What is a Social Enterprise?
I recently read an interesting blog by the Harvard Business Review “Where Are the Ray Krocs of the Social Sector?” The writer suggests the role the franchises model can play in solving social challenges is profound and should be explored. Having recently become aware of the philanthropic efforts Ray Kroc and his family made through his foundation including the Salvation Army Kroc Center in my city (Kroc supported research and treatment of alcoholism, diabetes and other diseases and established the Ronald McDonald House foundation). The article resonated with me. Of course we’d like to be good corporate citizens and affect positive change in our communities, and there are economic benefits to dong this as well. But how do franchises tie into this and what are “social enterprises” exactly?
I found Social Enterprise UK which states clearly in FAQ 1:
A social enterprise is a business that trades for a social and/or environmental purpose. It will have a clear sense of its ‘social mission’: which means it will know what difference it is trying to make, who it aims to help, and how it plans to do it. It will bring in most or all of its income through selling goods or services. And it will also have clear rules about what it does with its profits, reinvesting these to further the ‘social mission’.
Social enterprises come in many shapes and sizes from large national and international businesses to small community based enterprises But they all:
- Are businesses that aim to generate their income by selling goods and services, rather than through grants and donations
- Are set up to specifically make a difference
- Reinvest the profits they make in their social mission
Why is the Franchise Model Ideal for Social Enterprises?
Currently social entrepreneurs struggle to find capital and support for their endeavors and understandably so. Investors measure risk and reward carefully. The franchise model of established brand standards allows the ‘packaging proven social business models that good franchisees could replicate and scale .These business people would spend their energy building the business in a new market not experimenting with an untested model. This would provide scale to social enterprises and reliable returns to those who invest in them” or the Ray Kroc model. 31,000 global locations provides a lot of gravitas and heft to socially impacting endeavors.
Social Brand Standards
Social media has allowed businesses the opportunity (often to their own detriment as US Airways recently discovered through Twitter) to reinforce their brand and educate the public on their model. Franchises are no different. People feel good about supporting businesses that reinvest profits into their causes and social media is a great platform to communicate those values and that mission. As HBR points out, bringing the franchise model to the social sector, you need to determine which models work, package the essential elements of each model, educate your franchisees and support the franchisees.
This is validating for anyone looking at franchising now. Franchises are less-risky than new business ventures and the ability to parlay working models into socially responsible causes can have many benefits and help define brands..