In the business of doing good
Social franchising, also known as not-for-profit franchising, is franchising with social 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.
Social franchises seek sustainability through operating on commercial principles, making enough profit to sustain operations and reinvesting surplus profits into the community they serve.
Profit making, not profit taking
While the social franchise has a social purpose at its core, it is often owned by its social franchises and operates like a business. While they do not take profit out of the community or distribute it to any other shareholder, they must make enough to survive, grow and meet their social aims.
Being self-sustaining differentiates social franchising from philanthropy or charity which relies fully on external funding. Social franchising is also different from social enterprise. While a social enterprise also has social goals, the business is not replicated through the mechanism of franchising.
In commercial franchising, there are two main role-players: the franchisee and the franchisor. In social franchising, the roles of the franchisee and franchisor are based on similar principles, with the franchisor providing ongoing support and training and the franchisee operating according to standards prescribed by the franchisor.
The franchisor or founder is typically a non-governmental organization but may also be another type of entity with a vested interest in fulfilling a social objective.
The franchisee is a business partner that shares the vision and objectives of the franchisor.
The main difference regarding role-players in social franchising versus commercial franchising is the presence of an additional stakeholder and third party, being the donor. The donor may provide funding to the franchisor and/or franchisee to assist them in achieving their social impact goals.
The mechanism of franchising offers significant benefits as a proven way to help organisations expand and enable people to work together more efficiently.