Jibu: Essential Service Franchising

Pairing a powerful product with a capitalized and motivated owner transforms essential service provision into roots of lasting economic development.

Jibu combines microfinance, franchising, and urban utility models to capitalize and equip emerging market entrepreneurs to launch and grow safe drinking water franchises. Decentralized water treatment technology has existed for more than a decade, but the last mile business model and technology needed to get customers safe drinking water at home has not existed. By providing local entrepreneurs both the tracks to run in (franchise system, SoPs, and brand) and the resources (capitalization, business IT, and training), Jibu has launched hundreds of locally owned businesses and more 2000 reseller points, as well as created over 1,500 jobs in the past five years. 

Jibu is Swahili for the "solution" or "answer". Our mission is to equip entrepreneurs to profitably solve community challenges for themselves. 

Lack of meaningful business ownership opportunities and massive under-employment trap many people in emerging markets to an undesirable standard of living. At the same time, about a billion people do not have access to daily necessities such as affordable drinking water. 

In the markets where Jibu operates (Uganda, Kenya, Tanzania, Rwanda, Burundi, DR Congo), unemployment is as high as 60% among youth. At the same time, small business ownership and growth is stifled in a large part because unsecured financing is virtually impossible and secured financing rates are more than 20% APR. Even if entrepreneurs are able to raise informal financing from friends and relatives, they then face a myriad of doing-business challenges including those related to local regulators, supply chain input costs and reliability, and a lack of business management know-how. 

Latent entrepreneurial capacity exists to solve the essential necessities gaps in urban emerging markets, but an avalanche of systemic barriers suffocate small business before it can grow past a subsistence stage thereby limiting job creation and economic growth.

Jibu key innovation is combining financing with a technology-enabled franchise system.  

We provide entrepreneurs with regulatory certifications, supply chain economies of scale, a common brand, Jibu business management app suite of tools including PoS and CRM, water treatment equipment, and business know-how  down to the day to day standard operating procedures. Because of the unfair advantage that a Jibu franchise provides to entrepreneurs, we are able to also provide affordable start-up financing. (In a traditional franchise model, franchisees capitalize the system.)

Jibu franchises are high-visibility retail points with on-site production / manufacturing. Franchise owners pay a franchise licensing fee and Jibu builds out a franchise, provides training, and coordinates launch with the new franchise owner.

Safe drinking water is the anchor product (we are able to treat water from any source), and the franchise network is a platform for all essential services which now includes cooking fuel (LPG) and fortified porridge, a staple food in East Africa. 

Top-performing Jibu franchise owners generate more than $150,000 USD per year per franchise with a 20-25% take home profit, and breakeven within months of launch. Each franchise serves a 2-3 km radius. Our owners have come from various backgrounds that include a security guard, a DJ, and a T-shirt salesman.

Jibu operates in seven countries across 2000 resellers and more than 120 production franchises. Entrepreneurs employ more than 1,500 FTE and serve more than 200,000 customers daily with safe drinking water refills. All customers previously did not have safe drinking water available at their tap, and the majority previously boiled their water to make it safe to drink. 

We impact the entrepreneurs we equip, and the communities they serve with affordable essential services.

Since 2015 Jibu has created more than two new FT jobs per week. 

Jibu has invented a new business model. Our innovation is contextualizing pre-existing components of other industries and technologies to build a replicable model for emerging markets. Microfinance has existed, but has failed to provide the know-how. Franchising has existed, but it has been unavailable to local entrepreneurs at a small/medium business scale. Utilities have existed, but they have not evolved with the available technologies. And finally, business management technologies have existed, but they have not been put together with a UI that allows for emerging market entrepreneurs to comprehensively manage their businesses. 

 At the core of our game-changing innovation is the integration of franchisor and financial services, successfully contextualized to emerging markets. This new business model is the foundation that enables successful use of decentralized water treatment technology, and app-based business management tools for franchise owners. 

Regarding competition: Informal business operators do not grow beyond subsistence because they do not have a trusted brand, affordable supply chain inputs, training to succeed, or regulatory licenses. Big businesses, on the other hand, fail to serve the underserved emerging market population because they are unable to establish community-intimacy - the relationships with customers that typically only informal business owners can accomplish. Jibu combines the advantages of big business with informal to allow for a high-growth, replicable business. 

Water treatment for rapidly growing emerging market urban populations must be locally driven, and must be decentralized if it is to keep up. Jibu has created the first decentralized, scalable, and profitable safe drinking water solution for emerging markets.

The core hardware component that powers Jibu is the water treatment system technology. Jibu has co-designed this system with Healing Waters International and the WTS has received recognition from the American Engineers Association. Although the WTS does not have any singular components that have been invented by Jibu, the water flow and process of treatment that minimizes water waste and maximizes energy efficiency is unique - similar to how our business model is unique in its unique blend of pre-existing business models. 

The core software that enables our franchisees to manage their business is our co-developed open-source app, SEMA. We developed this in collaboration with two other safe water enterprise organizations. It allows our entrepreneurs to manage their P&L, inventory, CRM, POS, and more. The app enforces and compliments the business processes needed for franchise owner success, which we initially teach through a combination of our online LMS and classroom / field training. 

We are using the WTS technology in seven countries and in all countries the product water quality is certified by local regulators with bottled drinking water standard approval marks. We have labs in three countries where we conduct weekly water tests to ensure water safety, which meets or is more stringent than the WHO water safety guidelines. 

