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:
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...
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