We occasionally come across organizations considering franchising as a strategy for developing a social enterprise.
A franchisor is a company that has a successful product or service, business model and recognizable trade name (think chain stores), which it offers on a continuing contractual basis to other businesses (its franchisees), for a fee.
The advantage of participating in a franchise is that it allows an entrepreneur (social or otherwise) to focus their efforts on operating a business that already has a successful business model and track record.
In rough terms, franchising in the US accounts for more 750,000 establishments, ~10 million jobs, and more than $1 trillion in sales. And, for the nonprofit sector, Social Franchise Partners, an offshoot of Community Wealth Ventures, was created by Billy Shore to help more nonprofits become franchisors as a strategy for generating resources as well as social impact. A couple of years ago they published Streams of Hope, which provides extensive information and case studies on how franchising works and how to determine if it’s the right thing for your organization.
For a very small number of social enterprises, franchising might be the way to go. But for most others, the cultural gap is so great between the franchise model to pursue personal wealth at almost any social cost, and the social enterprise model to pursue both social and organizational financial stability, that we have seen more failures than successes on this path. Presently there are about 100 nonprofit franchisees in the US.
The Streams of Hope publication can be downloaded for free. So if you’re at all interested in franchising (or just curious), take a look and decide where to go from there. Franchising is not for everybody, but perhaps it’s just right for you….
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Copyright © 2010 Rolfe Larson Associates – Fifteenth Anniversary, 1995 – 2010
Author of Venture Forth! Endorsed by the late Paul Newman of Newman’s Own
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thanks for this Rolfe, I’ve been active in social franchising since 1998 ‘over the pond’ here in the UK – we certainly seem to be a bit behind your thinking and stages of development in this field;
I’m just finishing a thesis paper critically reviewing the tools available to social enterprises in the UK who are considering franchising as a growth strategy, but thought you might also be interested in some of my other writings on this subject to date to get a feel for ‘the british perspective’ –
http://thirdsectorexpert.blogspot.com/2010/03/franchising-social-enterprises.html
Thanks, Adrian, for that information about franchising for social enterprises in the UK. It’s great to get that perspective. We all have a great to learn from each other! Please keep us posted on this side of the pond on your work, and we’ll do the same over here. Best wishes – Rolfe.