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Not-for-profit franchising.

Apply a corporate strategy for nonprofit success.

At a national seminar on franchising held in London in 1990, a new idea emerged: Franchising can be successfully applied to not-for-profit organizations. Consider the following:

* The not-for-profit sector has a long tradition of sharing models for action or services and a willingness to replicate good practice.

* Nonprofit organizations that create and develop successful projects and services should benefit when their ideas are reproduced.

* Standard geographical replications, such as chapters, agencies, and local offices, can be difficult to manage and hold to standards of quality.

* The franchise model allows for a controlled standard of practice for replicated projects.

* The ability to innovate is one of the key strengths of the not-for-profit sector--and franchising could be a fast track to the dissemination and wider implementation of good practice.

What is not-for-profit franchising?

Not-for-profit franchising adapts a form of corporate franchising, allowing a not-for-profit organization to replicate its projects or services. The organization licenses the right to use its name and product or service in other locations where there is a demand or need. Franchising offers the franchisor control over the content and quality of its services operating elsewhere.

The Liverpool Personal Service Society, in the United Kingdom, is an example of a not-for-profit organization franchising one of its projects. PSS's "Activities Project" provides a range of social activities for older people living in residential care and has reorganized so that it can seek franchisees among local voluntary bodies, private residential homes and day care providers, local authorities, local individuals or groups, housing associations, and volunteers.

Setting up a franchise

The development of the franchise concept in the voluntary sector in the United Kingdom is relatively new. Two not-for-profit organizations have developed franchise-style approaches to reproducing their projects and services in other parts of the country. Crossroads Care operates programs that help people with disabilities live in the community and relieve the stress experienced by those who care for them. Homestart operates support, friendship, and practical-help programs for families with at least one child younger than five years of age. As a direct result of adopting franchising, they were among the most successful English charities in the 1980s in terms of generating revenues and developing new programs.

The franchise model invites a local individual, group, or local authority to enter into an agreement with you to establish a particular service or project. They use your name and imprimatur, strictly along lines that you have successfully developed. In return, you license them, usually for a fee, and provide a monitoring and evaluation system to ensure that the project or service meets your standards. You might also supply initial and ongoing training and provide a centralized purchasing and marketing system. This would mean economies of scale to local franchisees.

Franchising requires a blueprint that might specify the procedures required to run a regional office or describe the elements needed to operate a project. A good blueprint

* details how to operate the business;

* reduces the risks involved in setting up and operating a new business; and

* enables an individual or organization to operate the business or project by following a predetermined format with the support of the franchising organization.

What can you franchise?

Most projects or services can be developed along the franchise model. Consider the following checklist of requirements for a successful franchise:

* Your organization has a successful track record in providing the service.

* A need or demand for the service exists in other locations or organizations.

* You have identified the key success factors of the service, and they can be applied in other areas.

* Some or all of the distinguishing features of the project are unique.

* The project or service is a proven long-term community or organizational benefit and the demand for it is ongoing.

* You recognize that some change to existing organizational priorities will occur if you begin to franchise.

* The organization is willing to commit sufficient time and energy to develop a franchise strategy.

Can a nonprofit franchise work?

Service quality is an issue in the not-for-profit sector. The franchise system offers controls not found in such other replication strategies as setting up regional offices, networks of volunteer-led local branches, networks of local agents, licensing agreements, and national training and consulting programs.

Also, national organizations might find that reorganizing their chapters or regional offices using the franchise framework increases the autonomy and enthusiasm of local service deliverers and clarifies their needed role.

Peter Houghton is managing director of Association Managers Ltd., Birmingham, United Kingdom, and with Nick Timperley is author of A Guide to the Concept and Practice of Franchising Charitable Services, published by the Directory of Social Change, Radius Works, Back Lane, London NW3 1HL, U.K.
COPYRIGHT 1993 American Society of Association Executives
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1993, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

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Title Annotation:Perspective
Author:Houghton, Peter
Publication:Association Management
Article Type:Column
Date:Jul 1, 1993
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