Social franchising: “Like McDonald’s, but with a social mission”

Last week the Spindle celebrated – together with the community on innovative finance including Dance4Life – the official launch of the publication ’Innovative financing instruments for development, popping up like daisies’ at Partos offices in Amsterdam. The Spindle connects innovators among Dutch and global actors into an online and offline movement for inclusive, sustainable development.

Our colleague Koen Böhm, Team Lead Partner Management, was one of the experts interviewed by Menno Bosma, the co-author of the book. Koen shared his experience on Dance4Life’s business approach since 2018: working as a social franchise. “We noticed that organisations who succeeded in arranging their own funding were more enterprising, innovative and had a greater sense of ownership. They were better partners, who needed less support”, says Koen. “This matches with our aspiration to be lean and mean and not grow too big. Social franchise is the perfect solution in that case”.

What is a social franchise?
The concept of social franchise is not always clear to everyone. Koen: “A social franchise is essentially the same as a commercial franchise like McDonald’s but with a social mission.” In the publication it is explained as followed: The franchisee (‘the branch’) concludes a contract with the franchisor which obliges the franchisee to respect the basic concept and to pay for it. Fees can also be charged for services like training and support. The common element is that there is a shared product and that the model is replicable.

Currently, Dance4Life is working with 13 franchisees in 13 countries. We started in Ghana, Nepal, Russia and Tanzania and rolled out in China, Indonesia, Kazakhstan, Kenya, Kyrgyzstan, Malawi, Pakistan, Uganda and Ukraine.

Challenges and solutions
The book also reflects on the challenges of working as a social franchise. A traditional problem is how to match quality with scale. To put it simple: you want lots of franchisees because this enhances your impact and income. But you don’t want them to deliver bad quality, because this spoils your reputation. The solution lies in, among other things, a strict door policy. Another challenge is how to maintain quality once an organisation has become a franchisee. Koen: ‘You want to control the quality of the output of the franchisee without limiting its freedom and abilities too much”. His experience is that you should not impose too many requirements: this leads to irritation. “The secret lies in trust”, he concludes.

Read the full publication written by Menno Bosma and Hans van de Veen here.