Does franchising belong in social enterprise?

 

Décio Emanuel

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As social entrepreneurs, we’ve all been guilty of believing that our idea, business model, and social impact model are unique. There is none like it; and because of this, it must merit success. Information gathered from conversations with social entrepreneurs and after in-depth analysis of their models, I got the impression that systems and operations are often overlooked. A structure is often not in place, meaning that the owner or founder resorts to fighting fires frequently; he or she becomes reactive instead of proactive, does technical work rather than work that will develop the business.

Is the application of systems, operations, and structure ignored deliberately? Can and should a great social enterprise idea be replicable and replicated?

Essentially: Do franchise models and franchising belong in social enterprise?

To do that we must understand that a franchise model is the interdependence of systems and strategies that, when assembled, form a remarkable organism. A franchise can be understood as the expansion of your business by licensing the blueprint of your organism to someone else. It would include your know-how, procedures, intellectual property, business model, brand, and rights to sell your branded product or service. That someone else signs an agreement and pays you some fees in exchange. Simple, right?

But I’m certain that one of these was the first word that popped into your head: artificial, synthetic, unnatural, emotionless, passionless. However, what could it really look like when applied to social enterprise? Certainly the fusion of social values and capitalist systems could bring about a significant impact?

Pros of franchising the business model

  • It can allow you, as the social entrepreneur to focus deeper on the social impact model. It will allow you to focus on being creative and maximise your contribution or benefit to society.
  • It liberates you from the boring aspects of business through the application or enforcement of uniform, predictable, and consistent operations already set in writing. It allows you to outsource people and other services to do this type of work.
  • It allows you to stop carrying out technical work and focus solely on business development or any other areas of the business as desired.
  • It enables your business to expand gradually, for growth in revenue to increase steadily, and for the number of employees hired to rise. Expectedly, it would result in a larger social impact budget.
  • It enables for multiple social enterprises to be set up, across the country or internationally, with an identical business model further allowing individual social entrepreneurs to focus entirely on the design of their social impact model. It may, for example, allow for several groups of deprived demographics to be addressed, through the exact same business model.

Cons of franchising the business model

  • Many believe this will take away the humanity and human values from social enterprise. The business won’t be as personal and a connection with the beneficiary, customer, and employees will not be as strong or intimate.
  • It won’t allow for your product or service to be unique and will force you to compete with the market on cost – also known as ‘race to the bottom’ – which social entrepreneurs are staying as far away from as possible.
  • It may do the opposite of what was initially intended: instead of allowing the social entrepreneur to focus entirely on the social impact, it may cause the soul and culture of the enterprise to totally vanish.

Although many would conclude that franchising does not belong in social enterprise, after much thought, pros can certainly be taken away from the ideology. The reasonable and intelligent application of systems and the establishment of operations can allow you to work more on the business, rather than in it. It can allow you to compete in the profit-driven market. There is also no reason to ward off automatisation and digitisation, nor to be risk-averse when it comes to outsourcing people to do what you are not skilled to do.

What do you think? Can we adapt a system or model from the capitalist, profit-driven franchise model, in order to yield greater social impact? Or would we be stepping into dangerous territory?

Décio Emanuel is a consultant specialising in social enterprise and was a Young Talent Programme Delegate at SEWF 2018


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