I'd like to open a Singapore franchise please?

Franchise Cities as an alternative to Charter Cities.

Over and over again, Singapore, Switzerland, the Nordic Countries, and so many others have been heralded as the most utopian in the world, so why shouldn’t other countries copy them?

That’s technically the goal of Prospera, a “startup city” in Honduras that aims to scale its model to cities internationally. The problem is that Prospera is the size of a golf course with three small buildings and a resort. Only a few hundred people actually live there and the “country” is run by the CEO of a venture-backed corporation and a handful of its employees. To say a corporate resort in Honduras is a working model we should extrapolate to other cities is entirely premature.

But we have many working models that are not premature! Prospera frequently cites Singapore, Hong Kong, Dubai, and Shenzhen as blueprints for better governance worldwide, and the idea to replicate them internationally came from a 2009 TED talk suggesting we allow those countries to start cities other countries. In his talk, World Bank economist Paul Romer says Cuba could, for example, invite Canada to build a new city on their island. The city would be Canadian and would follow all of its rules and regulations, but it would exist in Cuba where residents could enjoy its spillover economic benefits.

That was the original idea for Charter Cities, but it didn’t turn out that way in practice. As Scott Alexander points out, “In the original plan, charter cities would be governed by some respected and competent foreign power like Switzerland. That fell apart for various reasons (worries about national sovereignty and colonialism, no sign Switzerland actually wanted to help) and the new version is that they'll be governed by a corporation full of visionaries and experts and other hopefully non-corrupt people.”

Countries didn’t want to start new cities around the world so now companies are doing it instead? That’s truly a letdown of a compromise. And most of the “startup cities” pioneered by wealthy investors have only ever made it to a few buildings and a dream. When Idris Elba recently said he wanted to start a city in Sierra Leone, researcher Sina Schlimmer pointed out that, “frequently these projects stop after the construction of a few infrastructures, or the reality on the ground turns out to be very far from the initial objectives.”

She criticized the concept of Charter Cities, saying “we are trying to sell Africans a city concept developed in international conference centers.”

If companies don’t make the best city builders, it’s understandable why countries aren’t the best fit either. It’s probably asking too much of Switzerland or Singapore to build new cities from scratch around the world, and I can’t imagine that’s an easy sell to citizens. “Hey, I know we still have potholes in our streets, but would you mind if I use your tax dollars to build a shiny new city in Africa?”

Even if Switzerland was game to start a new city in another country, that’s probably not desirable. As one Le Monde article points out: “New city projects in Africa are disconnected from the real needs of the populations.” Wouldn’t it be better if the country could become a better country themselves?

That’s why I wonder if “Franchise Cities” would be a better alternative to “Charter Cities.” As blueprints for good governance, already successful countries could franchise their countries to other countries just like businesses do: Companies establish sound business models and then franchise them to independent business owners who want to start their own business using the same successful blueprint.

My mom owns a franchise that works this way. She paid an initial startup fee to her parent company and pays a smaller fee every 10 years to renew, plus tithes 5% of her revenue ongoing. In return, the parent company helped her establish her business, provides marketing and recruiting support, and takes care of market research and analytics. They provide her with one-on-one mentoring support to help her become successful, as well as host an annual conference for all franchise owners and quarterly events for regional groups where they can all share best practices. Today she owns a thriving business where she keeps most of the profits and can cater her business to her local area, even as her parent company helps her succeed in that market.

Countries could do the same. Using Romer’s example, Cuba could pay Canada for their proven governance model and contribute an ongoing percentage of their tax earnings to Canada. In return, Canada provides initial training and support, helps them establish rules and regulations that will make it successful, and provides ongoing support in the form of annual, quarterly, monthly, and one-on-one check-ins. Cuba gets to create their own “Startup City” (rather than letting Canada create it for them), they keep the tax revenue they earn from making their country more economically prosperous, and they can fine-tune country regulations to their unique culture and political landscape.

It’s a win-win!

In a world of Franchise Cities, the best countries in the world get paid to export their good governance elsewhere (rather than pay to start cities in other countries) and developing countries can franchise working governance models that will ultimately make their country much richer and much better, while getting the support they need to make sure they succeed. They can build their own economies in their own countries while keeping most of the tax dollars and profits within their borders.

And isn’t that a better model than letting outside countries or companies start a new city in your country?

But I’d love to know your thoughts on Franchise Cities as an alternative to Charter Cities. Join us in the comments! 👇🏻

Thanks for thinking through the future with me,

Elle Griffin