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Social Franchising

Scaling for social impact

Social franchising, also known as not-for-profit franchising, is franchising implemented by organisations with social impact goals. Social franchises grow and broaden their impact by scaling a proven social impact intervention, product or service delivery through the mechanism of franchising. Instead of seeking pure profits, social franchises aim at achieving sustainability or sustainable donor funding by scaling in a standardised and consistent manner.

Social franchises seek sustainability through operating on commercial principles, making enough profit to sustain operations and reinvesting surplus profits into the community it serves.  Traditionally, these businesses are NGOs that exist to promote the delivery of social services to the communities that they are based in.

Social franchising versus microfranchising

There are overlapping elements between social franchising and microfranchising, but the overarching social purpose of microfranchising is poverty reduction.

The term ‘micro’ in microfranchising relates to the concept of microfinance, as these types of loans are granted to impoverished individuals to start businesses. Franchising adds another element to facilitating these businesses, as it enables systemization and replication of a proven model.

Microfranchises can also be defined as a ‘business-in-a-box’, basically providing the system needed to run a small business and earn an income with a low investment or with financial assistance from donors or financial institutions.

Social franchising is not social enterprise

It is important to note the difference between social franchising and social enterprise. While a social enterprise also has social impact goals, it is not necessarily replicated through the mechanism of franchising. A social enterprise is a business with social impact objectives and has as its goal reinvestment in the community, as opposed to profit maximization for shareholders.

Social franchising is a scaling option for social enterprises. Franchising may be an effective way to grow and multiply social enterprises if they meet the criteria that contribute to successful social franchising.

Role-players

In commercial franchising, there are two main role players: the franchisee and the franchisor. In social franchising, donors or funding partners also play an important role as a stakeholder providing the means to implement the franchise model. 

As in commercial franchising, the franchisor is the developer of the concept with a mandate to expand it, while the franchisee replicates the concept in his or her community along the lines prescribed by the franchisor for the purpose of achieving social goals.

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