Macken – social franchising practised to create jobs and language skills for unemployed immigrant
Cluster: GROWTH AND DEVELOPMENT
Authors and organizational affiliations: Pär Olofsson and Sven Bartilsson, Coompanion Göteborgsregionen
1.Context and history
Social franchising is a new phenomenon that has created remarkable growth in some social enterprises. European Social Franchising Network (ESFN) has in 2011 successfully identified 63 franchisors in Europe. Most social franchises are relatively new and have thus grown relatively rapidly, with 40% having established their first franchise in the last five years and over 80% in the last ten years. ESFN estimate that they have created at least 10,000 jobs in the social economy. 65% of their employees are disadvantaged in the labour market. Social franchises trade in a variety of sectors, reflecting the range of activities in which social enterprises and social cooperatives are involved.
Social franchising is primarily a method for transferring knowledge from one established social enterprise to another that wants to achieve the same social and financial goals. The term is used in many different ways and there is no obvious definition.
The European Social Franchise Network has defined social franchising as follows:
• In a social franchise both the social franchisor and franchisees are social enterprises (i.e. businesses that trade and have a social purpose) sharing the same values.
In a social franchise there is:
• An organisation that replicates a social enterprise business model – the social franchisor.
• At least one independent social franchisee that has been replicated by the social franchisor.
• A common brand under which the social franchisees operate.
• An interchange of knowledge between members.
• An agreement that regulates rights and obligations and secures the sustainability of the franchise as a system.
The way a social franchise develops is dependent on the nature of the business, its origin and the values of the founders. The process can be described in three fundamental phases which always occur.
Phase One – The pilot.
The first phase is the establishment of the social enterprise from which the social franchise model will be developed. The number of years this will take can vary significantly. There are some examples where franchising has been developed within five years of the start of the first enterprise.
Phase Two – The development phase.
In this phase, the social franchise is established on the basis of the founding social enterprise. For most social franchises, this will mean codifying the learning from phase one and the development of the social franchise manual, quality systems, branding, business plans and so on. Quality systems will also be developed to monitor social franchises and to ensure consistency. Other elements will depend on the nature of the social franchise; thus for a care organisation, this might include care management systems or uniform designs. This stage is completed when at least one social franchise is established and trading successfully and profitably.
An organisation to manage and support the development of the social franchise, the social franchisor, will also be set up and will become distinct from the founder social enterprise. The franchisor has not done this before and they must develop their skills as franchisors during this period. As a further part of the process, finding, evaluating and training a franchisee must be included in the concept and its manuals. Normally this is a phase where the entrepreneurs develop the quality of the processes and correct some of their less appropriate process and routines. This phase will normally take a minimum of one year, but is probably more likely to be a three-year process.
Phase Three. The expansion of the franchise, and growth.
The third phase is the expansion phase. This can be said to occur when the social enterprise has proven its capacity as a franchisor. There are routines and experience that can be used for transferring knowledge to the franchisees. Thanks to the successes during the establishment phase, in this phase of the model financing is usually available both for the franchisor’s own expansion and for setting up new units. Input from the franchisees’ experience is integrated and the concept is developed. In this phase, a level of profitability arises in the franchise organisation after a year or two. In several of the concepts, it requires at least 4-6 franchisees for there to be long-term profitability and for the concept to be capable of delivering the service the franchisees can expect.
Social enterprises sector in Sweden
In Sweden today there are 310 companies on the list of work-integration social enterprises registered with Tillväxtverket - The Swedish Agency for Economic and Regional Growth which employs approximately 9500 people, about 3,000 of whom are employed in companies. The remaining 6,500 people receive different contributions from employment services, job locations from the municipal council or the social insurance system.
2.Summary of main characteristics of good practice approach
Macken – a social enterprise reusing resources.
One of the most successful social enterprises in Sweden is Macken, that has created pathways for a particularly exposed group in the labour market; immigrants with poor knowledge of the Swedish language.
