Social Franchising

Franchising Health Care

A Social Franchise is, in essence, the application of Social Marketing values and expertise to clinical services. As Social Marketing seeks to apply the lessons of commercial marketing and brand creation to socially beneficial goods and behavior change promotion, so Social Franchising seeks to apply the lessons of commercial franchising to socially beneficial ends. Social Franchising organizations offer individuals or small businesses an opportunity to join into a franchise network and benefit from a set of incentives offered only to franchise members. In exchange the franchisee must comply with a range of requirements, often included the provision of certain socially beneficial services, meeting quality and pricing standards, and payment fixed or profit-share franchisee fees. Providers joining franchise networks are typically already established, allowing the Social Franchise organizations immediate access to their target population and facilitating rapid scale-up. Franchisee incentives often include some or all of the following: training, branding and brand advertising, subsidized or proprietary supplies and equipment, ongoing support services, and access to other professionals in the same field.

Most social franchises are ‘fractional franchises’, where a franchised service or product is added to an existing business. Under this arrangement, franchisees attract additional income using existing business assets (e.g. building, staff). As reproductive health and family planning services are amenable to a certain degree of standardization, the majority of health Social Franchise organizations to date offer these.

Private Sector and Social Franchising

Social Franchise organizations create valuable networks by organizing existing health providers with additional resources. Oftentimes, this network is the only safety net available. The network allows Social Franchise organizations to collect data on social results, system development, and impact. Social benefit may be the result of a greater quality, cheaper price, greater access, or greater awareness and use of these health services and goods. In developing areas, Social Franchise organizations networks greatly decrease transaction costs in seeking health services by offering reliable services, prices and quality. However, there are a number of management challenges inherent to the delivery model (see below).

Strengths

  • Fast scale up
  • Uniform services to a broad market
  • Cost savings (in training, advertising, etc.)
  • Improved private sector skills
  • Economic development
  • Replicable
  • Tiered service delivery outlets
  • Cross-subsidizing
  • May create a safety net health network
  • Compatibility with social marketing
  • Can work toward long-term policy change

Weaknesses

  • Tough to standardize medical care
  • Small networks not sustainable
  • Monitoring is challenging and costly
  • No specific reproductive health outcomes yet associated with reproductive health franchise networks
  • Brand positioning based on price or quality
  • Provider satisfaction conflicts with social goals
  • Basing organizational decisions on demand

Social Franchising Today

Few networks work with the dual, and often conflicting, goals of achieving public health objectives while making a profit. Successful Social Franchise organizations today often diversify clientele (e.g. rural and urban populations) and funding sources for greater viability. More and more, Social Franchise organizations are offering curative services to subsidize preventive ones, and even cross-subsidizing tiered service delivery outlets. RH/FP Social Franchise organizations networks are recognizing the need to expand into general medical services and goods to attract customers and to increase sustainability. Service contracts with the public sector and partnership with pharmaceutical manufacturers are more common franchise features these days as well. Another trend in social franchising is the increasing use of modern health technologies to increase access while minimizing costs (e.g. medical abortions, telemedicine).

Another Point of View

Scale

The strongest argument for social franchising is the ability to rapidly scale up the number of service delivery points. This has happened successfully in the Greenstar program in Pakistan and with the Sun Quality Health Network in Myanmar, but most franchising initiatives have not gone to scale despite heavy subsidies. The attractiveness of the model often blinds proponents and donors of social franchising to the complexity of managing distributed clinical care networks with limited influence over franchisees. A number of well known franchises receive annual donor funding that is greater than the total turnover of the franchise outlets: this is madness, as it means that greater efficiencies could be gained by employing franchise members directly and giving away the goods or services for free!

The problem is scale. Franchising is complex and for this reason requires highly skilled management. Highly skilled management does not come cheap, and to justify this fixed cost in a subsidized program, it, the management, must be allocated across many franchisee outlets: the management cost to set up and oversee 60 clinics or pharmacy outlets is almost the same as for 2,000. Franchising makes sense at large scale, and makes little or no sense at a small scale. Many of the programs in the developing world now were not designed, nor pushed by donors, to go to scale. This remains a significant failure of implementation and understanding.

Social Franchising Meeting, November 20, 2008
Current Programs and Resources - Social Franchising