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Workshop: Social Franchising to Spread Social Impact

11:00-13:00 / 14:00 16:00, Thursday 15

Session reporter: Shangshang Chen

Summary of the content of the session:
The workshop explored replication and scaling up strategies for spreading social impact both
nationally and internationally. It started with a talk by Michael Norton, Co-Founder of the
International Centre for Social Franchising (ICSF), to explain the concepts of social franchising,
replication strategies, the processes, and the skills and expertise required. It was then followed by
discussion facilitated by Hillary Liu, Founder of V Club, who also gave examples of social ventures she
has worked with in Taiwan.

ICSF (Michael Norton)
Michael is the co-founder of Unltd, which supports social entrepreneurs in the UK and is now
spreading internationally. In 2011 he co-founded the International Centre for Social Franchising, with
mission to make social ventures work, scale them up and spread the impact.

Big issues need brilliant ideas
There are many different mechanisms to take good ideas to scale but they all start from the same
thought - to use a simple idea to solve a big issue. A good model is the determinant factor. We dont
need to reinvent the wheels but we can invest in what has already worked and scale it up.

One great example is 1Kg More in China, which aims to address the poverty issue in rural China. To
help the under-resourced schools, 1Kg more encourages travelers to bring school supplies when
they go to rural areas. It started from a very simple idea and took off quickly to become a national

Marketing is critical
In Cape Town, there is an entrepreneur who grows fish farms in the shipping containers, and trains
and employs handicapped people. However one of their challenges is to find the market for their
product they target high-end diners in waterfront restaurants in Cape Town, but this might not be
scalable for other places. It is better to start with the market and work backwards.

TOMS shoes makes a successful branding and marketing case. It utilizes celebrity marketing - getting
pictures of celebrities on fashion magazines. This has turned out to be quite influential. However,
since value is the foundation of social ventures, focusing on the value of your products whilst
branding your social ventures is still important.

Key issues to replicate your model

1. Prove: to prove the project work, its viability and sustainability, the charisma and energy of
the founder, adaptability to other cultures, and an acceptable offer.
2. Design: there are many replication mechanisms, such as open source, multi-level marketing,
licensing and partnership. It depends on the nature of the products and services, as well as
the personal temperament of the founder.
3. Systematize: simplify and standardize the procedures, put your business in a box, and make
the right legal arrangement to protect your intellectual property.
4. Pilot: pilot the model on small scale first and keep innovating most of the time the
innovation comes from the franchisees instead of the head quarter. E.g. ChildLine India,
Senior Home Safety in Hong Kong.
5. Scale: find the right franchisees and leverage social finance.

To find the right franchisees
o Who are the franchisees?
o Can they make the business work?
o How will you recruit them
o Induction?
o What support will they need?
o Freedom and flexibility to adapt?
o Who is going to pay?

Opportunities to invest
o Getting the franchisor franchise-ready
o Financing the expansion programme of the franchisor
o Lending to franchisees
V Club (Hillary Liu)
Hillary founded the V Club, which provides the platform to bridge the business professionals to the
SE community and facilitate cross-sectors collaborations in Taiwan. One of the achievements is to
help SE to be listed on the B Board.

Case study and SE sharing
A social enterprise in Taiwan delivering medicines to door
o For patients in rural areas / with disabilities
o 24/7 free toll service hotlines
o In 2010, NT$70M turn over, with a team of 20 persons
o Invested by Senior Marketing System, a Japanese listed company

Question from the audience:

Q: In social franchising, the funding can flow from franchisers to the franchisees how is this
structured and does this change the dynamics between the two parties?
Take ChildLine Center as example, the franchiser provides the financing to the franchisees, which is
based on the contract. It comes with a whole package of use of the name, brand, logo, technology,
etc. Instead of charging a fee of royalties, the franchisor gives the franchisees the flow money to run
the services in the community. Meanwhile, the franchisees also need to secure other sources of
funding including the Indian government and arrangement with the bank. The franchisor does have
certain managerial control of the franchisees, as well as provide the training and support to help the
business in the box up and running.

Q: How do people work through the founder syndrome in the franchising process, in terms of the
control mechanism?
There are pros and cons in the control mechanism and it largely depends on the personality of the
founder. From the franchisees point of view, its better to just give the business to them and let
them concentrate on the product. With the legal and technical support in place, franchising usually
has guaranteed outcomes and lower percentages of failure. Be aware that the nature of the
organization evolves and there needs to be continual innovation. Micro-managing may inhibit the
scale of the business. There is no fixed business model but there is firm commitment and the heart is
always where the customer is.

Q: There are different ways of franchising modes but for the open source one, how does investors get
financial return from it?
To start with, the business is designed to be able to spread around the world. Profit is only one
dimension of the business model. Open source models are not investible, just like the social business
Prof. Yunus model that has defined these do not distribute profits. Hence, this model is
philanthropic and there is no financial return for the investor. You need to turn to other models to
develop the franchise to attract investors. For me, it doesnt matter in terms the exact number of
costs or profits as long as its positive and reasonable.

Key Take-Aways:
1. A brilliant idea is only the starting point of social franchising - the entrepreneur needs to have the
ambition and capacity to prove that the model works, from trial to pilot, before replicating it.
2. The business needs to be systemized and "put in a box" to be replicated through appropriate
strategies and mechanisms, including open-source, multi-level marketing, licensing and partnership.
3. Marketing is key: have a strong brand identity and transmit your values through the franchisees,
know your market and customers, and think about the cultural differences across localities.