Our SEMA app is only used by Jibu entrepreneurs and so is self-validated - link included above. 

Daily served today: 212,000

Daily served in one year: 300,000

Daily served in five years: 1.6M

By 2025, Jibu plans to launch hundreds of new locally-owned franchises, create thousands of jobs, and reach over 7 million people with affordable drinking water and other impactful products. Our total addressable global market is vast, with about 1 billion people living in environments where the Jibu model is most applicable - 400 million in Africa alone. Our goal of reaching 7 million by 2022 is less than 1% of 1 billion – we are only scratching the surface!

Franchisee becomes unmotivated/ uncooperative/ ungrateful or unethical

Franchisees adopt the attitude of ‘What have you done for me today?’ or are dishonest in their business operations

• Attempt to continually add value as a franchisor

• Stay high touch with franchisees to stay ahead of potential problems

• Enforce language in franchise agreement allowing Jibu Corporate to take over franchise if necessary 

Corruption

Systemic and/or individual corruption slows and convolutes productivity

• Rely on local partners and board members to mitigate  

• Attempt to proactively build high-level relationships in each organization and with policy makers

• Budget for occasional slow-downs 

• Attempt to leverage political clout and networks when needed

• Avoid bribes 

Currency fluctuation

Products sold in local currency/payback to investors in $USD. Fluctuations are common and can be large, mostly in the direction of $USD strengthening

• Keep enough cash in each country to run operations without being forced to move money between countries at the wrong time 

• Do our best to time the movement of money to take advantage of favorable exchange rates  

• Change our pricing as needed

• Hedges

• Keep dormant money in interest-bearing accounts 

External challenges: war, disease, broken governments, stifling bureaucracy, etc.

Unpredictable exogenous events can hurt our business

• Franchisees are used to navigating these challenges successfully - a strength of our model 

• Sometimes these challenges actually provide new opportunities.

Unknown unknowns

Emerging markets rapidly change and unknown, unconceived risks arise

Maintain 5% cash reserve and 5% risk loss expense item in our pro forma

Please see above - mitigations included in table next to challenges.

NA

JibuCo (franchisor) employs 42 staff in franchise support across three office, Jibu Rwanda, Jibu Kenya, and Jibu Uganda. Jibu also owns four franchises which employ an additional 41 full time staff. 

Our traction is the best proof of our capability as a leadership team. This year, Jibu franchise owners will sell more than $10M worth of Jibu products to more than 200,000 daily customers across seven countries.

Our most important partners are franchise owners. 

Besides franchise partners, suppliers and government regulators are our most important partners including:

- Healing Waters International (HWI) which manufactures and assembles water treatment systems. 

- UNBS, RSB, KEBS, TBS, BBS, and ZABS are the local bureaus of standards that regulator drinking water quality in the current markets where we operate. 

Franchises pay a licensing fee pre-signing of the franchise agreement. JibuCo (franchisor) then builds out the turnkey franchise, including the retail front and production line. Franchisees then produce and sell refills to customers. Refills is their primary revenue driver. 

Besides the one-time franchise licensing fee, JibuCo (franchisor) earns revenue primarily based on a Franchise Network Fee (FNF) - a per liter fee. This fee functions as an operating lease on the water treatment system and Franchise in perpetuity. Against capitalization costs (about $20k per franchise launch), Jibu breaks even in about 2 years on average. Each franchise functions similar to an annuity in the long term for the franchisor. 

For non-water products (currently fortified porridge and LPG), JibuCo distributes the products centrally from our warehouses and earns a margin (~20%) on each sale. 

We are ~18months from being EBITDA positive from earned revenues (primarily franchise fees from franchise water sales). Please see our projections in the image below.

Solve will allow us to maintain momentum in reaching our target of equipping hundreds of emerging market entrepreneurs to make essential services - like safe drinking water - affordable to millions of underserved customers. Specifically:

1) Solve will help to catalyze the close of our Series C financing round. We are consistently hitting targets in spite of the COVID-19 lockdowns, but need momentum and to keep conversations warm with potential investors to successfully close our Series C.

2) Solve will give us access to technology experts who can help bring SEMA to the next level. 

MIT has an incredible network and credibility. Solve will provide us with a platform to share more about Jibu's solution which will not only help Jibu to grow, but help our business model to be replicated by others. 

Jibu's association with the keyword, "water," often limits the perception of Jibu's core innovation. The possibility of what Jibu is doing being classified as an innovation evaporates. MIT's brand is the opposite- it represents innovation and the future. This credibility would be a game-changer for Jibu 

We are specifically interested primarily in:

1) Connecting with experts who can help us to develop and implement an ERP. Wrapping our LMS, franchisee-app, and all other data into an ERP is necessary for scaling. 

2) Closing our Series C financing round. Solve may not directly connect Jibu with investors, but it will provide us with a powerful platform and credibility to push those conversations across the line.

Jibu can launch three more franchises with $75,000 which provides water access to more than 80,000 people, creates more than 30 new jobs, and brings lasting income generation to communities. 

The Future Planet Prize could push Jibu past the tipping point to reach financial sustainability, being able to replicate and reach millions of new end customers in the next five years by equipping hundreds of new entrepreneurs in emerging markets globally.