There is great interest in expanding the number of positions for people who are outside the labour market in Sweden. The number of people registered as long term unemployed is rising steadily, despite large investment in the government labour market policy. One group that is over represented in the long term unemployed is immigrants, especially non-Europeans. Sweden has had large scale immigration for several decades, including accepting many refugees. Many have not been able to gain a foothold in the labour market and during a recession unemployment increases more in this group than in others.
Language teaching is considered one of the most important factors to quick integration. Therefore all immigrants are offered education in Swedish for immigrants (SFI) cost free. For that group of adult immigrants who are illiterate this education does not just cover Swedish but also teaching the pupils to read, write and count using numbers. The government finances the education for refugees and the municipalities finance the education for other immigrants. The Municipalities are the principals for SFI and responsible for ensuring that SFI is offered to those that the right to the education. The municipalities can procure SFI from several players. The work is also vital to the chances of integration. Without access to work many have difficulty in developing their language abilities. There is therefore a Catch-22 moment for many of those with weak language ability; no language - no job, no job – no language development.
The Swedish municipal councils do not have a labour market policy role; the government has that responsibility through the Arbetsförmedlingen. However, in reality most municipal councils operate their own employment services. The target group is those who receive support from municipal social services. Most people receiving welfare from the municipal council have never entered the labour market and qualified for the payments and benefits received by the unemployed via Arbetsförmedlingen, or they have fallen out of the labour market and the unemployment benefit system because of long term unemployment and/or disability.
These employment service units within municipal social services run different forms of employment training and practical activities. They are limited in the opportunities for work that they can provide their target groups. Time in a municipal employment service activity seldom leads to employment.
Social enterprises are a solution for this group. As a rule, the unemployed person starts as a trainee at the social enterprise, for which the company sometimes receives compensation from the Arbetsförmedlingen, sometimes not. After a time these trainees get the opportunity to employment, often with several years recruitment support from the Arbetsförmedlingen, which underwrites the wages costs for the cooperative.
Macken is a cooperative in Växjö. Växjö ([ˈvɛkːˈɧøː]) is a city and the seat of Växjö Municipality. It is the administrative, cultural and industrial centre of Kronoberg County in South Sweden. It has a population of about 64,200, out of a municipal total of nearly 85,000 inhabitants. 12 000 of the municipal inhabitants were born abroad. Unemployment in Växjö is 1.5 percent above the national average. Less than 50% of the non-European immigrants work, (compared to 61% of European and 82% of Swedish born)
Macken was created in 2004 as a reaction to how many good, reusable items were being disposed of at the municipal recycling centres. Macken’s founder Fredrik Bergman saw that there was an unrealised potential to reuse what was being discarded. Out of this grew a recovery and reuse operation. The idea arose that one could create job opportunities by repairing and selling some of the discarded items. The step from thought to action was not far and operations soon started at Macken’s first workshop, the bicycle workshop.
The need for further workshops soon became apparent, which led to Macken today having furniture, bicycle, electronics and textile workshops. The cooperative also has its own shops and a café.
Macken’s core – the language workshops
As described, Macken started with recycling, repairing and redesigning refuse from Växjö municipal refuse station. Unemployed immigrants with language difficulties made up the majority of participants. That gave rise to the idea of teaching language at the same time as the practical work. Many immigrants may never have been to school and it becomes very difficult for them to manage their whole SFI in two years. There are not many alternatives for language development for those immigrants that cannot manage the SFI in two years and there is a risk that these people become locked in a life of benefits dependency. Kronoberg county, in relation to its proportion of the national population, is the county that receives most newly arrived refugees in the country. In 2009 immigrants made up 13.5 % of the county population.
Macken contacted The National Centre for Swedish as a Second Language at the University of Stockholm (which is a national resource and development centre, commissioned by the Swedish government) and was referred to Denmark; in Sweden there was no operation for teaching languages in a practical environment. Using inspiration from Denmark, financing from the government Integration Board (now closed and replaced by other authorities), and under the pedagogic leadership of the newly retired head of the above Centre, Macken wrote a unique language primer for language studies in a practical environment. The Swedish Agency for Economic and Regional Growth – Tillväxtverket - financed the illustrations. Lena, the retired head became the chair of the Macken cooperative.
