It’s over a year since I last wrote about Social Franchising (the great social franchising debate). At the time I noted the increased interest and mentioned some conferences, but my main point was the need to understand and engage with the commercial franchising sector. What has happened in the last 12 months?
First of all, social franchising is happening. The Trussell Trust Foodbank now has added over 100 new franchises to the 285 I quoted a year ago. Patchwork People, recent winner of the RBS SE 100 newcomer award, has just opened its first 4 franchises, mostly in the North East. And FranchisingWorks’ list of commercial franchisor partners has risen to 43.
While the conferences and courses continue, our focus has been working directly with the organisations that are seeking to replicate or franchise their models. These organisations run the full range of social impact including offender rehabilitation, education, drug misuse, mental health, family support, and long term unemployment. From this experience a few key points have emerged.
• The first is the confusion between community franchising and business format franchising. The focus at Shaftesbury Partnership is Business Format Franchising, where the business and operational models are more complex, requiring higher levels of investment, and a much tighter relationship between franchisor and franchisee. This rigour is the most important feature of Business Format Franchising and ensures consistency of service across the network.
By contrast, community franchising is lighter touch, with the operational models relying more on volunteers and local donations to launch and sustain the model. The knowledge transfer is less complex and there is more freedom to vary the model according to local circumstances. Some franchising purists argue this is not really franchising, but there is definitely a place for community franchising within the Voluntary and Community Sector.
• The second point relates to the specific requirements of franchises which rely on public sector commissioning for their income. This has been a bone of contention for the social enterprise sector for years, and variability in local commissioning has been one of the most serious obstacles to successful franchising of social enterprises. However, through our work this year we have developed a process to help social enterprises analyse their potential market much better. Of course, they must be able to show robust evidence of impact, but given that, it is possible to identify the characteristics of suitable territories and hence estimate market size more accurately. In turn, this allows for focussed pre-marketing to the customer base (in this case commissioners), even before the franchise is launched, which reduces start-up risk and allow new franchisees to start earning income more quickly.
• The final point is one we have made before. Successful franchising depends heavily on finding the right franchisee. Every successful franchise launch we have seen this year has had a great person leading the new enterprise. By contrast, more than 50% of unsuccessful launches struggled because the franchisee hadn’t got the right aptitude or skills.
Commercial franchisors understand this well. They start by selling themselves to potential franchisees – but there is a key moment when they demand the candidate sell themselves to the franchisor. Getting that turning point right takes practice, but sacrificing that determination to get the right partners in the pursuit of quick wins is a sure recipe for problems down the road.