microfranchising opportunities please check out my post or check the Google resources for microfranchising.  I suggest the these micro enterprise resources, microfranchising wiki, perhaps the microfranchising blog.