In collaboration with Växjö municipal council and The Swedish Migration Board -Migrationsverket, Macken also became a school for immigrants who wished to learn Swedish in “language workshops”, in a more practical way than the theoretical training that was offered in other SFI education that the municipal council was responsible for. Gradually the language training became a central part of the cooperative’s economy and it is this service that the municipal council purchases.
The Cooperative has continued to develop largely due to the pupils’ needs and wishes. For many it would be virtually impossible to enter the labour market in Växjö. So it was a wish of students to get a job at, and through, Macken and so Macken building services emerged. Today building services is shoveling snow at different estates in Växjö and have a contract with another real estate company to manage waste and garbage. Previously they cleaned in student houses, but lost the contract.
So many people were in language education that is was not possible to offer them all jobs. Some students wanted help to start businesses. This led to Macken's enterprise centre. It is an enterprise hotel of approx.1000 m2, where people receiving benefits can start a company to create their own economic self sufficiency. Macken's enterprise centre has an entrepreneurship school in easy Swedish, business mentors to help new traders, accountancy and marketing help etc. It offers a physical location (premises), pedagogic support (education including entrepreneurship) and social companionship (every possible type of person is in the centre and can support each other). The enterprise centre was the result of pressure from language participants, others at Macken and the business office in Växjö municipal council. All of them saw the need for, and the benefit of, new start-up businesses and more employment. At the moment we are in the process of starting a Handicraft building where handicraft enterprises in particular will have access to premises to get their operations started.
Students also wanted to have regular vocational training at Macken and so Macken’s business school, a distance course for immigrant women who read in their upper secondary education while Macken offered instruction in Swedish, and later agricultural college were started. The agricultural college was implemented by Macken as a 28 week course for 9 immigrants during 2011. It was an introduction and orientation course within the green industries. The training provided a first contact with and an insight into Swedish agriculture and forestry and horticulture. It was funded by the Rural Development Programme (financed by the European Agriculture fund and the Swedish Government together) and the County’s regional growth program
Development has continued in this way. The Macken model has evolved with the years into a sort of “tricks & fix” program, with great flexibility in relation to the individual, a very moveable tool box.
Not just some people, but everyone who has been employed for more than a year is offered a share of ownership in the economic cooperative. The objective is that Macken should be controlled and owned by those that work in the cooperative. The cooperative determines how any excess is used. Profit is a method of achieving the social objectives. Any excess is ploughed back into the operations.
An important goal in Macken’s work is to try to get individuals to reach economic self-sufficiency, either through employment or through their own enterprise. One would like a society where as many people as possible can support themselves, and fulfil themselves.
Without the network no Macken
Macken has grown out of demand from participants and members. But it would not have been a successful Macken without its capacity to create an extensive network. Early on a charitable foundation, Friends of Macken, was established which engaged private individuals who wanted to contribute to the integration of immigrants and support Macken’s work. This also included local businesses and committed individuals all with the common desire to support Macken in whatever way they could. The retired Council leader helps with contracts, business people help with new customers, the retired Professor from Stockholm University helps to write the Macken’s language educational material. Friends of Macken is chaired by a Professor of entrepreneurship at Växjö University.
Collaboration with municipal councils
Every municipal council in Sweden is divided into policy boards with an operative administration under its control, as it is in Växjö.
