What is Social Franchise (Enterprise)?
Operation Boost aims to be a World Wide Social Franchise (Enterprise) Project. Social franchising is the application of the principles of commercial franchising to promote social benefit rather than private profit.
In the first sense, it refers to a contractual relationship wherein an independent coordinating organization (usually a non-governmental organization, but occasionally a governmental body or private company) offers individual independent operators the ability join into a franchise network for the provision of selected services over a specified area in accordance with an overall blueprint devised by the franchisor. Once joining the network, operators are given the right to employ previously tested incentives including:
– professional training,
– use of brands or brand advertisements,
– subsidized or proprietary supplies and equipment,
– support services,
– access to professional advice.
Members also gain beneficial spin-off effects such as increased consumer volume and improved reputation due to brand affiliation. Franchisees must adhere to a range of requirements including: providing socially beneficial services, meeting quality and pricing standards, undergoing mandatory education on provision of services, subjecting outlets to quality assurance mechanisms, reporting service and sales statistics, and occasionally, paying fixed or profit-share fees. Social franchises have been used for primary health services, pharmaceutical sales of essential drugs, HIV testing and counseling, and reproductive health services in the developing world.
A second application of social franchising is as a means of enabling social enterprises and the social economy to create more employment for disadvantaged people and achieve social aims. This is done principally by enabling joint working and knowledge sharing and transfer. The European Social Franchising Network has identified over 60 social franchises of this type in Europe, which employ over 13,000 people and more recently in 2012 The International Centre for Social Franchising (ICSF) identified 140. The largest of these is De Kringwinkel in Flanders employing 5,000 people. Others, like the Le Mat hotel and tourism social franchise or the School for Social Entrepreneurs operate in more than one country. Social franchising provides an opportunity to rapidly grow the sector to the benefit of disadvantaged people and society more generally.
The international Centre for Social Franchising (ICSF) was founded to help replicate proven social ventures to scale. They have a number of useful resources and have published papers such as Investing in Social Franchising which looks at the viability of investment into franchised social enterprise in the UK and Social Franchising: Innovation and the Power of Old Ideas which is a comparison between McDonald’s and the social franchise Foodbank.
The ICSF is currently developing a social franchising toolkit with NESTA, Bertelsmann Foundation, London School of Economics and others to help the best social ideas develop as a franchise. The toolkit is planned for launch in 2013. They group recently carried out research into replicable health care models with significant social benefit with GlaxoSmithKline the pharmaceutical company which will be published in early 2013.
What are the strengths and weaknesses of social franchising?
Strengths: By organizing small independent providers into larger units, social franchises can yield returns to scale in investment in physical capital, supply chains, advertising, and worker training and supervision. Additionally, social franchises can offer the ability to: faster scale up programs, decrease transaction costs, provide uniform services to a broad market, collectively negotiate financial reimbursement mechanisms, and replicate best practice services among a large group.Franchisees can also cross-subsidize less profitable services with the more profitable ones supported by the franchisor. The use of brand advertising makes social franchising compatible with social marketing. In addition, social franchising for health services allows an expansion of services because of cross-subsidization, addition of less-profitable services if fractionally franchised, and access to costly medicines if subsidized by the coordinating organization.
Weaknesses: Several inherent logistical and economic weaknesses are present within the social franchising model. These include the need for networks to be sufficiently large to attain an economy of scale, the cost and challenge of regulatory oversight of outlets, and the need to base organizational decisions on the population demand which may not maximize quality or minimize cost. There also exists the possibility of “tragedy of the commons” wherein franchisees provide low quality, low cost due to incomplete monitoring. Social franchising runs the risk of fraud if oversight is not present.
What is Social Franchise Enterprises?
The Social Franchise Enterprise is a type of Social initiative directed to achieve development goals through private ventures that provide goods and services to unserved markets, at a viable price. The Social Franchise enterprise creates self sustainable economic activity for the franchisees by using the franchise model to provide them with Capacity Building (know-how & training), Access to Market (bulk procurement of standard supplies, network clients, brand) and Access to Credit (benchmarking leading to Bankability). Franchisees then become capable to supply a given population with much needed goods or services.
By maintaining the transaction element, the Social Franchise Enterprise generates the revenue to both the Franchisees and to the Social Franchiser, who becomes also self sustainable and can further extend its footprint and further supply unserved markets, enforce monitoring and continue to provide added value services to the Franchisees network.
Operation Boost aims to be a World Wide Social Franchise (Enterprise) Project and be recognized as a premier social franchising organization around the world. Our operations worldwide are owned and operated by our Social Franchisees.
Owning or running a Operation Boost organization is a tremendous opportunity. We are seeking individuals with significant business experience and a big social heart who have successfully owned or managed business like operation boost.
If you want more information please contact:
John Tamerus EMTP, chairman InterHelp foundation the Netherlands and founder Operation Boost International. E-mail: firstname.lastname@example.org