Proposal by StageSix for Vanilla Value Chain: Scaling Smallholder Service Delivery

Stage Six, Inc.

Proposal

Vanilla Value Chain: Scaling Smallholder Service Delivery

This proposal was created by Stage Six, Inc.

SECTION 1: BACKGROUND

Project name: Vanilla Value Chain: Scaling Smallholder Service Delivery

Name of submitting organization: Stage Six, Inc.

Background: Stage Six was founded to stimulate economic development in emerging markets by using the franchise model to expand successful businesses and create local business ownership opportunities.

Our franchise advisors have a unique combination of commercial and social franchise experience in more than 80 high-, medium-, and low-income countries around the globe and multiple industries including agriculture, water, and healthcare in Africa.

Stage Six is on a mission to prove that the franchise model can be successfully adapted to businesses that provide social value (e.g. income generation opportunities) in low-income countries. We are therefore extremely invested in the outcome of the support we provide to our clients. We view client engagements as opportunities to co-create socially beneficial and commercially viable multinational franchises capable of attracting new sources of financing and accelerating the pace of economic and social development in Africa, Asia, and Latin America.

SECTION 2: PROJECT APPROACH

Stage Six will work with NEI’s team in Tanzania to develop the vanilla center of excellence (VCoE) business (referred to throughout this proposal as “the business”) with franchising as the intended expansion model. This means that, to the extent possible, at the end of the pilot period, the VCoE will meet the following key franchise feasibility criteria:

1) The business is commercially viable
• The business is profitable for the VCoE owner
• Revenues are consistently increasing
• There is a reliable long-term supply of subsidies required (if required) to achieve unit profitability (e.g. third party payer for brand offerings when customers do not have sufficient purchasing power)
• Investment required by franchisees is affordable by the targeted classes of franchisees
• The business delivers a compelling brand offering that resonates with target customers and is differentiated from competition

2) The market will support the growth of the business
• The industry is growing
• The business fills a gap in the marketplace
• Customers have a favorable view of the products and services
• There is a growing demand from customers that desire the products and services offered by the business
• There is a growing demand from prospective franchise owners for what the franchise opportunity has to offer

3) The business can function successfully within the local legal framework
• The business is in full compliance with local regulations
• There are not any significant barriers that will impact expansion or prevent the achievement of brand standards or commercial viability

4) There is a sufficient pool of qualified franchise candidates for the business • The return on investment is attractive to ideal candidates
• Profile of ideal franchisee candidate is defined
• Ideal candidates have access to capital required to finance the business (both CAPEX and working capital)
• Ideal candidates have previous people management experience, marketing experience, and strong relationships within their local communities.

5) The business know-how can be transferred to others
• The business is based on a set of refined, turn-key operating processes and systems
• Systems are codified in operations manual and other supporting documents
• Staff training program achieves consistent results with reasonable resources deployed (both time and investment)
• Quality assurance system is effective and streamlined

6) There is an effective consumer marketing strategy
• Brand is distinctive
• Pricing strategy enables achievement of both profitability and impact objectives
• Supply chain is reliable, efficient, and affordable
• Successful location requirements are defined

7) Economics of the business supports franchising
• Business will still be profitable after payment of royalties to NEI (Franchisor)
• Break-even point for NEI (as franchisor) is acceptable
• Financial metrics are attractive at every level of the value chain (i.e. Franchisor, Franchisee, 3rd party retailer, etc.)

SCOPE OF WORK
Stage Six will work with NEI to deliver on five phases of the project including:
1) Conduct formative research;
2) Design the VCoE business;
3) Develop the implementation plan
4) Execute the plan; and
5) Evaluate the business model for franchise feasibility and expansion readiness and make recommendations accordingly.
The activities and deliverables for each of these phases are described in Section 2.

