The Equity Factor

How to Turn Helping People Into a Franchise Business

Nonprofits can take replication cues from the corporate world.

Nonprofit Lava Mae is working with International Centre for Social Franchising on replicating its San Francisco-centered services for the homeless throughout the state of California.

Shake Shack. Subway. McDonald’s. Starbucks. Love them or hate them, corporate chains are everywhere. And most of the time, they produce a reliable product day in and day out. Chains have figured out how to replicate their models across many local contexts, often at a rapid pace.

The social sector has taken note of that corporate success. International Centre for Social Franchising (ICSF) has been working with partners around the world since 2011 to identify and replicate proven models for delivering social impact. They’ve worked with healthcare NGO Population Services International, which operates 33 healthcare franchise chains in 30 countries, and a number of social service providers in the U.K., including food banks and child violence groups.

In 2014, the U.K.-based organization began working in the U.S., where so far they’ve provided workshops or consultancy services to a range of nonprofits, foundations and universities. (They’re open to partnering directly with the cities too.)

“We’re interested in taking a proven solution in one area and spreading it to other areas,” says Greg Coussa, country director. “It could be one part of a city and bringing it to other parts of the city.”

One of ICSF’s newest U.S. clients is San Francisco-based Lava Mae, which provides bathroom services to the homeless using converted city buses. Lava Mae is looking to scale its model statewide in California by 2020. ICSF is also in the early stages of a partnership with an East Coast-based nonprofit to replicate an afterschool program.

In some ways, ICSF’s work represents a return to the social roots of franchising. In the late 19th century, Martha Matilda Harper, a maid-turned-entrepreneur who some credit with starting the first franchise, opened a beauty salon. (She also designed the first reclining shampoo chair.) As Harper expanded her popular shop to open in cities beyond Rochester, New York, she wanted to provide economic opportunity for underprivileged women. Instead of making them salaried employees, Harper set them up as owners of these Harper Salon outposts.

Franchising is just one example of replication. It typically involves an intense level of involvement by the central organization, especially in a training capacity and shared supply chains. Licensing agreements are a less intense form of replication, in which owner-operators are permitted to use a brand name and appearance in exchange for adhering to the brand’s standards and procedures. (Shake Shack uses licensing agreements.)

As Coussa explains, the biggest challenge, and ultimately the secret sauce behind successful replication, is the tremendous attention to detail paid by the original venture before trying to scale up.

“The nuances, the details, are by far one of the most critical things about it,” Coussa says.

ICSF offers a free online replication readiness test, posing questions like: Do you have an ambitious yet realistic strategy for scale and reducing the size of the social problem? Are the functions and organizational values necessary for replication well defined and developed to ensure quality? Everyone from staff to board and external stakeholders supports replication?

It can take years of research and evaluation before an organization is prepared to engage with ICSF. Once it’s involved, it typically takes anywhere from six months to a year of work before a pilot replication, Coussa says, including creation of operations manuals, licensing or franchising agreements, training workshop materials and other documentation.

Branding is another key detail. A strong brand is one of the most important tools that corporations use to establish customer bases in new markets.

When appropriate, a strong brand also helps maintain quality. “In certain models, once there’s a lot of replications it becomes sort of self-regulating,” says Coussa. “Franchisees often watch each other or watch out for each other, using their shared training experience as a way to hold one another accountable.”

ICSF’s emphasis on attention to detail is quite apparent from its 86-page Replication Toolkit, also available online for free, which walks organizations through the replication model.

It’s never easy to repeat success, but the level of detail in the replication process leads to one of its most important benefits: greater opportunity for people who may not have an MBA or any college degree to play a leading role in solving problems in their own community. McDonald’s once raised eyebrows with controversial commercials touting itself as a place to move up the economic ladder. Imagine that kind of ladder, but in the nonprofit or public sector instead.

“One of the big things we do with organizations in the design phase is identify who the local implementer profile is, what are the critical requirements and traits and previous experiences they need, and what might be ideal but not necessary,” Coussa says. “Being very strategic about who can be an implementer is a big part of what we do.”

The Equity Factor is made possible with the support of the Surdna Foundation.

Oscar is Next City's senior economic justice correspondent. He previously served as Next City’s editor from 2018-2019, and was a Next City Equitable Cities Fellow from 2015-2016. Since 2011, Oscar has covered community development finance, community banking, impact investing, economic development, housing and more for media outlets such as Shelterforce, B Magazine, Impact Alpha and Fast Company.

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Tags: social services

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