Macken collaborates and has agreements with several boards in the municipal council. Macken has an agreement with Department for work and welfare to run language education in practical forms in the different workshops. The Departments purchase these language training services. With the Technical department there is an agreement to place a container at the Växjö Municipal recycling facility where households can dispose of items that they no longer require at no cost. Everything from old fashioned china and CRT TVs to garden furniture and roof tiles. Macken reuses scrap and gadgets, repairs or redesigns in a special workshop where one receives language training in parallel. Mack has a collaboration with the Culture department for and with journalists taking refuge from trouble spots of the world. A project where the journalists get the chance to tell their own story. Macken works with the municipal business department and social services on a company hotel of approx.1000 m2, where people receiving benefits can start a company to that can maintain themselves. The Municipal council purchase the service of company start-up (training, coaching, financial solution, workplaces etc.) from Macken with the goal of 10 people/ year succeeding in leaving income support and supporting themselves through their own business. “Global market” is run with the Technical department Roads offices once a month. Stortorget in Växjö is filled with stalls and food from, around the world that Macken’s members and participants have produced.
Collaboration with educators
Macken has a “get started course” with a Folk High School and a construction company for those who have been unemployed for a long time. During the course the participants are supervised as they build a house using primarily reclaimed materials.
There is also close collaboration with Linnaeus University, based in Växjö. People from the University have taken part in the development of Macken. Research is underway that has been financed by IKEA’s founder Ingvar Kamprad, who was born and grew up in Småland near Växjö.
Collaboration with Försäkringskassan (Swedish Social Insurance Agency)
During 2008 and 2009 the Försäkringskassan in Växjö with the municipal council, Arbetsförmedling, county council and Macken social fund project ran “Hovs livs - ökat arbetskraftsutbud” (Hof living - increased labour supply). Macken’s role in the project was to offer 20-40 rehabilitation places. Participants were offered rehabilitation and work training in either existing Macken workshops or in a new business concept that the participants could build and man.
Macken – part of Småland’s cultural inheritance
Macken, Jönköpings museum and Kulturparken Småland run a skills development project “Cultural strategy and the future” together within ESFs program area 1. The Project runs for the period 01/01/2012- 20/06/2014. Kulturparken Småland is a limited company that is owned by Landstinget Kronoberg and Växjö municipal council and is principal for 10 or so museums including the Glass Museum and the House of Emigrants. The project is intended to enhance the skills of those employed in the culture sector and to create more employment opportunities in the sector. The latter is a task for Macken and resulted in the starting and running of a café in the Emigrants House. Immigrants in Macken run the cafe.
Even the government collaborates with Macken. Several years ago Macken participated as experts witness in a government inquiry into how Swedish education for newly arrived immigrants could be improved.
Employees, participants and financiers
At this moment, October 2013, Macken has approximately 30 employees, the majority of whom have previously participated in one of Macken’s projects or language workshops. The number of unemployed who participate in one of Macken’s workshops, or are in the process of starting a business at Macken’s enterprise centre varies between approximately 40 and 60 people.
Macken started within a social fund project but the core activity is now run without project funds and is primarily financed by sold language training places. Most new initiatives through the years have been project financed however. Start up and development of the language workshops was financed by the European Fund for Refugees and The Swedish Inheritance Fund Commission. The enterprise centre was also a result of another social fund project but this now operates on market terms and sells its services. In other words the Social fund has contributed heavily to building up Macken’s operations.
3.Evidence/Justification for Good Practice
Extending through social franchising
Now Macken has grown beyond Växjö Municipality. The need for training, language workshops, more enterprise (cooperative) and more jobs applies in municipalities across southern Sweden. Other municipalities have made a number of study visits and made inquiries about establishment or assistance. The greatest challenge is the first step. Macken has not had the time or resources to expand itself to new municipalities. Those municipalities that have shown interest in Macken have not dared to commit the resources that Macken required. They have chosen to see someone else do it and take the risk.
Macken was contacted by Coompanion Gothenburg region, which has developed social franchising as a method, and underwent their introductory training in Social franchising in 2010. The idea was to find a way to extend and help those municipalities that had need of an operation like Macken. But Macken did not have the resources or the opportunities to develop in the way learnt during the training. Daily operations were too demanding and Macken has not built up the economic capital necessary to fund the development work required to be a franchisor.
As described earlier social franchising is primarily a method for transferring knowledge from one established social enterprise to another that wants to achieve the same social and financial goals. During the first phase, the pilot, support during establishment and for development was provided by ESF through a number of ESF and other EU projects. Macken was a successful business for more than 8 years before it entered the next phase.
