The Child and Family Wellness Shops Story:

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The Child and Family Wellness Shops Story
Improving access to life-saving medicines
through Micro-Franchising
Sponsored by The Sustainable Healthcare
Enterprise FoundationTel 415-332-1153 -
www.cfwshops.org Contact wayne_at_cfwshops.org
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The Public Health Crisis
On average 25,000 children die every day in
developing countries for want of basic medicines
that cost less than a cup of coffee

• A short list of diseases treatable with
  inexpensive drugs accounts for over 70 of
  childhood illness and death in the developing
  world.
• Almost a million people die each year of malaria
  in Africa alone. Shockingly, the cost of medicine
  to cure malaria is just 68 cents.

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Broken Distribution System
There is no reliable delivery system for
essential medicines for millions in the poorest
rural corners of the globe

• Millions of Africans live hours if not days from
  the closest clinic
• Existing public and private outlets suffer from
  Chronic shortages Poor training / faulty
  diagnoses Prevalent counterfeit drugs

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CFW Shops Mission

• Mission
• To prevent needless death and illness in the
  developing world by sustainably improving access
  to essential drugs and basic health services.
• Key Goals
• Provide affordable access to essential medicines
  in communities where supplies are scarce,
  over-priced, or of poor quality.
• Reduce mortality and morbidity rates especially
  for children under 5.
• Encourage the replication of the health
  Micro-Franchising model in the developing world
  by demonstrating that the model is a secure and
  highly cost-effective means to improve public
  health.

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The CFW Shops Micro-Franchise Model
CFW Shops is a franchise network of Micro Health
Outlets that employ the same principles that
drive successful multi-national franchisers.
Health workers run their own outlets under
license to CFW Shops.

• Drive sustainability and performance though
  ownership
• Ownership provides performance incentives. Each
  outlet provides a living income for its owner
  ensuring sustainability.
• Ensure consistent quality through tight franchise
  systems and controls
• Use rigorous, uniform systems and training
• Maintain a consistent brand image across all
  outlets
• Enforce careful selection of locations and
  operators
• Employ strict controls on quality, care and
  service backed up by regular inspections. Revoke
  or replace franchises that do not consistently
  comply with standards.
• Achieve efficiency through scale and
  standardization
• Leverage the combined buying power of the full
  network to obtain quality medicines at the lowest
  possible cost and strictly controlled prices at
  retail
• Building scale to over 300 locations reduces the
  cost to improve access to essential drugs to less
  than 1 per person per year.

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Success Story Jesmah Clinic
Credence offers free infant weigh-ins. She also
provides informal insurance by extending credit
to many of her customers when their money is
tight.
Credence (right) started and runs the rural
Jesmah Clinic. She treats over a thousand
patients per month and is one of the most
successful operators in the CFW Shops network.
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Key Facts

• CFW Shops operates a total of 68 outlets in
  Kenya 45 shops and 23 clinics. 20-40 more will
  open in the coming year .
• 37 Outlets in the Mt Kenya region
• 10 outlets in Nairobis Kibera slum with emphasis
  on TB
• 20 outlets in the highly impoverished western
  region
• Serving 275,000 patients per year on a run rate
  basis
• Over 40,000 patients were treated for malaria in
  2004
• SHEF Kenya employs a management staff of 14.
• US staff is minimal 2 paid positions pro-bono
  President
• 2005 budget is just 740,000

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Successes to Date

• 350,000 patient visits since inception
• Patient visits per outlet are growing robustly.
  Total patient visits are on track to double in
  2005.
• Approximately 25 of patients are treated for
  malaria
• Drug sales grew 62 in 2003, and over 56 in
  2004.
• The SHEF Kenya network grew almost 50 in 2004
  opening more than 20 new Outlets
• The CFW Micro-franchise model is already being
  duplicated in other African countries.

