What is Social Franchising?
Franchising is first and foremost a way of transferring knowledge and experience from one successfully enterprise to another. The franchisor gives the franchisee the right – but also the obligation – to operate a business according to the franchisor’s concept. The franchisee, for a fee, may use the franchisor’s name and trademark, know-how, business methods and techniques, way of working and other rights. The enterprise receives support and training, and (not least) the further development of the concept.
Although social franchising is like commercial franchising, it is significantly different. The social franchise is normally set up not to maximise profits, but to enable people to work together and share ideas. The founder is driven by a social goal, such as the employment of disabled people, the democratisation of the economy or tackling climate change. As such the social franchise has a social purpose and is often owned by its social franchise members but it is also a business that makes profits. Without these profits, it could not survive and grow and meet its social aims. .
A community and federation
Founders of social franchises recognise that local ownership is important to create dynamic, entrepreneurial organisations that are responsive to local needs. A social franchise combines both local ownership and the creation of economies of scale that enable more effective enterprises to be developed.
What is a social franchise
For us, to be a social franchise both the social franchisor and franchisees must be social enterprises (ie businesses that trade and have a social purpose) and there should be:
- An organisation that replicates a social enterprise business model – the social franchisor.
- At least one independent social franchisee that has been replicated by the social franchisor.
- A common brand under which the social franchisees operate.
- An interchange of knowledge between members.
There are considerable variations in the way social franchises operate, some have a very clearly defined business format that is replicated whilst for others the business format is leser. 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 is a defining features. However, in all franchisor always enters into an agreement with the franchisee that regulates rights and obligations. We also recognise that different forms of social economy organisations, for example charities and foundations, that get most of their income from grants use a social franchising approach. This is also an important development, but our focus is on trading social enterprises and social cooperatives.