In the development phase, when Macken, started to develop as a franchisor they started to collaborate with Coompanion Göteborgsregionen and the ESF-project Explosion. Within less then 18 months they took this step and had their first franchisee up and running.
Macken has now entered the third phase, the expansion for the franchise, and growth. They have begun to help their second franchisee to start. The model they work with is still based on project funding for the costs of starting the franchisee. One can expect future applications to ESF from municipal councils around the country.
Coompanion Gothenburg region is running a national ESF project, Explosion, over the period 2012-2014. The objective is that people who are currently excluded get work through actual jobs being created in social enterprises. The project does this by developing social franchising as a method. Existing social franchising concepts such as Le Mat (hotel operations) and Way out (work rehabilitation) are being further developed and expanded to more locations, the English scheme CASA (home care) is being imported and adapted to Swedish conditions and a couple of new concepts are being developed. One of the new concepts being developed is Macken. The project is establishing new companies in a total of six locations.
In Explosion Coompanion Gothenburg carries out both expansion analyses of those companies that will be franchisors and establishment analyses of those locations where the companies are to be started.
The expansion analysis made by Coompanion’s consultants is carried out in the first months of the project. During the analysis, Macken’s management group had three separate workshop days where they received help to clarify what of everything that Macken does is possible to expand, keys to success, requirements of franchisees, what the concept should look like and a business plan.
Macken has since received support to produce contracts, manuals and other items that needed clarification in the business development. The work meant going through Macken’s operations, with the side effect that the organisation has been enhanced and become more efficient.
In the work to make Macken into a franchisor Coompanion came across a common problem. The social enterprise had such extensive and diversified operations, that it was not clear which were profitable and which would be more difficult to expand. The project funds used to develop operations were also something that complicated the issue when one needed to refine the concept so that an outsider could understand how one could run the operation in a different location.
The founder also had a stark role as motor, inspirer and role model. Others in the company had been given the role of taking greater administrative responsibility, but the founder still has responsibility for development. In social franchising one does not assume that franchisee has this sort of strength, but one still needs to ensure that what the leader did is also done in the new company by describing what should happen in the manual.
Macken chose to go further with the contact made with Högsby municipal council in Kalmar county, 90 kilometres from Växjö. This was done although the manuals and the work to establish how one should operate as a franchisor were not completed. It was too good an opportunity to miss.
Starting Macken in Högsby
Högsby is a rural municipality with 5700 inhabitants in Kalmar county, making it one of the smallest municipalities in Sweden. Of these inhabitants 750 are born abroad. Högsby has had negative population growth for some time. The municipal council, like many other rural councils, has chosen to take more refugees than the national average. The conditions for integration are considered better in smaller places and immigration contributes to maintaining schools and social care.
The initiative for establishing Macken in Högsby was taken by the manager of the Högsby municipal council’s employment office. He saw the opportunity to create work in the municipality through more social enterprise and this in collaboration with Macken in Växjö, which had long experience of starting companies by and with the long term unemployed. He had previously considered different ways of starting a social enterprise that offered better opportunities to those people who were stuck in long term unemployment. The politicians in the municipality also saw social enterprise as an interesting route to doing something about the long time unemployed residents. Högsby municipal council assumed a policy of working for more social enterprise in the municipality.
The next stage in the start process was an establishment analysis. Before a company can establish itself in a new location the company should carry out an establishment analysis, regardless of whether it is a social enterprise or not. Coompanion’s advisors have had several analysis meetings and a full day seminar with different representatives and key personnel from Högsby to chart the risks and opportunities prior to start. The result was a business plan to address the priority tasks one of which in Macken Högsby’s case was the importance of contracts with the public sector for purchase of services.
In every other aspect the business plan clearly indicated that a Macken in Högsby has a great chance of success. Recruitment of participants for training and for staff was underway, premises with greatly reduced rents had already been negotiated and a number of business contracts had been signed.
