the dirty secret about social franchising...

Most people tend to agree that social enterprise is generally a good thing because of all the positive impacts it can/does create, and that it would be great if that impact could be multiplied. Traditionally, the way social enterprise has done this is through ‘organic growth’ (slowly getting bigger, employing more people, selling more stuff, etc itself). But in more recent years, there’s been a growing interest in the concept of ‘social franchising’ as a way to grow impact more quickly.

It’s worth demystifying ‘social franchising’ at this point: it’s not the same as Costa, Subway, or McDonalds, but rather a more flexible way to replicate a model of social enterprise through either informal licensing agreements about sharing a brand to more formal ownership and shareholding agreements in each other. These guides from Social Enterprise UK (which I contributed to!) are good starting points:

http://www.socialenterprise.org.uk/advice-services/publications/social-franchising-manual

http://www.socialenterprise.org.uk/advice-services/publications/social-franchising-guide-for-franchisees  

But there’s a problem in the land of social franchising that few people seem willing to acknowledge or talk about: broken models. In the private sector, an enterprise model is replicated only when it’s had a few years of successful (profitable) trading to assure it and others that it’s sound. But in social enterprise land, there’s a push from the powers that be, sector bodies, government ministers, investors, etc to see more happen now... and that can create a problem.

As part of my support to enterprises, I’ve been involved insocial franchising in various ways, including researching several social franchises offers that groups were considering taking on. And you know what? Many didn’t work – looking at their finances, speaking with other groups who’d taken on franchises, etc showed that what was being offered wasn’t a ‘dead duck’ as such, but was being talked up a lot more than it was safe to...

Just as in other parts of the economy, enterprises fail. Market conditions change, people come and go, and legislation and copycats mean we can lose what was once our competitive edge.

It’s only recently that ‘failure’ in social enterprise is starting to be talked about more openly, but so far it’s only in relation to individual, stand-alone ventures. There’s a dirty secret at the heart of social franchising that not all of them actually work as business models, and that’s not something we seem to want to talk about, often to our (and our communities’) cost...

are we all missing the real point of social franchising?

Social Franchising is seen by many as a Holy Grail or magic bullet to so many: depending who you speak with, it’s about:

• ·      scaling your enterprise for even greater impact (Unltd)
• ·   generating even greater impact in addressing social ills in society and communities throughout the country (various government policies and politicians)
• ·      the way to increase the number of successful social enterprises to ‘critical mass’ (Social Firms UK)

and lots of other reasons, all of which are broadly in keeping with the sentiment that social franchising is talked about as a growth strategy for existing social enterprises to achieve more of the good they deliver.

But I’m wondering if everyone’s missed a really obvious trick here, and actually missed the point of what social franchising is actually really doing in practice: it’s a way of fast-tracking the creation of consortia within the sector without all the time and energy usually needed.

There’s lots of interest in consortia for all sorts of reasons (easier to procure larger contracts, greater purchasing power, saving costs on shared back office functions, etc), but consortia development always begins with the assumption that there are a number of existing groups who identify some common shared interest.

And surely Social Franchising offers the same things as consortia: a larger scale of linked activities through which it might (amongst other things) collectively more easily procure larger contracts, share administrative functions to reduce overhead costs, greater purchasing power,.... The difference is that the consortia that emerge in this way would do so without the need for the usual time-consuming and costly negotiations that are otherwise needed. They would also emerge more in line with current real market trends and opportunities rather than simply because “it seems to be a good idea...?”

I for one would therefore like to see some dialogue happening between the various sector bodies that are currently encouraging and facilitating consortia and social franchises in completely separate ‘silos’ to each other. It may be that nothing comes of such chats, but it could perhaps unlock a new way of approaching both the development of consortia and how successful social enterprises look at how they franchise themselves...

If we're to be a movement, we need to stop listening to our leaders...

Time and again, there's a rallying call that talks of social enterprise as a 'movement'. And that's fine, but surely the way that a movement is created, sustained and ultimately succeeds, is through it being made up of numerous small initiatives – all of which are concerned primarily with impacting on their immediate community.

But... it seems increasingly that the social enterprise policy and priority being set is for 'scaling up': making existing enterprises bigger. But surely such a 'scaling up' risks the enterprise losing touch and becoming a faceless giant such as Tesco or McDonalds – they both started out very small, rooted in their immediate communities, but as they've grown, they've become increasingly distant and unresponsive to local communities. And as they've grown, they also appear to have increasingly struggled to retain credibility and trust from their customers on ethical issues...(see Tescopoly and McLibel)

Surely we need more, not less, local small initiatives, each of which recognise their role and contribution to this wider movement, but retain their unique identity and distinctiveness in their communities. And that should be the priority for growing our movement, not force growing a handful of individual enterprises.

And where questions of scale are raised on economic terms (generating economies of scale, the ability to reach larger numbers of people), we should be looking to better collaborate between ourselves – and perhaps even look to our history for models of how this can be done: the co-operative movement grew from a vast number of small, individual, local co-operative societies who created a shared supply chain (the Co-operative Wholesale Society) to balance this tension between scale, movement and local impact.

So – if we're a movement, we should be focusing on seeing more small social enterprises emerging, not trying to find who can be grown to become the next Tesco...

Franchising social enterprises – replicating the ‘magic dust’ and the hidden threat from within?

I’ve been involved in the replication of social enterprises and co-operatives since 1998: as a member of a worker co-op that was licensed from another successful original worker co-op (which led to my being asked by some to comment on the failure of the Whole food Planet franchise that was based loosely on it earlier this year); as a manager of one of the regions of the ill-fated Aspire: the first attempt at creating a formal franchised social enterprise in every region of the country; involvement in the national social franchising programmes that ran in the early 00’s; and in supporting groups to evaluate social franchise offers as well as developing their own.

In all these instances I’ve been struck by the baggage associated with the phrase “franchise” – people seem to think that the only way to replicate a successful model is to do a McDonalds on it, but actually there are lots of ways that such enterprises can be replicated and duplicated elsewhere.

I recently participated in a 2-day residential on social enterprise replication run by Unltd Advantage – a welcome opportunity to reflect on my own knowledge and experience built up from firsthand experience and self-directed learning (especially as I’m currently writing a 5,000 word essay that will be critiquing current theories, models and tools for social franchising).

And while the formal content it offered me may not have offered much new that I hadn’t already educated myself in, including how we identify and recreate the ‘magic dust’ that makes our enterprises successful, the opportunity to spend some time exclusively immersed in the subject matter, and to share stories and ideas amongst the other participants did make me realise something:

Despite there being a multitude of models through which successful models of social enterprise can increase their impact in ways that they could never do if they remained as a single entity, the biggest threat to this being achieved is our egos:

People can be extremely precious about the enterprise model they’ve developed and aren’t always happy about the chance that in offering it ‘out there’ in some way for replication in ways other than in very formal command and control ways on their part, perhaps there’s a fear that they’ll lose control of it, that maybe others may be able to improve on it, and that it will mean less reward and kudos for them personally and individually.

But if, as social entrepreneurs, we’re motivated primarily by the needs we see in society, shouldn’t we welcome any and all opportunities to increase the impact in addressing those, even if that means copying someone else’s model or accepting that our own approaches can be improved on?