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Franchising helps social and charitable organisations grow for the greater good

Written by Eric Johansson on Friday, 07 July 2017. Posted in Analysis

Thanks to the rise of social franchising, everything – from charities to social enterprises – is able to grow faster and change the world for the better

Franchising helps social and charitable organisations grow for the greater good

Whether it’s providing care for the country’s elderly or teaching children new and important life skills, plenty of UK franchises are improving the lives of many people around Britain. But commercial businesses aren’t the only ones using franchising as a way to replicate their success and change the lives of others: over the past few decades social franchising has enabled a growing number of organisations to have a positive social impact in Britain and across the world.

However, while the history of commercial franchising on these shores dates back to British breweries licensing their products to pubs in the 18th century, social franchising is a much more recent invention. One of the earliest mentions of the phrase dates back to the 1990s, when brands like Disney, Gap and Dunkin’ Donuts opened outlets in American inner cities. “I’m talking about poor neighbourhoods that people would drive through without stopping,” says Michael Seid, chair of the International Franchise Association’s Social Sector Task Force and co-author of Franchising For Dummies. Opening stores in these areas served two purposes for the different brands: it enabled them to access an untapped customer base and to provide a social good for the people living around the new stores. “It brought jobs and opportunities into neighbourhoods where they had never existed,” says Seid.

Fast-forward to the modern day and the meaning of the phrase has changed slightly, even if the focus on helping others has remained. “Today social franchising means taking commercial franchising practices and using them in an NGO setting to help those less fortunate,” says Seid. By adopting the practices of big franchising networks like McDonald’s, social enterprises and non-profits can scale faster, cheaper and provide social good to more people than they would have been able to if they’d gone it alone. Even if the term is reasonably new, social franchising has not only enabled non-profits to deliver healthcare and fresh water to poverty-stricken parts of Africa but has also empowered charities and social enterprises in the UK. For instance, the Foodbank charity has provided meals to people who cannot afford food and Tatty Bumpkin, the baby yoga class franchise, has helped new mothers back to work. “Franchises are able to do things in a much more consistent, sustainable and replicable way,” says Seid.

But with such a wide range of organisations using the model to scale, it’s important to remember the one thing that unifies them all. “Ultimately we’re all interested in doing good for the community,” says Dan Berelowitz, chief executive and founder of the International Centre for Social Franchising (ICSF), the organisation supporting the growth of community-changing initiatives through franchising. And while there technically is no one single definition of what a social franchise is, the wish to do good in society is the overarching feature that distinguishes these initiatives from commercial franchises. “If they’re catering to shareholders and acting like a commercial business in every other way I’d say that they are less likely to be a social franchise,” he says. But prioritising impact over profit isn’t the only way in which social franchising differs from regular franchising.

Another key difference from commercial franchises is that social franchisees aren’t always necessarily people. “Sometimes local organisations that have their own local identity become franchisees,” says Nick Temple, deputy CEO at Social Enterprise UK. He explains that this has to do with the overall collaborative nature of social enterprises in general. “If there’s a great organisation in Liverpool that’s working in the same field, then most of us would wonder if we could work together instead of opening a competing brand down the street,” he says.

That being said, the qualities of a good social franchisee are not particularly different from the ones you find in more commercial franchises. “They have to have the right mix of being entrepreneurial and able to work within the framework at the same time,” says Temple. In other words, the people within the network should be bursting with ideas on how to take on the local market but still not stray too much from the model. “The only difference really is that franchisees have to be very aligned with your social mission,” says Temple. “If you’ve got someone with a different set of values then it just won’t work.”

But despite having gained in popularity over the past decade, social franchising is still reasonably small on these shores. In a report from 2012, the ICFS estimated that there were less than 100 social franchises in the UK. “It may be a few more out there now but I still think that we are in the tens rather than in the hundreds,” says Temple. Comparatively, there were 930 franchisors in the UK in 2013, according to the bfa. A part of the reason for the low number is that social franchises still don’t enjoy the help that their peers in the commercial sector do. “You don’t see the same supportive infrastructure around social franchises as commercial franchises,” says Temple.

Thanks to its long successful history, commercial franchising is seen as a safe bet for banks to invest in. But because social franchising is still in its infancy, it means that many of the ventures in the social sector may find it challenging to raise funds. According to Social Enterprise UK, most social franchises are either funded by trusts and foundations or from the organisation’s own reserves. And given that the European Social Franchising Network estimates that the average cost of building a social franchise is around €150,000, it’s hardly surprising that few organisations have established sustainable social networks. While there are initiatives like the ICSF’s new social-franchise accelerator and several programmes out there aimed at helping non-profits build their networks, they are – much like the sector itself – still in their early days. “Social franchising has immense potential but we need the infrastructure and funding,” says Temple. “There have been a few bits and bobs ticking away and being developed but there’s nothing like what we could’ve hoped for. So there’s room for improvement.”

Nevertheless, it’s encouraging to see that the transformative power of franchising is being adopted by social enterprises and non-profits. And given the success of commercial franchises and their impressive ability to scale, we’re willing to bet that social franchising is soon going to be a force to be reckoned with. 

About the Author

Eric Johansson

As feature writer and resident Viking, Eric ensures EF is filled with engaging and eclectic entrepreneurial stories. While one of our freshest faces, he has sharpened his editorial teeth by writing about business, entertainment and fitness.

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