ResPublica’s Winston Mak on how social franchise can accelerate the development of co-operatives
Capitalism has for centuries been our economic doctrine as the
‘best’ system to reward individual efforts and distribute wealth. With over 90
percent of Britain’s productive assets owned by two square miles in the City,
and exacerbating income inequality, now is the time to fix the system if we
want a fair society which espouses the ‘responsible capitalism’ that 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.
At the recent ResPublica event, ‘Driving the
UK Economy through Co-operation and Innovation’,
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 and obstacles 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 reinventing the wheel, it can speed up the establishment
of social enterprises.
Last October, as a delegate to a social franchising conference, I attended a workshop
with Sunderland Home Care Associates, one of the most famous employee-owned
care providers in the UK. Perhaps surprisingly, what is particularly striking 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 knowledge reduce
operational costs by joint procurement, sharing staff and IT
systems, but social franchising can also speed up the 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 that 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 the ‘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. Undoubtedly, joint ownership and
shared responsibility could make social franchising a powerful driver for a
better economy, and the ‘popular capitalism’ the Prime Minister called for earlier this year.