Driving Britain to ‘popular capitalism’ with social franchising co-operative model

Capitalism has for centuries been our economic doctrine as the ‘best’ system to reward individual efforts and distribute wealth. With now over 90 percent of Britain’s productive assets owned by two square miles in the City and exercerbating income inequality, it is the time to fix the system if we want a fair society for all. This is also the ‘responsible capitalism’ which the Occupy LSX campaigners ask for. Seemingly far away, the panacea for today’s predicament is, in fact, close at hand – the ‘co-operative’ model, or Rochdale Rules dating back to 1840s.

In a symposium – ‘Driving the UK Economy through Co-operation and Innovation’ held in Central London on 19^th April, panellists explored how co-operation and shared ownership can offer a realistic alternative to traditional business models and create a more sustainable economy. Despite some illustrious benefits a co-operative business model can yield in community engagement, whether it is the people’s supermarket or port trust exemplified, they presented similar challenges in meeting legislative requirements, seeking finance and businesses that might take weeks or even years to overcome. Why don’t we consider the potential of ‘social franchising’ in accelerating the development of co-operatives?

Social franchising is the latest form of co-op movement. Similar to commercial franchising, the social franchise is owned by member franchises (or franchisees) but with a social purpose. By replicating a proven business model and not repeating reinvention of the wheel, it can speed up the establishment of social enterprises.

Last October, I was a delegate to a social franchising conference where I attended a workshop with Sunderland Home Care Associates, one of the most famous employee-owned care providers in the UK. To my astonishment, what is particularly tempting in these economically straitened times is that social franchising can exponentially accelerate local jobs creation. As an original co-op, it took more than 10 years to hire 200 employees. Care and Share Associates was then set up to franchise its business model. In less than 4 years, this franchisee has almost tripled the staff size to 570. They also co-manage to satisfy legal requirements from the Care Quality Commission to reduce costs.

Not only can the resultant joint working and knowledge reduce operational costs by joint procurement, sharing staff and IT systems, but also can social franchising speed up business development process. The largest social franchise identified so far is Komosie, a Flemish social franchise. Under the De Kringwinkel brand, locally owned re-use shops and recycling workshops have been set up across Flanders. More than 4,500 people are employed in over 100 shops. Komosie is member-owned and provides the brand, training, shop design and a wide range of other services which enable De Kringwinkel to grow speedily. Social franchising allows residents to retain local democratic control of community services. It also brings economies of scale, political clout and credibility of a large organisation to a young-age co-operative that has a key role to play in a ‘Big Society’. 

Today, social franchises are found in 12 European countries, with the largest ones in Belgium and Germany, according to the European Social Franchising Network. There are now over 13,000 people employed by around 60 social franchises, which generated a combined turnover amounting to €400 million last year. Joint ownership and shared responsibility may make social franchising a powerful driver for a better economy or ‘popular capitalism’ the prime minister talked about in the beginning of this year.

However potential social franchising could be, there should be a new company model supported by realistic changes to relevant legislation and investment market. In the next article, I am going to share the key findings of my research project on emerging company models, including my views on the Industrial & Provident Society (IPS) Act and the ‘bankability’ of co-operatives. 

This article is also published at http://www.respublica.org.uk/item/Driving-Britain-to-Popular-Capitalism-with-the-Social-Franchising-Co-operative-Model.


Email me at winstonkm.mark@googlemail.com