Social franchising

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Definition

Social franchising is the adaption of the commercial technique of franchising to serve social goals. Conventional franchises are embodied in a contractual relationship through which the owner of a brand can earn revenue from other people who trade under that brand. The contract typically provides that the franchisor prescribes operating methods, quality standards, training, design guidelines, uniforms, and raw material specifications. In return, the franchisee pays a share of turnover. A social franchisor might close the circle by making the franchisees members of the franchising enterprise.

Franchising is a way of rapidly expanding a business and is crucially dependent on having a strong brand. The British Franchising Association defines franchising as: “the granting of a license by one person (the franchisor) to another (the franchisee), which entitles the franchisee to trade under the trade mark/trade name of the franchisor and to make use of an entire package, comprising all the elements necessary to establish a previously untrained person in the business and to run it with continual assistance on a predetermined basis”.

Franchising is a very common business development tool – think only of McDonald’s (70% of its 26,500 restaurants are franchised) or the UK Post Office. It enables an innovator with a good business idea to package up their intellectual property and sell it to other entrepreneurs. The bargain is that the franchisor gets a quicker return on their inventiveness, while the franchisees can open up straight away with the minimum of risk, expense and delay.

In the case of social franchising, the aim is to reduce the cost, time and risk involved in setting up a social enterprise, by copying an existing model. A idea is something of a ‘holy grail’ in business development, as it promises vastly improved social returns for a given investment of development time, along with a reduction in the anguish and disappointment that are typically part of a business start-up. The scope of the research undertaken and the opportunities available may be gauged from an overview of some recent activity.

Networks & resources

The European Social Franchising Network (ESFN) was set up towards the end of 2007 to support such activity. . They have recently carried out research into the scale of social franchising in Europe and have identified over social fracnhises employing over 13,000 people. See http://www.socialfranchising.coop or Social franchising in Europe 2011

Download Flyer for Social Franchising Network UK

Social franchising is a form of replication. UnLtd publishes set of 6 handbooks on social enterprise replication: http://www.unltd.org.uk/template.php?ID=95&PageName=replicationstudy

In April 2011 the UK's Social Enterprise Coalition published a Social Franchising Manual including a 10-step process, a specimen franchising agreement and 4 short case studies.

Overview of recent initiatives

CAN

In 2004-2006 two substantial development projects were run. The Beanstalk programme run by the Community Action Network (CAN) under EQUAL, helped five social firms to replicate themselves [1]:

  • Law for All: a welfare rights advice centre
  • Big Issue: newspapers produced by homeless people
  • Timebank: volunteering
  • Mezzanine 2: shared workspace for start-ups
  • TACT: independent living services for handicapped people

Social Firms UK

Social Firms UK, the representative body for work integration social enterprises, has piloted six business ideas suitable for social firms as part of its Flagship Firms project, supported by the British government’s Phoenix Fund [2]:

  • Aquamacs: the rental and maintenance of fresh water, tropical and salt-water aquariums.
  • Soap-Co: manufacture and retail of hand-made soaps, shampoos, conditioners, lip balms, bath bombs, shower gels and creams.
  • Wholefood Planet: retail of healthy unprocessed food and environment-friendly non-food items (based on Daily Bread in Northampton, a very early social firm)
  • Pack-IT: packaging, order fulfilment, distribution and warehousing
  • Café Ciao: healthy eating coffee bar
  • Wood recycling: wood recycling

Plunkett

The Plunkett Foundation, the leading British and Irish think tank on agricultural co-operation, has developed five franchise models for rural businesses, which are available from the Plunkett website [3]:

  • Farmers' Markets Operator
  • Wood for Heat and Power
  • Charcoal Products
  • Local Food for Food Service
  • Local Fruit and Vegetables

It may be noted that both these lists are strong on the food and wood industries. Sadly, the ideas above have been slow to take off, with replications numbering in single figures.

EQUAL

In EQUAL, the INSPIRE project promoted social franchising, and as a result of EQUAL, several initiatives have grown rather faster:

  • The German CAP Märkte supermarket chain has grown to around 70 shops;
  • From its starting point in Italy, the Le Mat Association has expanded to European scale and is promoting social hotels (along the lines of St Mary’s Place in Edinburgh and U Pana Cogito in Kraków [4]). In parallel in Germany, Embrace Hotels has 11 member businesses [5];
  • Vägen ut! In Göteborg is spreading the model of half-way houses for recovering drug addicts. The Vägen ut! consortium now employs 80 people, with a further 120 volunteers. Five halfway houses are now operating, in Göteborg (2), Sundsvall, Östersund and Örebro. Furthermore the consortium model itself is being replicated with the establishment of Sveakonsortiet in the Stockholm region [6].
  • Peiran set up a chain of seven shops selling local food produce and crafts in Greece;
  • CASA – Care & Share Associates – has spread the successful model of employee-owned home care business established by Sunderland home Care Associates to four other towns in northern England

Electronic waste recycling

There are also some clusters of social firms that have not formally adopted the idea of franchising but have nonetheless spread by replication, notably the reuse and recycling of electrical and electronic waste (WEEE) [7]]. See RepaNet, ELWARE

Fietspunten

Belgium

A recently fast-growing sector in Belgium is ‘bike points’ for bicycle hire, storage and repair, situated near railway stations and operated by local social firms. In 2011 Flanders has 26 with 8 more in the pipeline [8], and there are 4 each in Brussels region and in Wallonia [9]. For example the Belgian province of Vlaaams Brabant lists its sociale werkplaatsen in the booklet at: http://www.vlaamsbrabant.be/binaries/publicatie-zo-eenvoudig-is-mvo_tcm5-48787.pdf. Beginning at page 160 is a series of bike-related social firms.

Netherlands

Utrecht has a fietspunt that describes itself explicitly as a franchise:

On 13 April 2004 the first bicycle store opened in Lange Jansstraat in Utrecht, where three employees worked. Later that year, a second branch opened in Woerden. In September 2004 bikepoint Utrecht was extended with a branch at Jansveld in Utrecht, after it outgrew the premises in Lange Jansstraat. Fietspunt stayed here till the end of December 2005, and on 1st January 2006 moved to its current building at 293 Nobelstraat, Utrecht. in 2010, Fietspunt Utrecht has eleven staff and there are a number of franchise stores established in the province of Utrecht. In 2007 a former employee took over the franchise of the branch in Woerden, and the branches in Driebergen and Wood followed.

(translated from http://www.fietspunt.net/contents/nl/d4.html )

UK

The idea is exportable: in 2010 Northern Rail (part-owned by Dutch firm Nedrail) opened a Cylepoint at Leeds Central station (though not as a social firm) [10].

ADIE

On 27 Oct 2010, Adie launched a social microfranchise project in France. This project will enable unemployed and young people with few skills to easily create their microenterprise. Functioning nearly identically to the traditional franchise, microfranchise is financially more accessible for microentrepreneurs, who also benefit from the new rules of this programme.

For instance, Adie launched the project “Become a driver without a car” in partnership with the co-operative Chauffeur sans voiture (Driver without a car) which is based on the principle of driving clients in their own car. The drivers, who have the legal status of self-employed auto-entrepreneurs, are also associated to the cooperative, which provides them the know-how, proper insurance as well as support and relevant training.

Source: http://www.european-microfinance.org/news_en.php?piId=9546

Bundesverband Deutscher Stiftungen

The idea is also of interest to philanthropists wanting to maximise the impact of their donations, and in December 2007 the Bundesverband Deutscher Stiftungen organised a “World Social Franchising Summit” [11].