Social Franchise versus Social Enterprise

All the definitions of social franchising and social enterprise refer to the achievement of social goals. However, the pursuit of social goals does not negate the importance of running these businesses on commercial principles to ensure their continuity and longevity. With grants and donor funds seemingly decreasing, these businesses need to make enough profit to achieve sustainability. Therefore, social enterprises and social franchises need to operate on commercial principles, but not for the attainment of commercial goals.

It is important to note the difference between social franchising and social enterprise:

Social enterprise:Social enterprise

  • A social enterprise is a business with social objectives
  • The social goal is to reinvestment in the community, as opposed to profit maximization for shareholders
  • It is not necessarily replicated through the mechanism of franchising.
  • They are stand alone or heterogeneous outlets
  • There are no standards of replication in place
  • Branding is not critical
  • Solves social and environmental problems
  • Need to operate on commercial principles to ensure their continuity and longevity
  • These businesses are run by NGOs or charities that exist to promote social services to the communities that they are based in.

Social franchise:Social franchise

  • It is a scaling option for social enterprises.
  • Pursue social goals through the means of franchising as a model for replication and distribution of the products and services of the organization.
  • Seek sustainability through operating on commercial principles, making enough profit to sustain operations and reinvesting surplus profits into the community it serves.
  • Franchising may be an effective way to grow and multiply social enterprises However, a social enterprise could only scale through franchising if the factors contributing to social franchising as a suitable replication strategy are present.
  • There are standardized outlets
  • Branding is critical through successful franchising
  • Run by NG’s that fulfils franchisor function

Sources

  • Aliouche, E., & Fernandez, D. (2015). Social Franchising: A panacea for emerging countries? The case of Algeria. In International Conference on Economics and Management of Networks – EMNet. Cape Town.
  • Aliouche, E., & Schlentrich, U. (2015). Social Franchising. In M. Brookes & L. Altinay (Eds.), Entrepreneurship in Hospitality and Tourism: A global perspective. United Kingdom: Goodfellow Publishers.
  • du Toit, A. (2003). International Development Consortium (IDC) - Interview with Graham Coultas.

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