We've all heard of franchising for commerce? But how about franchising for a cause?
With most franchises, the motivation – or end goal – is profit. In contrast, the motivation behind a social franchise is the expansion of a goal, such as increasing the employment rate of a group of disadvantaged people. Profit, while still a needed component for success, is viewed as a means to achieve, not the achievement itself.
What Are Social Franchises?
Social franchises are established by people who recognize a problem in society and strive to solve it by using the entrepreneurial principles that make up traditional franchising to create, organize, and manage a venture.
Formally, the Social Sector Task Force of the International Franchise Association (IFA) defines social franchising as the application of commercial franchising methods and concepts to achieve socially beneficial ends. Key attributes of a social franchise are as follows, per the European Social Franchising Network (ESFN):
- An independent organization that replicates a social enterprise business model (the social franchisor)
- At least one independent social franchisee that has replicated the social franchisor’s business model successfully
- A common brand under which the social franchisees operate
- An interchange of knowledge between members
- An agreement that regulates rights and obligations to secure the sustainability of the franchise as a system
Furthermore, the ESFN stipulates that both the social franchisor and its franchisees must be social enterprises (business that trade and have a social purpose) sharing the same values. The amount of interconnectivity can vary between the social franchisor and its franchisees. Some operate with a very clearly defined business format, while the framework for others is more malleable. According to the ESFN, many social franchises are owned cooperatively by the social franchises and, normally, the social franchisees pay the social franchisor a fee for their support, but neither are defining features.
Like all franchise operations, there are challenges that must be overcome to enjoy success. However, in overcoming those challenges, social franchises can gain benefits like:
- Quicker responsiveness to an area’s needs.
- Ability to get programs up and running quicker in new locations.
- Ability to collectively bargain with vendors.
- Enhanced replication of best practices.
- An established brand that helps with the attraction of valuable partners and talent.
Noted above, the ESFN, is one of the largest, formal organizations spreading the word about social franchising. Founded by members of the European Union, membership is limited to exclusively social franchises and free of dues.
In addition, there is the International Centre for Social Franchising (ICSF). Founded in 2011 by Dan Berelowitz and Michael Norton, the ICSF seeks to use the charity backgrounds of its partners to bring efficiency to social change efforts. The organization is based in London and has two field offices in the USA (San Francisco) and Australia (Victoria).
Growing Social Franchising
Although consistently utilized in Europe, as well as parts of the Middle East, Africa and Asia, social franchising is still finding its legs in the United States. There are over one million non-profits in the United States. Contrast that with the number of social franchises: roughly 100 by the count of Franchising World magazine.
Education about the concept could be the key. As Ron Bruder explained in an editorial for Harvard Business Review about the 2006 launch of his social franchise, Education for Employment, “it was an unorthodox method and I faced strong pushback from potential donors and partners in the US and around the world.” However, experience has proved to many that the model works. And some cases have “shown that a social franchise is the only effective model in times of great uncertainty.”
Adds Michael Seid, Managing Director of Michael H. Seid & Associates, LLC (MSA) Worldwide, “There are surprisingly few examples of social franchisors that have been able to demonstrate the desired results. The fault lies not with the franchise business model itself, but rather with the social sector’s limited experience with and understanding of the franchise business model and the development of effective, sustainable, and well-managed social franchise systems.”
In order to capitalize on franchising principles, a non-profit, charity, or social venture must build a solid foundation. The following advice for potential social franchisors is from the report “Nonprofit Owned Franchises: A Strategic Approach,” conducted by Community Wealth Ventures, a Washington D.C.-based consulting firm, and the IFA Education Foundation:
- Find the right partners
- Don’t compromise the concept
- Promote the relationship
- Track and monitor performance
MSA Worldwide, an international franchise advisory firm, is also making moves to bolster its services by hiring Julie McBride, a leading expert in the field of social franchising. McBride has immense experience in social franchising, including contributions to one of the world’s first social franchises in Pakistan (more on that below).
Social Franchising in Action
PHOTO CREDIT: Greenstar.org.pk
As you might imagine, commonly when social franchising is used, it is in a charitable or health setting. In fact, one of the first known instances of social franchising came to be in 1995 within the medical services field. Nowadays, Greenstar, a Pakistani social franchise, provides family planning and reproductive health care to people with lower income by way of its 80,000 retail outlets and over 24,000 providers.
Other industries that social franchises operate within include: the employment of disabled persons, energy saving, renewable energy, recycling and reusable goods, cleaning, cycling and cycling accessories, halfway housing, and more.
One of the larger social franchises in the United States is SF4Health (Social Franchising for Health), led by a global health group at the University of California, San Francisco. According to their website, “SF4Health is a global group of program managers, advisers, donors, researchers, academics and policy-makers with a common interest in developing, improving and advancing private health sector engagement through the social franchising model.”
As of January 2015, SF4Health has more than 80 programs operating in at least 40 low- and middle-income countries, and over 95,000 participating providers. SF4Health measures its work with 5 goals:
- Health impact
- Equity of service to the poor
- Cost effectiveness
- Health market expansion
- Quality of clinical standards used