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Ben Litalien, Founder of FranchiseWell, Explains the Power of Social Franchising
Ben Litalien discusses the concept of social franchising and how it can benefit both franchise brands and non-profits
As the Founder and Principal of FranchiseWell and a Certified Franchise Executive, Dr. Benjamin C. Litalien has spent three decades in the franchise community. Dr. Litalien completed his doctoral program at the University of Maryland University College with an award-winning dissertation focused on the theory of Social Franchise. As a staff member at Georgetown University’s Center for Continuing and Professional Education, he created the Franchise Management Certificate program, which he now teaches each semester at Georgetown for franchise professionals from the U.S. and around the world.
We asked Dr. Litalien to discuss the concept of social franchising, how it can benefit both franchise brands as well as nonprofits, and how brands can get started with their own social franchise strategy.
Tell us a little bit about your background.
After college, my wife and I moved to Houston where I managed a bank data processing operation before taking over a failed franchise company called Flying Colors. I didn’t know anything about franchising but I liked the underlying concept. I called the to learn how the franchise model was supposed to work. They suggested I drive to Waco, Texas and talk to Don Dwyer, which really started me on my franchise journey.
What made you so passionate about franchising?
My passion for franchising has always centered on the franchisees. I took their trust in me to do what was right for the brand and business model very personally. It was important to me that every franchisee had the tools, resources and support needed to achieve success with the concept. After being part of four franchise concepts, I was recruited by ExxonMobil to extend their dealer franchise to their distributor class of trade. During that time, I also started the Georgetown Franchise Management Certificate Program to teach franchise professionals about franchising. A nonprofit leader, Billy Shore from Share Our Strength, reached out to me to ask why more nonprofit organizations weren’t using the franchise model to support their efforts. I was intrigued by the notion of a nonprofit owning a franchise and it lead me to not only research the concept, but eventually attend the University of Maryland to complete a doctor of management program with a dissertation focused on the theory of social franchise.
What is social franchising?
A “social franchise” is a nonprofit owned franchise business. For example, a Goodwill affiliate that owns a Subway franchise, co-branded in their retail store. Social franchising is replicating a nonprofit program through a franchise model. For example, replicates retail water stores in sub-Saharan Africa through a franchise.
Why should brands get involved with social franchising? What areas of their business will it help specifically?
I have nonprofit clients that operate numerous franchise brands, including Subway, Link Staffing, The UPS Store, Papa Murphy’s, Auntie Anne’s Pretzels, Auto-Lab Complete Car Care Centers, and Zerorez Carpet/Tile Cleaning. These organizations are committed to the franchise business; however, they hire a manager from the industry to run the business so they are more of an “investor” than an “operator.” Some concepts do not work well in that model, so caution should be given to matching the right nonprofit to the right franchise.
How will it help with job creation?
One of the key benefits to a nonprofit owned franchise is on the employment side. Given that the franchisor should not be heavily involved in the franchisee's employment practices, this gives the nonprofit significant latitude to work with their client base in conjunction with the business model. This works well for organizations that are serving disadvantaged populations such as prison re-entry, disabled or otherwise. It should be noted that nonprofit organizations are held to all the franchisors “brand standards” in this process.
How will it generate revenue?
The goal of the franchise model is to maximize net income. While many make their decision on a franchise based on lifestyle or personal preference, they certainly are expecting a return on their investment at or better than other investment options. If a nonprofit operates a franchised business that produces net income, those funds can be returned to the nonprofit through various means (e.g. donation, dividend) depending on the legal structure and the organizational goals.
How should a brand (non-profit or franchisor) go about creating a social franchise strategy?
Education. My research on social franchises clearly indicated that both parties had very undeveloped understandings of each other’s sectors. In fact, when I reach out to many franchisors to talk about considering a nonprofit client, their response is “Why would I want to sell a franchise to an organization with a goal of ‘not making money’?” Nothing is further from the truth. As any nonprofit leader will tell you, “No money, no mission.” The vast majority of nonprofit organizations are active in business generating income to support their mission. I conduct “Social Franchise Workshops” for nonprofit organizations to help them understand the franchise model, and I work with franchisor leadership to help them understand the nonprofit sector. This is critical before engaging in a relationship.
How should a franchisor decide what social issues to connect with their brand?
The vast majority of franchise companies have no “charity of choice”, rather they let individual franchisees focus on local charitable and other social activities. While this is a good thing, it does not endure to the value of the brand overall. As franchise systems grow, leadership should be actively considering if there might be a social activity or cause that could help define the brand value to the benefit of all stakeholders.
Are there certain vertical markets in franchising that are better suited for social franchising than others?
There are two primary drivers for a nonprofit seeking a franchise. First, they may want to generate unrestricted income to support their mission. The key in this approach is to identify proven “investor” models where strong returns are prevalent without having to be an owner and operator. This often can lead to considering area development opportunities as well. The second driver is job creation. Concepts that have a need for employees are of interest, especially when the agency can determine if their clients can effectively handle some of the positions.
What made you want to start FranchiseWell?
My interest in understanding and exploring social franchise activities, coupled with teaching franchising at Georgetown, led me to pursue my doctorate. In order to do this full-time and complete in less than four years, I launched my consulting practice to give me the flexibility in my schedule. This worked well for the first few years but the demand for my services compounded quickly making my schedule during the last year of my doctorate program a bit overwhelming. Somehow with the support of my very patient wife, Raeann, I made it through and now I am continuing educational pursuits.
What do you look for when potentially working with a non-profit or franchisor?
The mission of Franchise Well is defined through the following statement of purpose: “Franchising can be done ’well’ if there is a disciplined approach, systems thinking and a commitment to the betterment of society.” My focus for relationships is on evidence-based decision making, understanding and following the franchise model and social impact. I probably spend the majority of my time educating individuals and companies on the tenants of the franchise model. Most of the people I have met “in franchising” don’t have a strong working knowledge of the model and how to extract the most value from it. They are practitioners working “with” the model and in many cases they are leaving much of the value untapped. In addition, the global trends that are disrupting our traditional approaches to franchising create the need for education and strategic advisement. On the nonprofit side it is all about “order of magnitude.” Given there are only a few hundred nonprofit owned franchises in the country today, we are still on the cusp of this movement. Only nonprofits that have solid leadership, significant financial capabilities and sufficient corporate capacity to take on an emerging strategy such as franchising should consider going down this path.
Where do you see FranchiseWell and social franchising in the next 5 years?
I enjoy being at the “tip of the spear” and my hope is that my team and I can continue to educate on the power of the franchise model such that it creates more social impact through strong economic results, increased job creation and providing innovative solutions to many of the intractable social issues our world faces. Personally, I will continue to transition consulting engagements to my talented team and focus on speaking and educational engagements, from franchisor leadership support to more board advisement, and a continued focus on how to apply my knowledge and expertise in franchising to truly accomplishing long-term good in the world.
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