SECTION 3: ACTIVITIES AND DELIVERIES

Activity 1: Conduct formative research
Description: Stage Six will gather and analyze information needed to design the VCoE as follows:
• Integrate findings of the small-holder farmer (SHF) study to identify customer needs, desires, purchasing power, purchasing decision process, and purchasing behavior drivers and barriers
• Evaluate effectiveness, efficiency, necessity, and commercial viability of current and proposed NEI solutions (e.g. trainings, subsidized seedlings, market access)
• Conduct competitive analysis
• Analyze findings
• Formulate underlying business hypothesis
• Finalize research conclusions with NEI

Duration: 4 weeks – <3 months
Deliverable: Report, Workshop or meeting

Activity 2: Design the VCoE business model
Description: Stage Six will use the research findings to design the VCoE including:
• Targeted customer segments
• Prospective VCoE owner/operator
• Core products and services and how they will benefit customers (including competitive advantage)
• How the VCoE will benefit NEI
• How the VCoE will benefit the VCoE business-owner (including competitive advantage)
• Brand standards
• Seasonality
• Goals and key performance indicators
• Organization structure
• Ownership structure
• Operational systems and procedures
• Quality assurance systems
• Human resource requirements
• Training and tech support requirements
• Supply chain requirements
• Equipment requirements
• Product and service pricing
• Store placement
• Promotional strategy
• Capital requirements
• Financial model
• Legal requirements
• Monitoring and evaluation system

Duration: 3 – <6 months
Deliverables: Workshop or meeting; Business Plan

Activity 3: Develop the VCoE Implementation Plan
Description: Stage Six will develop an implementation roadmap for piloting and scaling the VCoE concept. The VCoE pilot plan will provide NEI staff with a step by step process for executing the business plan, routinely monitoring key performance indicators, and adjusting the model in real time until the concept is proven and ready to scale.

The roadmap for scaling the VCoE will include recommendations around where to expand, when to expand, how fast to expand, and whom to target for franchise ownership. The recommendations will be based on NEI business objectives and key business model assumptions that will be validated during the pilot phase of the project. The scaling plan will be adjusted after the pilot to reflect lessons learned and adjustments made.

Duration: 2 – <4 weeks
Deliverables: Implementation Plan, Workshop or meeting

Activity 4: Support NEI in implementing the VCoE model
Description: Stage Six will provide ongoing advisory support to NEI as they implement the VCoE business plan. The team of consultants assigned to this project will engage in a weekly one-hour meeting (via skype/phone) with NEI staff to review progress against the work plan, discuss challenges, and recommend solutions to challenges

Duration: 3 – <6 months
Deliverables: Report,Workshop or meeting

Activity 5: Evaluate and Recommend Expansion Strategy
Description: At the conclusion of the pilot, Stage Six will use its franchise feasibility and readiness assessment tools and methodology to evaluate the VCoE model according to franchise feasibility and readiness indicators. We will recommend performance improvement strategies and/or expansion strategies based on our findings.

Duration: 2 – <4 weeks
Deliverables: Report, Workshop or meeting

Project measureables: At the end of the pilot, Stage Six will measure the extent to which the following franchise feasibility criteria are met:

1) The business is commercially viable
• The business is profitable for the VCoE owner
• Revenues are consistently increasing
• There is a reliable long-term supply of subsidies required (if required) to achieve unit profitability (e.g. third party payer for brand offerings when customers do not have sufficient purchasing power)
• Investment required by franchisees is affordable by the targeted classes of franchisees
• The business delivers a compelling brand offering that resonates with target customers and is differentiated from competition

2) The market will support the growth of the business
• The industry is growing
• The business fills a gap in the marketplace
• Customers have a favorable view of the products and services
• There is a growing demand from customers that desire the products and services offered by the business
• There is a growing demand from prospective franchise owners for what the franchise opportunity has to offer

3) The business can function successfully within the local legal framework
• The business is in full compliance with local regulations
• There are not any significant barriers that will impact expansion or prevent the achievement of brand standards or commercial viability

4) There is a sufficient pool of qualified franchise candidates for the business
• The return on investment is attractive to ideal candidates
• Profile of ideal franchisee candidate is defined
• Ideal candidates have access to capital required to finance the business (both CAPEX and working capital)
• Ideal candidates have previous people management experience, marketing experience, and strong relationships within their local communities.

