Social Franchising: The Magic Bullet?

20th December 2010

In a “Big Society” many of the exciting education and youth social enterprises that I advise will take on an increasingly important role. Some argue that “social franchising” is the key to scaling these organization up quickly and effectively, but is this model of replication really the magic bullet we are promised?

ATA Management asked me to write a report on different “affiliation based replication strategies” (ABRS) and to analyse case studies of different social enterprises.The verdict which emerged was far from a ringing endorsement of social franchising. It seems that careful introspection and consideration of all ABRS is essential before any organisation embarks on replication. What follows is a summary of the research:

  • A whole range of models for “affiliation based replication strategies” (ABRS) exists. Franchising is just one of them which may or may not be suitable
  • Different models allow different degrees of “tightness of affiliation”

affiliation_continuum_diag_0

Many attempts at social franchising fail. This is often because organisations force the pace on replication and are ill prepared. To avoid this, organisations considering replication should examine the following key questions:

  • What is being replicated?If it is just an idea that is being replicated, affiliation does not yield much benefit so there is not much reason to opt for an ABRS. Successful social franchises (and ABRS) either have a strong, recognisable brand or systems of operation that a replicator will want to buy into and pay a licence or franchise fee for.
  • Is the social-enterprise suited to different places? Many social-enterprises owe their success to carefully responding to local need. They may therefore not be appropriate or as successful in other places.
  • How established is the replicating social-enterprise? Many organisations attempt to replicate before income and governance are stable and embedded causing problems in the long term
  • Has there been a pilot? The Hub have grown significantly over time and attempted a range of different ABRS. Some have been more successful than others. Each time they have seen the benefits and problems associated with different models and adapted their strategy. It is a mistake to attempt to replicate too fast without piloting the strategy.
  • Demand driven? Many of the more successful social franchises (and ABRS) succeed because other organisations or entrepreneurs take the lead in requesting replication
  • How suitable is the potential affiliate? Successful social franchises are picky about who they allow to become affiliates and reject many. As on CEO argued, affiliates must have business skill, this comes first, even before social benefit because without the business benefit, how can there be social benefit.
  • How much will replication cost? Organisations often assume that social franchising offers a cost free or cost positive means of replicating. This is not the case. Unltd have developed excellent materials for assessing these costs which show just how costly the initial stages can be. This needs to be carefully planned for.
  • Which ABRS is being used? Each strategy comes with its advantages and disadvantages and is suited to different organisations. Careful thought should be put into the appropriate strategy and advice sought. (Full analysis of the advantages and disadvantages of different models is available from L.K.M Consulting).

Ticking the appropriate boxes in the following table gives an indication of which end of the spectrum an organization should consider:

abrs_table_diag

The original report on which this summary is based and from which the tables and diagrams are drawn was produced for ATA Management

Further analysis of different models and detailed case studies are available. Contact [email protected]

 

Further Reading and References:

Beanstalk Newsletter, April 2006, http://resources.socialfirms.co.uk/system/files/Beanstalk%20newsletter%20Apil%202006.pdf

CIC Association, http://cicassoc.ning.com/forum/topics/flagship-social-franchise-also

Fifteen Cornwall, http://www.fifteencornwall.co.uk/presskit/FifteenCornwall-TheFacts.pdf

G. Mulgan, R. Ali, R. Halkett & B. Sanders, 13 April 2008, Aspire Group Ltd, Case Study http://www.socialinnovationexchange.org/node/650

Pack-IT, http://www.pack-it.com/

Social Enterprise Live, http://www.socialenterpriselive.com/section/news/money/20100127/first-social-firm-licensee-closes-down-after-one-years-trading

Social Firms UK, http://socialfirmsuk.co.uk

Stridingout, Models for Growth, Creating a Franchise Model,  http://www.stridingout.co.uk/models-for-growth/creating-a-franchise-model.html

The Social Enterprise Coalition, www.socialenterprise.org.uk

UnLtd Ventures, 2008, Choosing a Social Enterprise Replication Strategy, http://www.unltd.org.uk/download/Choosing_a_Social_Enterprise_Replication_Strategy.pdf

UnLtd Ventures, 2008, Social Enterprise Strategies for Early Demand for Replication, http://www.unltd.org.uk/download/Social_Enterprise_Strategies_for_Early_Demand_for_Replication.pdf

UnLtd Ventures, 2008, Replication Ready Checklist, http://www.unltd.org.uk/download/RROverview.pdf