Franchising means growth, and often on a large and rapid scale. But while in Europe social entrepreneurs have really bitten the franchising bullet, in this country we seem far more hesitant. Why?
As a network, we've just come to the end of a large piece of work looking at social franchising in Europe. We've visited a number of EU countries, met some inspiring social entrepreneurs and learned a lot.
Overall we found that in Europe, franchising is far better understood than over here and it's considered a far more established route to growth. In this country, franchising's still a bit of an unknown quantity. We also found that European investors and entrepreneurs tend to be more confident about using franchising as a route to replication and growth and are more willing to take risks.
On our European travels we visited an inspiring social enterprise called Le Mat. Based in Sweden, Le Mat is a small chain of franchised guesthouses which employs people with physical and mental health issues and offers them training, new skills, and improved life chances. From the outside, Le Mat is a quality guesthouse business which offers excellent service and pleasant accommodation at the right price.
Le Mat was set up as a franchise business and its directors have developed a strong replication model that we can really learn from. Franchising is really all about brand and consistency and for Le Mat, having an effective franchise model is about maintaining tight control over the brand and how the brand is "experienced" by guests from location to location.
Le Mat puts a real focus on ensuring that customers receive and experience the same services at the same level of quality, no matter which guesthouse they stay in. They also know that when people stay at a Le Mat, they're also buying into a brand. They believe strongly that each guesthouse should "feel" the same to a customer and stress the importance of having the same brand "look and feel" – when people stay in a Le Mat guesthouse, they must know where they are.
Key to achieving this consistency is to regularly monitor service quality levels and keep strict control of their intellectual property. While legal costs can be high in this area, it is worth the expense to ensure that your brand is not diluted. In fact, we were so impressed by Le Mat that we're hoping to set up a guesthouse based on their franchise model in Liverpool and Blackpool.
Back in the UK however, franchising still isn't something that has taken off – and it's certainly not considered an established way to grow. One reason for this is that many British social entrepreneurs are not making enough use of transnational funding opportunities and so they're not benefitting from transnational exchanges and opportunities to learn from other countries' franchise models. This means that there are often large gaps in knowledge and understanding – particularly around things like brand and IP.
Investment is another key factor. I know that there are franchise business ideas in this country that are just as exciting – if not more so – than those in Europe but here, social entrepreneurs are struggling to get their ideas off the ground because of a lack of investment.
To stop us lagging behind, we urgently need to build awareness and understanding of franchising among investment communities and we must encourage investors to realise that some risks are worth taking. Entrepreneurs will always be the drivers of change, growth and expansion but we must help the boards of social enterprises understand the benefits of franchising and the opportunities available.
As a network, we're doing what we can to share our learning about franchising with our members and beyond and to encourage the exchange of good practice with our European colleagues. We have run a number of masterclass sessions on franchising and we're teaming up with the European Social Franchise Network for a conference. We have also invited the directors of Le Mat to run a workshop for our trade fair in October.
While understanding, investment and awareness are key, perhaps the most important factor that needs to change is attitude. In the current economic climate, some enterprises are hunkering down and pulling up the drawbridges. They're in survival mode and that means getting by, doing what they do best and choosing the safe option.
For me, franchising is all about taking considered risks and having the entrepreneurial hunger to grow. Times are hard but social entrepreneurs must be enterprising. They must be looking at ways they can diversify and thinking about how their products and services can be replicated elsewhere. Franchising is an opportunity for social enterprises to grow further, share their brands and show off their social models to a wider audience.
Val's six key learning points from Europe:
Make sure you have investment and financial resources in place. Legal costs around IP can be high but it will be worth the expense in the long term.
Make sure someone is in the driving seat. Someone must be the one willing to take the risks involved and take ownership of the process.
The right knowledge and skills are important. You'll need access to the right support and advice before you start.
Be realistic. Setting up a franchise model can be a lengthy process and it does takes time, so factor that into your costs.
Don't expect everyone to stay committed. Franchising's not for everyone, so expect to lose stakeholders along the way.
Don't forget the business plan. Don't go anywhere without a locked-down business plan that everyone has bought into.
Val Jones is chief executive of Social Enterprise North West, a regional network representing the interests of the North West's social enterprise sector
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