5) The business know-how can be transferred to others
• The business is based on a set of refined, turn-key operating processes and systems
• Systems are codified in operations manual and other supporting documents
• Staff training program achieves consistent results with reasonable resources deployed (both time and investment)
• Quality assurance system is effective and streamlined

6) There is an effective consumer marketing strategy
• Brand is distinctive
• Pricing strategy enables achievement of both profitability and impact objectives
• Supply chain is reliable, efficient, and affordable
• Successful location requirements are defined

7) Economics of the business supports franchising
• Business will still be profitable after payment of royalties to NEI (Franchisor)
• Break-even point for NEI (as franchisor) is acceptable
• Financial metrics are attractive at every level of the value chain (i.e. Franchisor, Franchisee, 3rd party retailer, etc.)

Methods of data collection:
Interviews;
Written Surveys;
Business performance reports (sales and financial reports);
Observation of and interviews with VCoE staff; and
Review of VCoE operations documents.

Project Risks:
• Seasonality of the business may prevent it from being profitable enough to support franchising;
• The size of the market may not be large enough to support expansion through franchising;
• Customers may not be able to pay enough to make the business profitable;
• There might not be a sufficient number of capable and motivated franchisee prospects to support franchising;
• Franchisee prospects may not have access to capital they need to purchase the franchise;

Risk management strategies:
• Prove the business model before investing in scaling it.
• Build a continuous feedback loop into the pilot so that we can learn and adjust as we go and increase the likelihood of building a viable business model.
• Use seasoned franchise experts to ask and answer the right questions.
• Conduct industry research and build on best practices and lessons learned.
• Consider product expansion opportunities to address seasonality issues (if there are any)
• Engage customers in the VCoE design process so that the product and service offering responds to their needs and desires.
• Engage prospective franchisees in the VCoE design process so that the franchise offering responds to their needs and desires.
• Only recommend franchising when the business is ready, according to best practice KPIs in franchising.

SECTION 4: SKILLS AND TEAM

Relevant past experience:
1) Current Project: Mexico, USAID:
Use franchising to expand Echale’ (affordable housing business) globally Stage Six conducted a franchise feasibility study for Echale’ and, after concluding that they are franchiseable, began working with them to develop their franchise system. We have thus far developed their franchise offering, financial model, and franchisor business model. We are in the process of developing their franchise manuals and sales strategy and plan to expand them to Colombia in 2020 and Uganda in 2021.
2) Current Project: Mexico, USAID:
Use franchising to expand Eisenkraft (blacksmithing business) globally Stage Six is currently building a franchiseable business around the Eisenkraft technology and will begin piloting it in Mexico in March 2020. Once the business is proven we will develop a franchise system and offer sell franchises in Latin America and Africa.
3) Current Project: Costa Rica, USAID:
Use franchising to expand Little Monsters (early childhood development business) globally Stage Six conducted a franchise feasibility study of Little Monsters and concluded that the business was not yet ready for franchising. We developed a performance improvement plan for them and are currently helping them to implement it. Once the performance gaps are addressed, we will work with them to refine their franchise offering and sell franchises to new countries.

Qualifications:
Julie McBride, Kelli Schroeder, and Alex Deprez will use their collective expertise in business development and franchising in Africa, including the Agriculture sector, to develop a model that is grounded in practical experience and specialized skills that are relevant to your specific project. Alex will serve as the project lead and be your primary point of contact.

