News

Sector should learn from McDonald's, says report

Finance | Kirsty Weakley | 7 Nov 2012

To avoid “continual reinvention of the wheel” charities looking to solve a particular problem should consider looking at what has already been done, and consider a franchise to scale up an existing project – argues Dan Berelowitz.

Berelowitz today published the report Social Franchising – innovation and the power of old ideas. The research was conducted as part of his Clore Social Fellowship and part way through he co-founded a new organisation – the International Centre for Social Franchising.

In the report he explains: “So often time and money is poured into developing new programmes to meet social need, when so often this work has already been done and could simply be copied or adapted.”

He concludes that: “The strength of the franchising model for the social sector lies chiefly in the fact that it is a good way of growing a socially and/or environmentally beneficial idea in a context where resources are scarce.”

The research is focused on a comparison of two success stories - commercial franchise McDonald’s and social franchise the Trussell Trust Foodbank – to see what lessons could be learned for the wider social sector.

These lessons were:

• Design for scale – make sure it easy for others to replicate the processes and systems 
• Choose franchisees carefully
• Develop you people
• Test the business model to make sure it is replicable
• Continue to learn and improve the offer to franchisees
• Be three steps ahead of the franchisee
• Use networks to maintain quality and foster innovation
• Create freedom in the framework so that the business model can be adapted to the local situation
• Plan for sustainability – the financial model needs to generate enough for the central organisation to provide support to franchisees.
• Understand and adapt to markets
• Build the brand

Berelowitz also identified 11 key replicable elements to consider when developing a franchise model:

1. Vision
2. Idea
3. Knowledge
4. Process
5. Brand
6. Networks
7. Training
8. Health and safety
9. Business plans
10. Monitoring and evaluation systems
11. IT systems and website

Challenges

Berelowitz also identified key challenges to social franchising including: “The fact that funders like funding new ideas which means that social organisations are obliged to innovate even when there are proven methods that work.”

Also included in challenges is difficulty finding finance to start the franchise and managing tensions between the central organisation and franchisees.

The full report can be viewed here.