Social Franchise: A New Journey for Nonprofits
By Benjamin C. Litalien, Certified Franchise
Executive,
President and CEO of Social Franchise Ventures
The nonprofit sector has been traveling the familiar road of donors
and grants for a long time. Yet for many, that road has become narrower
and overcrowded, leading them to consider a new route to finding
resources for the missions ahead. Now comes a concept new to many
nonprofits but based on the successful experiences of numerous
entrepreneurs. It is known as a "social franchise," the intersection of
the nonprofit and franchise worlds, and it has created a powerful and
compelling gate to the future.
The goal is sustainability. Franchising has provided long-term,
sustained revenues for thousands of companies for over five decades, by
identifying a need and filling it over and over and over again. And now
it's beginning to do the same for nonprofit groups.
The map to success in franchising has been well crafted over time.
Although the Federal Trade Commission regulates the offer and sale of a
franchise, and enforces laws against fraudulent activities, the
franchise sector is largely self-regulated. Yet, even with a good map, a
qualified guide is recommended because the customs vary widely among
franchisors, and states have their own rules.
The mode of transport—in this case the franchise concept—should be
chosen wisely as there are thousands to sort through. Some have low
barriers to entry while others cost millions to get them up and running.
Franchising is powerful, contributing over $1.5 trillion to the U.S.
economy. According to the International Franchise Association, the majority of
franchises are under $250,000 in total start-up costs. As important to
the financial concerns are the "mission and cultural fit" aspects of the
relationship. Like the difference between riding in a covered wagon and
a space ship, the type of franchise you choose can makes a great deal of
difference in how quickly you'll travel, much you'll spend, and where
you will ultimately end up.
A good example of a successful social franchise program is Platte River
Industries (PRI) located in Denver, CO. It operates five Auntie Anne’s
pretzel franchises; two at the Denver International Airport and three in
local shopping malls. The franchise concept works well for its
cliental, developmentally disabled persons, because it is easy to
operate and provides a high gross margin. Over 50% of the employees
working at the franchise locations are developmentally disabled, and PRI
is able to provide them with strong mentoring and coaching support while
generating significant earned income.
The resources to complete the journey are the hardest tools to assemble
and manage, and they require the most vision, leadership, and intestinal
fortitude. Starting to build without a clear plan for completion is
bound to lead to failure, yet many start down the path without the
necessary resources. It is critical that any activity undertaken by a
nonprofit that is not directly related to the mission must be wholly
supported by the best available talent. The assistant program director
is not the right person to negotiate the franchise relationship, deal
with the contractor on build-out of a retail space, or manage the
inventory in a retail operation. Another key resource is the financial
commitment to starting and nurturing a new business venture. Franchise
or not, it must be viewed with clear, long-term vision. Once you set
down the path, the road home is much farther than it may first appear.
The well documented success in the franchise sector will continue to
compel nonprofits to brave this new journey toward a social franchise.
For the sake of those in need of continued support, let’s hope for a
well-worn path.
Social Franchise Ventures, LLC, is a wholly owned subsidiary of
Community Wealth Ventures. To learn more about SFV, email
Ben or visit its web site at
www.socialfranchise.com.
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