About Social Franchises

Definition

A social franchise is a network of private sector healthcare providers that are linked through agreements to provide socially beneficial health services under a common franchise brand. A ‘franchisor’ (typically a non-profit) manages the brand and oversees the administration of the program.

Social franchise programs often-times share these characteristics:

  • The private healthcare providers (or franchisees) are not employed by the social franchise program
  • There are fees for services or medical commodities that are provided
  • The franchised clinical services are linked to standards and protocols

Background

The private healthcare sector represents a wide array of providers: traditional healers, non-profits, charitable institutions, for-profit one-room clinics, multi-specialty hospitals, pharmacies, and outreach services. What they have in common is that they touch the lives of hundreds of millions of people around the world, including the poorest. While these providers fill a critical role, in many countries the care they offer can be highly variable. Efforts to stimulate system-wide approaches to healthcare that include the private sector have also been limited.

The past decade has seen a trend towards public health interventions that organize private sector healthcare providers into networks. One model is social franchising of health services, which applies commercial principles to achieve public health goals.

How the model is organized

An agency (also called a franchisor) creates and markets a brand for certain health commodities and clinical services. It offers the use of the brand, and access to subsidized commodities to private healthcare providers who agree to become purveyors of the franchised services or products. These healthcare providers agree to receive periodic trainings and performance monitoring, and are now recognized as franchisees. They continue to retain complete ownership over their outlets, and continue to charge fees for their services.

This model holds the promise of greater scale with less incremental cost for the addition of each new provider to a network.

Many social franchising programs finance a substantial portion of their yearly operating budgets through contributions from international donors, though some have begun to receive financing from public health systems, and some have become entirely commercially self-reliant. International donors also play a critical role in procuring and contributing commodities for use by franchisees.

Some programs charge providers for enrollment into the franchise network, and some charge annual membership fees. Some programs also generate revenue by purchasing commodities at well below market value, and selling them to franchisees at a slightly marked up price. The price of commodities purchased in this fashion can tend to be lower than normal retail price, thereby still passing on cost savings to the franchisee.

Franchisees are encouraged to transfer this cost savings to clients. Clients either pay for services, or receive vouchers, subsidies, or insurance coverage that cover this cost. This latter form of provider payment, known as ‘demand-side’ financing, may be financed by international donors, the franchising program itself, the public health system, or private initiatives.

Learn more

Learn more about social franchising programs around the world by downloading the Clinical Social Franchising Compendium: An annual survey of programs: findings from 2015.