The establishment analysis gave the green light - Go!
Högsby became a partner in Explosion when they expressed interest. Because of the structure of the project it was possible to attract interested municipal councils, who were not partners from the beginning, even when half the project had passed. Coompanion in Kalmar county also became a partner in the project.
Before the formal start of the company Macken Högsby initial training of participants was carried out by one Coompanion’s educators at the municipally owned Tegelbruket. The training was in starting and running a social enterprise. It was participants in that training who went on to Macken and 5 of them are now employed.
The employment office manager ended his council employment and became Explosion’s project manager for the start-up with a view to becoming manager of the cooperative that was created and will be the franchisee. So far the Macken Högsby cooperative has three members, one of whom is the project manager. Membership is open to application after one year's involvement in the cooperative.
Torbjörn Carlreus, Macken Högsby is signing preliminary agreement with/on Fredrik Bergman, franchiseleader and founder of Macken.
Macken Högsby started its operation in August 2013 and a few months later already has 5 employees and five different workshops; transport services, café, construction, silver smith and work team in second hand operations. The Second hand operation is in conjunction with Human Bridge, a charity that runs second-hand shops and collects funds for disaster relief. Human bridge is in many locations in Sweden. In total approximately 15 people are active in Macken’s workshops in Högsby.
Already there an agreement is in place with the municipal council’s education board purchasing places in the language workshops.
The municipal employment training operations, with 50 or so participants now functions as a recruitment base for participants/ employees/ members in Macken. This provides a route for these people that was not present previously.
In Högsby there is an arbetsförmedling that is positive towards the Macken cooperative and has promised to make government funds available the day that Macken employs people with disabilities and so facilitates the path from welfare payments to wages for the individual.
Work is underway to mobilise “Friends of Macken”, a network of people who work on a voluntary basis to enhance the local Macken. Creating a local “Friends of Macken” is part of the franchising concept and must be established by every franchisee. It is a requirement that those involved think is an important part for the concept to be successful. It is relatively unusual in Sweden for work integrating social enterprises to involve committed volunteers.
How the expansion works
Macken has been around for 10 years – has received a lot of attention, has been awarded prizes, has had lots of press and Macken invests a LOT of resources in expanding the concept (too much in the view of this author).
Macken has strong support from Växjö municipal council which is used as an asset in the expansion work giving other small municipalities, who know nothing of social enterprise, the opportunity to discuss the idea with a municipal colleague who can explain the municipal role, responsibility and benefits.
Macken has identified who can be a franchisee and that person must have the following qualities
- Flexibility and Entrepreneurial spirit
- Good relations with the municipal council
- Together with Macken Växjö develop the concept
- Follow Macken’s values according to the manual
- A social engagement
- A stated environmental approach
In Högsby’s case this can be found in the project manager, but Macken also accepts that a group can meet these requirements.
Macken’s franchisees must find the funds required to start themselves, which is understood by those people/ organisations who have so far expressed interest. That this may be Project funding is quite natural to Macken.
Using Macken’s manuals for support, the coming franchisees can establish their operations. If the establishment takes the form of a project there is a possibility that the local Coompanion will provide training for those people who are starting the cooperative. Even if the manuals are important they are still only a starting point and assistance in the knowledge transfer that the franchisor provides in the shape of training, coaching and feed-back. For the start up the franchisee makes a study visit and takes part in Macken’s operations and the franchisor is actively involved in the new location.
The next stage is to establish Macken in Karlskrona. A coastal town, with 50 000 inhabitants, situated across more than 15 different islands, 110 kilometres south of Växjö. It has a submarine dock and a naval base. Karlskrona has a higher unemployment rate than the municipal average in Sweden.
The initiative to start Macken comes from the Municipal business office with support from the local Coompanion. An establishment analysis has been carried out with support of the coordination association.
Thanks to financing and support via the ESF-project Explosion, Macken has been able to expand, becoming a franchisor and establishing the first franchisee.