Alex Deprez, Business Strategy and Development Advisor for Africa, Stage Six Alex Deprez is currently a senior advisor with the U.S. Agency for International Development (USAID). His most recent (2013-2018) overseas posting was in Accra, Ghana, where he served as USAID’s regional director for West Africa. Prior to this assignment he served in other senior management positions with USAID implementing development assistance programs in East Africa, DR Congo, Haiti, Egypt and Russia. Prior to USAID, he owned and operated a franchise in the DR Congo, worked for a US multi-national and also served as director of a micro-finance institution. Alex brings a unique ability and a long track record of devising and operationalizing strategies in some of the world’s most challenging environments. He specializes in rural development, small and medium enterprise development and local capacity building. He is a former U.S. Peace Corps Volunteer and a graduate of Tufts University (BA) and George Washington University (MBA). He speaks French and Lingala (DRC) fluently.

Kelli Schroeder, International Franchise Development Advisor, Stage Six Prior to joining Stage Six, Kelli Schroeder lead international business development for publicly traded, $3B Franchisor, Wingstop Restaurants International (NYSE: WING). Kelli also served as the VP of International Franchise Development for Jibu, a safe drinking water franchise. While overseeing international expansion efforts, Kelli successfully launched the brand in Tanzania, Zimbabwe and The Democratic Republic of Congo. During her tenure at Chili’s Grill & Bar, Kelli established new franchise partnerships throughout Central & South America, Africa and Southeast Asia. Kelli also served as a Public Relations Senior Account Executive for Omnicom Group – The Zimmerman Agency, where she represented global hospitality brands including Hard Rock Hotels, the country of Aruba, Palace Resorts, and Party City. Kelli is a Certified Franchise Executive (CFE), holds a Certificate in Franchise Management from Georgetown University, an International MBA from Escuela de Administracion de Empresas (EAE Business School) and two Bachelor of Arts degrees from The University of Alabama. She is fluent in Spanish.

Julie McBride, CEO Stage Six Julie McBride is a thought leader in the field of social franchising and was recently named one of “Five Innovative Consultants that are changing the world” by Inc. Magazine. Julie’s experience using the franchise model to scale social businesses spans 20 years, five continents, and several industries including healthcare, water, sanitation, agribusiness, clean energy, and education. She was instrumental in designing and operating PSI’s pioneering reproductive health franchise in Pakistan (Green Star) and supported the expansion of social franchises into 27 additional countries. As a franchise consultant at MSA Worldwide Julie helped social business owners and NGOs design and execute franchise systems. In her most recent venture as founder and CEO of Stage Six, Julie is building and supporting a portfolio of investment-ready social franchises across a range of sectors and geographies. Her efforts to inform and inspire potential actors in this field have included several high profile speaking engagements and publications including a recent commentary in the Lancet titled “Setting the Record Straight on Social Franchising”. Julie earned her Masters in Public Health from New York University and her Bachelor of Science from the University of Washington.

SECTION 5: FEES, REPORTING AND FOLLOW ON

Currency Selection: USD

Upper fee limit: US$94,200 plus travel expenses

Payment structure: Milestone/deliverable based

Reporting processes: We will monitor VCoE monthly performance in order to learn and adapt if and as needed during the pilot and conduct a comprehensive franchise feasibility and readiness assessment at the end of the pilot period.

Desired frequency of reporting: After submission of each deliverable/achievement of each milestone.

Interest in follow on work: Stage Six would be interested in developing the franchise system for the VCoE when it is ready to expand. The system would include defining the franchisor entity and its roles and responsibilities in finding, selecting, training, supporting, and monitoring franchisees. We would also be interested in helping with international expansion when the time is right. In this case we would help to identify appropriate expansion markets, adapt the business to that market, and source new franchisees.

SECTION 6: ADDITIONAL FILES

CVs
1. Julie McBride CV 

2. A DEPREZ CV

3. Kelli Schroeder CV)

Workplan and budget
1. NEI Work Plan

2. NEI Work Plan

3. NEI Work Plan

4. Budget for NEI Proposal

Other file