The Big Society Franchise?

In the last year, the almost unthinkable combination of two words, social and franchising, has begun to make a significant impact on the social economy in the UK and across Europe.


Social franchising is often a form of business specific co-operative or social enterprise development, with the member franchises owning the social franchise. Joint ownership and shared responsibility makes it potentially a more powerful mechanism than commercial franchising, where franchisors and franchisees are often in competition.


The business model being replicated can also be a cooperative, like the Foster Care Cooperative or employee owned, like Sunderland Home Care Associates. In Europe, most social franchises are also social cooperatives set up to provide employment for their disadvantaged members.


Social franchises now exist in twelve European countries; the greatest number of which are found in the UK with thirty-six, followed by Germany (six) and Belgium (five). Although in the UK they are most numerous, the largest social franchises are Belgian and German. They operate in a wide variety of sectors, but are mostly service companies like Community Renewable Energy, which work in high growth areas or areas with significant employment opportunities, like social care.


The promise of social franchising has always been that by replicating a proven business model, it can speed up the establishment of social enterprises. In the UK Sunderland Home Care Associates (SHCA), one of the countries best known employee owned care providers took over ten years to employ two-hundred staff. It set up Care and Share Associates (CASA) to franchise SHCA’s business model and in less than four years it has almost tripled the number of member employees to five-hundred and seventy people.


In Germany, the CAP supermarket set up it s first social franchise in 1999 and opened it’s second in 2000. Thereafter each year saw, on average, an increasing number of new CAP supermarkets with eleven being opened in 2010 bringing the total up to just under 100. The growth in employment, particularly of the disabled people it was set up to employ, shows an exponential growth curve.


Number of employees in Cap Market


The European Social Franchising Network (ESFN) has been collecting information on social franchises across Europe. Its first report on the state of social franchising, researched in January and February this year identified fifty-seven existing and aspiring social franchises across Europe, including detailed information on just over a third. It found that they employed 6,776 people with a combined turnover of just under €200 million. Assuming that the thirty-four other existing and aspiring social franchises employ at least as many people and have as large a combined turnover, this would indicate that across Europe, social franchises are likely to employ 13,000 people and have a turnover of more than €400m.


Since the research, ESFN membership has grown to thirty and they have found a further eight aspiring and existing social franchises bringing the total to sixty-five.


Komosie, a Flemish social franchise, is the biggest social franchise identified so far. Under the De Kringwinkel brand, locally owned re-use shops and recycling workshops have been set up across Flanders. Last year they employed 3,800 people and a year later they now employ 4500 people, a significant growth in a time of recession. Komosie is owned by its members and provides the brand, training, shop design and a wide range of other services that have enabled De Kringwinkel to grow rapidly. Now they have more than a hundred shops, many with workshops.


In most cases, social franchises have been set up to allow joint labour and the sharing of knowledge, in the hope it would increase the speed of development of social franchises. Komosie, CASA and many others are beginning to demonstrate that this hope is becoming a reality. Michael Lilley of My Time CIC explains how this has happened:


“It has taken us 10 years to develop a community based professional mental health service that is able to win contracts from public sector commissioners and meet professional standards and this has been replicated in a format that, with training, can enable qualified franchisees twelve months to get fully operational and set up.”


As well as speeding up the business development process, social franchises also allow members to reduce costs by joint purchasing, sharing staff, jointly managing the legislative requirement of organisations and sharing the costs of IT systems and procedures.


Social franchising allows social enterprises to benefit from local control and the combination of accountability with the credibility of a large organisation. It allows companies like CASA to retain local democratic control while competing with large private companies.


If the lessons learnt by existing social franchises are also used and built on by other social enterprises then social franchising could become even more important to the social economy than commercial franchises are to the private sector economy. We would witness a change in the growth of social enterprises and co-operatives and put into practice the concept of the Big Society.

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