Macken has not yet reached the stability and extent as franchisor characterized in the Growth phase (see above). For sure it will face problems in the new locations, which will require the concept to be reviewed, but that is a natural part of social franchising.
Thus far, it looks as if Macken has succeeded in creating a company based on a business idea that solves the problems faced by all immigrants, who cannot get a footing within the Swedish labour market and cannot therefore develop their language skills. It solves in particular the problem of those, who need another form of learning than the traditional Swedish for Immigrants (SFI) education.
For the municipality in Växjö, Macken has been an interesting partner for a decade and has solved some of the problems within the responsibility of the city, that it was not able to solve alone, hence the inclusion of the big immigrant community. And for the stakeholders in Högsby it became an easy solution on how to start and build a partnership around a work integration social enterprise.
So far in Högsby five people gained employment and no longer receive benefits from the municipal social services, which means an annual saving for the municipal council of over 60 000 Euros. This amount will probably double within the next few years.
5.Strengths and Weaknesses
The strength of Macken is the business idea: to reuse resources, waste and humans. By combining language training and workshops producing different goods and services for sale they are able to get a combination of incomes to the cooperative. The way the enterprise is managed is inclusive in two ways: it includes the target group and they can be entrepreneurs and owners and Macken also includes the local community, individuals, enterprises and authorities, into a partnership. Another strength is the entrepreneurial and innovative spirit that exists in Macken, where they build the business around the needs of the beneficiaries. They expand into new activities that can give employment to the beneficieries participating in the workshops.
One of the weaknesses of Macken might be the diversity of its activities. It is consuming a lot of the management time and resources. The business model of Macken is also dependent on the strong relation with the authorities. In places, where it is not possible to create or maintain this relationship, Macken will have problems.
The strength of social franchising is shown with this case, proving how easy it was to establish a new social enterprise in Högsby basing on the model of Macken in Växjö. It lowered the threshold to start a new social enterprise. It gave support and know-how to the entrepreneurs in Högsby.
The weakness of the social franchising of Macken is the lack of time and resources during the development phase to maintain the business in Växjö while at the same time assisting the process in Högsby. Macken overcame these difficulties by including and inviting the new franchisee in the development work and also has received a professional help from Coompanion with the franchising process and with the training of the staff of the new franchisee..
A weakness, or an initial obstacle, is the process of becoming “franchisable”, to understand what, from all those tiny elements that makes the enterprise, is necessary to be transfered and how to transfer a business concept. It is also a time consuming activity to write manuals. Coompanion had to introduce the Robinson Crouse-method, to bring the persons responsible for writing to a desert island, where manuals were completed. Lesson learnt by the Coompanion is that in the future much more manuals should be written by their consultants.
6.Comparisons with other experiences
Macken, as a social enterprise in Sweden, is rather similar to some others. They are dependent on trading services and goods on traditional business and consumer markets and at the same time they are selling trainings for their beneficiaries to the authorities. Macken has a big diversity of activities. The core is the job creation and the inclusion. This is also a similarity with others, and maybe a necessity. But when the new Macken in Högsby took off, it was much more focused on the trade, which could be seen as a result of the process of becoming a social franchisor.
In the Explosion project Coompanion assisted few other social franchisors to spread within Sweden. The process is rather similar for all these new franchisors. It takes a lot of effort to make the basic work, to develop the franchise before being able to spread it. The diversity of the activities in Macken is similar with other franchisors in Sweden, and in the view of Coompanion, it is reducing the value of the knowledge transfer and makes it necessary to focus merely on the core of the concept, the methods of training and rehabilitation and management of the enterprise.
A lot of papers and projects promote and inform about social enterprises. All over Europe there are thousands of publications promoting and inspiring the public in the area of social enterprises. Many study visits are arranged to social enterprises in order to learn and repeat the success. There is a great value in these promoting activities. Social franchising is another way of promoting social enterprises.
