Social Franchising: A model for growth or a recipe for disaster?

If a burger joint can do it, then why not a social enterprise? Although this glib comparison with the McDonalds franchise may grate upon the sensibilities of the socially minded, the basic thrust of social franchising is just this. The concept of social franchising is, broadly speaking, the same as that of the traditional commercial franchise: the systematic replication of the enterprise. Simple. Or not. Among social entrepreneurs opinion is split as to whether franchising is a workable model for expansion. In a business where profit is mediated by social impact, where margins are paper-thin and where franchisees are more likely to be economically and socially vulnerable, can the social franchising be put into effect successfully?

Arguments against the use of social franchising highlight the difficulties of shared IP, quality control and competing goals. Social entrepreneurs are innovators and change-makers, but not so good at following systems. 'Many players in the so-called third sector rightly see themselves as "social change agents" - as an outlet for innovation. They prefer to focus their energies on the development of new approaches. Imitating those of others is considered as "not sexy".' ('Social Franchising - A Way of Systematic Replication to Increase Social Impact', Article by The Association of German Foundations). This trait in social entrepreneurs results is one pilot project after the other. Meaning many prototypes, but few replications. Examples of failed social franchises talk about the difficulties in maintaining the original focus of the project. Franchisees often struggle with the competing goals of social investment and profitability.

There are many though who would like to see the development of social enterprise through franchising. The contentious subject has recently been broached by the Social Enterprise Coalition, the UK's national body for social enterprise. This month they announced their 'Social Franchising Support' project. Their aim is to undertake 'detailed research into the processes and issues that surround social franchising and from this develop a comprehensive suite of support tools and resources for all social franchisors, franchisees and social enterprise business advisors.' Funding for this project is coming from the Big Lottery and is part of a larger scheme: Investing in Social Enterprise Expansion programme (I-SEE).

Certainly this move will promote more debate among social entrepreneurs. Social franchising is by no means an easy task to undertake and requires precise planning and strong leadership. Franchises need a strong brand, a product or service that is competitive in the marketplace, and an open, supportive relationship between the franchisor and its franchisees. However there is no reason why social franchising cannot become a successful model for expanding social enterprise successfully. This does not mean that franchising is the only means by which social enterprises. In addition to the Social Franchising Support project, I-SEE will also undertake research into alternative scaling-up models such as licensing, joint ventures, consortia and mergers. Particularly interesting is the concept of scaling up 'strategies or ideas', rather than necessarily scaling up organizations and organizational frameworks.

If you are interested in or have experience of social franchising or an alternative scaling-up model, the Social Enterprise Coalition would like to hear from you.  Please contact the senior researcher for the project, Lidija Mavra, at lidija.mavra@socialenterprise.org.uk.

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