What is social franchising?

By Anita du Toit, Managing Director at Franchise Fundi

Social franchising, also known as not-for-profit franchising, is franchising with social impact rather than profit-making goals. Social franchises pursue these goals through the mechanism of franchising for the replication and distribution of products and services of the organisation.

Economies of scale, standardisation, skills transfer and the opportunity to create a supportive network all make franchising an attractive replication model for organisations with social goals.

If properly implemented and managed, social franchising offers important benefits to the franchisor, franchisee, the donor, and society.

Benefits for the franchisor

Scale more rapidly and efficiently
Become financially sustainable through earning franchise fees
Make better financial and impact decisions from more data
Have more impact in meeting social objectives due to scaling
Able to offer more accountability and measurement to potential donors through systemisation

Benefits for the franchisee

Receive training and ongoing support from an experienced and trusted organisation
Rely on centralised marketing and systems
Have less financial risk compared to starting a new organization or operating in isolation
Achieve and maintain a greater social impact more quickly by not reinventing the wheel
Share ideas and resolve problems with like-minded individuals at the franchisor and in the network

Benefits for donors

Obtain a better return on investment
Create a larger and more measurable impact
Enjoy greater reassurance that systems are monitored by the franchisor
Potential to fund organisations which may ultimately be self-sustaining
Be associated with a strong and successful social impact organisation

The stages of a social replication process

Co-founder of the International Centre for Social Franchising (ICSF, now Spring Impact) Michael Norton (Norton, 2014) describes the five stages of a successful social replication as follows:

Stage 1. Prove that the project works and get acceptance for the idea of replication: Proving the concept involves the effective implementation of a project and the evaluation of its impact. Other considerations include whether the concept will work in a different location/culture and whether it can be implemented without the owner/founder’s presence.

Stage 2. Develop a replication strategy: This involves the design of the model/solution to be replicated. It’s also important to decide which core element of the existing program should be replicated to achieve the intended impact goal.

Stage 3. Systemize the operations: Clear systems for implementation and monitoring of the solution must be developed and ‘packaged’ for potential franchisees.

Stage 4. Pilot the process as a test run: At the piloting stage, the concept is replicated to another location. There is a lot to be gained from learning what the extent of support required is, which will inform the cost of supporting this and future replications. The franchisor must build these aspects into the business model and ensure it has the resources to continue to support the franchise network.

Stage 5. Go to scale: Once the piloting is concluded successfully, the organization can start replicating to more locations. It is best to do this on a regional, manageable basis. Also, the business needs to evolve continually. Just as commercial franchises adjust their concepts and develop new offerings, so social franchises must ensure that their offering stays relevant and that it continues to achieve social impact in the most efficient way possible. The development of a social franchise model: Process and overview of the elements