Ben Litalien, Founder of FranchiseWell, Explains the Power of Social Franchising

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.