What Is Social Franchising?Posted on: Monday, 6 July 2020 3:25 pm
It's true that people still most associate franchising with commercial enterprises and profit-making. But over the years, social franchising has grown to become a popular and viable method of expansion for social enterprises. Social franchising (sometimes known as not-for-profit franchising) is, quite simply, franchising with social goals such as reach and impact rather than franchising with profit making goals.
Social franchising is very similar to commercial franchising in the way that it works - it allows a social enterprise to expand their reach, scaling their services and operations to new areas and locations while working with a local partner who becomes the social franchisee. Here at The Franchise Company, we've seen many social enterprises have great success with social franchising. The goal of a social franchise is to increase the scale of operations and impact whilst seeking or maintaining sustainability to keep functioning and enable the organisation to reinvest into the community it serves.
What Exactly Is Social Franchising?
Over the past few years social franchising as a method of scale has grown a great deal. It's still quite a new model for both the franchise sector and the social enterprise sector. But it has seen a great deal of social benefit and social impact in sectors such as food banks, education, volunteering, education, homelessness, recycling, healthcare, not for profit advisory centres, access to justice services, family planning and more. A huge number of projects have begun to see their primary goals and social objectives find more success through genuine partnerships with social franchisors.
Compared to other more commercial franchising models, social franchising is most often about replication and expansion of services and reach. This is, in part, because it enables individual franchisees to work and be successful without relying on centralised funding. For social sectors, this is often a large problem, especially for international social franchises and other large scale franchises. It enables strategic management and individual funding to promote success and growth.
Social franchising is also interesting when looking at the broader category of replication and expansion strategies. Compared to wholly-owned expansion models and more flexible open source strategies, social franchising sits somewhere in the middle. The social franchise model is best used to allow both the franchisor and franchisee flexibility and independence while ensuring that the goals, branding and resource management required by the parent company are still met and fulfilled by the franchisee.
Social franchising is still a new form of expansion for social enterprises - one that we have seen grow here at The Franchise Company. This means that, while social franchises are finding their feet and exploring what works best, there is a lot of variation to be found in how different social franchises set up their model.
For example, some social franchises will opt for a more centralised approach, maintaining a lot of control over the franchisees. A lot of others, however, will be found taking a much more independent approach, allowing individual franchisees more flexibility in the delivery of services and the day to day management of the franchise.
It's worth bearing in mind that the appropriate level of flexibility for a social franchisor is dependent on a number of different factors. The complexity of the core social franchise model, for instance, alongside the brand identity and risk level will all play a part in determining the best franchise agreement in each case. Determining where the majority of funding comes from and the extent to which learning processes to be shared and learned, and many more factors all play a role in identifying the best approach.
How Different Is Social Franchising To Commercial Franchising?
There are a lot of similarities between social and commercial franchising, but there are also so important and fundamental differences. For commercial enterprises, there is no inherent need to provide social benefits and there is much more of an emphasis on the need to earn profit and financial sustainability. Put simply, the key difference is that a commercial enterprise will franchise in order to make profit, whereas a social enterprise will franchise in order to increase the social impact.
But, much like in commercial franchising, a key part of the agreement is the alignment of goals and values between the franchisor and franchisee. In most social franchise models, the social objectives are a much higher priority than the financial objectives. A lot of social franchises are not for profit organisations in which the majority of profits made are reinvested into the work being done.
The relationship between franchisor and franchisee is also different. A commercial franchisee is encouraged and supported to make as much profit as possible, meeting financial goals and being successful. The social franchise model, however, is quite different. As with commercial franchises, social franchisees have a need to meet certain financial requirements, but there's also the responsibility of meeting the social objectives of its parent company too.
What Are The Benefits Of Social Franchising?
Franchising can be a fantastic way for social enterprises to replicate successful systems and expand their brand. When properly implemented, franchising can support organisations in the social sector by scaling operations in a socially conscious and low risk model, aligning the goals, values and branding of the franchisor and franchisee.
For the social franchisor, franchising allows them to:
- Scale more quickly and easily - Starting or opening new branches is made easier, allowing for better and quicker expansion of the reach of the brand.
- Grow while maintaining local independence - For a lot of social franchises, the local area and community plays a very big role. Through franchising, a social enterprise can enjoy all of the benefits of being a large organisation without losing local independence and flexibility.
- Share successful models - Success can easily be shared throughout the organisation to different franchisees, ensuring that every branch can enjoy the benefits of the learning and experience of the others. This encourages social and financial stability and sustainability.
- Enjoy flexibility - When done well, the social franchise model allows the individual branches the independence to tailor their model whenever necessary. Because operations and services are locally based, changes in the market can cause a problem. But with social franchising, franchisees have the control necessary to make and action suggestions about their individual branch.
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Want to find out more about social franchising and how it can help you to expand while meeting your social objectives? Get in touch with us today for an initial call to find out more and get some initial advice. We’re here to help!