Propaís: Striving for the Future of MicroFranchising in Colombia

Propaís (propais.org.co) is a non-profit organization founded in 1994 in Bogotá (Colombia) by the public and private sectors and supported by 76 partner organizations (nine public and 67 private). Propais’s main public partners are the Ministry of Commerce, Ministry of Agriculture, National Learning Service, National Planning Department, National Guarantee Fund, Ministry of Labor, and Ministry of Education. Among the private partners are Confecámaras, Carvajal Foundation, Corona Foundation, and Santo Domingo Foundation.

In October 2018, María Lucía Castrillón, general manager of Propaís, was concerned about the future of the micro-franchising project (MFP) that had been active since 2012. The MFP was core to Propaís’s mission of promoting “the development of micro and small businesses through strategic work, carried out jointly by public and private agents”. It promoted the creation of 70 new enterprises that generated 350 direct jobs and produced over USD 1 million in annual sales.

The IDB-MIF, a co-financer of the project with a total investment of USD 2,540,150, had recently announced its decision to withdraw from the project in May 2019, generating great uncertainty regarding the project’s future feasibility. However, María Lucía believed that ending the project was not an option. Propaís had invested time and money to become a reference point in franchise structuring and had created a network of partners. She felt responsible for the small entrepreneurs and feared that without MFP support both franchisers and franchisees would lose the opportunity to do business, and the potential would be lost to create five direct jobs at each franchise.

During a meeting with Luis Fernando Martínez (project director) and Carlos Zambrano (regional coordinator), Castrillón and her team sought solutions to keep the project going. Martínez proposed two options: 1. Propaís could continue to manage the project but would need new financial resources from donors and investors, and 2. Propaís could transfer its knowledge and processes to its partners (such as the Ministry of Commerce, Medellín Chamber of Commerce, private foundations or companies) so that they could in turn scale up the micro-franchise model. However, both options implied a long negotiation process and IDB-MIF support would end in just seven months. Moreover, Propaís did not have enough resources to support the project alone during a transition.