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Growth In Patients Served
05-07 numbers are YE run rate est.
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Vision

• Triple the Kenya CFW Shops network to over 200
  outlets in 3 years, serving over 1,000,000
  patients per year.
• Replicate the CFW model in other countries by
  launching new CFW branded and operated networks
  and licensing/selling our franchise operating
  system to NGOs, governments, and/or
  businesses. Timing tbd based on funding and
  performance

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Benefits of the Franchise Model

• For Franchisor
• Low capital requirements, franchisees fund capex.
• Lower risk - fees usually based on sales not
  profits.
• Can scale quickly.
• For Franchisees
• Low risk. Buying a proven business model. 70
  of business start-ups fail. Less than 30 failure
  for franchises.
• Name recognition
• Ongoing support Marketing, new product
  development and testing, Training, etc
• Buying power of full network

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Key Success Factors for Franchising

• Compelling product offering, proven to work.
• Easily standardizable and measurable
  format/product.(EG Bednets vs. AIDS care)
• Broad appeal works in a wide variety of
  locales.
• Franchisee recruitment and selection.
• Site selection Location, location,
  Location(note tension between financial and
  social goals)
• Tight controls and reporting
• Strong support of franchisees Marketing, new
  products, training, problem solving.

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Franchising Growth Strategies

• Multi unit franchiseesEncourage high performing
  franchisees to open new locations
• Area Development RepresentativesTake a of
  gross, not employees, often former owners.
• Master Franchise License E.G. new country

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Models of Franchising

• Full Franchise
• New green locations
• Conversion of existing businesses
  -appropriateness depends on goals
• Fractional Franchise Adding a product or
  service to an existing business (E.G. Greenstar -
  family planning)
• Biggest Categories Restaurants, Gas Stations,
  Business Services

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Summary

• The Micro-Franchise model provides the incentives
  and controls that make rural drug delivery
  efficient, effective and sustainable.
• The number of patients SHEF is serving is growing
  robustly.
• Patient visits per outlet is also increasing,
  thus expanding public health benefits and
  enhancing financial sustainability.
• The public health community is quickly gaining
  interest in the franchising model as a critical
  tool to solve the problem of drug distribution.
• This model is demonstrating clear potential
  to Provide a secure channel for the delivery
  of essential drugs Radically lower the cost of
  access to these medicines Save thousand of
  lives

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Key Objectives 2005

• 1 Increase Outlet Traffic
• Improve outreach/marketing, refine pricing and
  test new promotions
• Expand product/service offering
• Upgrade and standardize signage
• Restructure outlet financing package
• Set and enforce higher performance criteria for
  all outlets
• Refine and optimize location and franchisee
  selection
• New outlets will be mostly higher performing
  clinics (vs. shops)
• 2 Broaden and Deepen the Donor Base
• Expand the Board of Directors and grow the donor
  list at all levels
• Prioritize and close funding with major
  institutions

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Management Bios

• Chuck Slaughter, Acting President and Board
  Executive Committee Member Chuck earned both a
  BA and a Masters in Public and Private
  Management from Yale. He is the Founder of
  TravelSmith, the 1 U.S. brand in travel clothing
  with over 100 million in sales and over two
  million customers. After Yale Chuck served as a
  Program Officer for Trickle Up, a micro
  enterprise development organization active in
  over 20 countries. He later worked on corporate
  strategy for Fortune 100 companies at Marakon
  Associates, a management consulting firm. He is a
  winner of Earnst and Youngs Entrepreneur of the
  Year. Chuck currently serves on the boards of the
  Spiegel Catalog, The Trickle Up Program, and
  Environmental Traveling Companions. Upon selling
  TravelSmith he established the Charles Slaughter
  and Molly West Fund. In September of 2004 Chuck
  agreed to take on the role of President for SHEF
  overseeing all aspects of the organization. All
  SHEF staff report into Chuck who in turn reports
  to the Executive Committee of the Board.
• Liza Kimbo, CFWshops Kenya Executive Director
  Liza specializes in finance and pharmaceutical
  services management. She earned her MBA through
  United States International University in
  Nairobi, and her BA in Finance from the
  University of Connecticut. USA. She is currently
  studying for her Masters in Public Health degree
  from the London School of Hygiene and Tropical
  Medicine. Prior to joining SHEF, Ms. Kimbo served
  six years in senior management at Standard
  Chartered Bank in Kenya where she was in charge
  of strategic planning and business information
  analysis. Subsequently, she established and
  managed a retail pharmaceutical company with 13
  outlets. Liza is currently the Chairperson of
  the Kenya NGOs/Private Sector Alliance against
  Malaria (KeNAAM). She sits on the Malaria Drug
  Policy Technical Working Group, and is a past
  Chairperson of the Coalition for Access to
  Essential Medicines. Liza is based in Nairobi and
  is the chief of SHEFs Kenya office and
  operations. All the Kenya staff report to her.