There have been projects like Explosion in other countries before: developing social enterprises into a social franchisors. A successful one was INSPIRE, an EQUAL programme to establish social franchises, were CASA, a domicile care franchise in UK, developed the first ‘replication unit’. The first experience enabled CASA to become operational very quickly and within 18 months two further Home Care Associations were established in Newcastle and Manchester.
But there have also been examples of projects, especially in the UK, that have not succeeded to establish a viable social franchise business. The major problem in our opinion has been the motivation and willingness of the original enterprise to fulfil the mission to become sustainable franchise. Some examples exist, also in Sweden, that instead the projects tried to overcome these obstacles by producing manuals how to run the business without doing by the social franchisor the necessary work with the newbie. According to Coompanion there is no proof that this is a successful way.
7.Overall assessment and transferability
The social enterprise Macken represents a very interesting case for several reasons. It addresses very important issue of reusing the abandoned household equipment, toys, electric appliances and so on. They offer jobs for people who could not find “typical” employment, among others for such reasons as poor knowledge of the language. They have developed methods of combining a language training with the job creation. Macken has used the method of social franchising to replicate and spread their model.
The strength of social franchising as a method for growth of social enterprises is also expressed in statistics - more than 10000 jobs created in Europe. Although Macken is still in an early phase as social franchisor, with help of the method described in this study, in short time it was able to establish a new Macken.
Social franchising evokes feelings. The public is suspicious of the method. Undoubtedly the concept of franchising has shown in many cases that in reality it is not about a mutual relationship between the franchisor and the franchisee, however it is the fastest growing business model today.
There is a big variety in how social franchises are organized. Macken is developing in the way that is rather common among social franchises: that the brand and concept is owned by all the franchisees - a cooperative model.
Social franchising could be seen as a top-down model that might reduce the diversity of social economy, not following some of the common values in this sector. We find this argument unnecessarily anxious. Social franchising will not be the only strategy for growth of a social enterprise, and is not appropriate for all social enterprises. There are still millions of long term unemployed and excluded people in Europe.
The transferability of Macken
The social franchise Macken has some features that are related to the Swedish context. For a work integration social enterprise in Sweden, it is usually inevitable to have an intense cooperation with the local authorities. By applying social franchising, Macken has made it likely that more municipal councils will dare to invest in social enterprises. In many municipalities the knowledge of what a social enterprise is and how it is started is limited. This creates uncertainty and in the worst cases leads to failure. In Högsby the idea to start a social enterprise was there, but it was only through the legitimacy of Macken that the municipal council dared to make the full investment. Therefore Macken is the solution for many municipalities which wants to invest in job creation by funding social enterprises. Macken knows how to do it, has already done it and can help.
A social enterprise is never run by a municipal council, but an operation like Macken would be difficult to start without collaboration with the municipal council. We have seen above how Macken operates with several municipal departments in Växjö and how it works with the municipal council in Högsby.
Macken found its pedagogical inspiration in Denmark. Perhaps in future it can inspire or extend its model to other countries as it is now expanding in Sweden. A condition is the willingness to invest in the language development of immigrants.
The transferability of Coompanions methods of social franchising
Macken is one of seven social enterprises Coompanion Göteborgsregionen has assisted and is still assisting to become a social franchisor. Still the development of the method is at an early stage. The consultancy work with Macken has been both structured and flexible, structured was the work to make the experiences and procedures of Macken transferable, but the transfer and training in Högsby needed a high level of flexibility to be delivered and adapted to the actual local circumstances. For an organization familiar with the target group and social enterprises this was manageable.
The methods developed to evaluate the transferability and capacity of the potential social franchisor is generic and transferable.
One condition is that there are entrepreneurs, who meet Macken’s requirements of a franchisee, who are prepared to collaborate with a franchisor. This process is facilitated by collaboration with local Coompanion, which can support the entrepreneurs. It can be of course done without intermediaries as Coompanion, but the costs of the social franchisors would be higher. On the other hand if intermediaries want to assist the growth of the social enterprise sector, it would be of great value if they invested in growing knowledge on social franchising.
Obtaining higher returns from ESF investments for jobs in social enterprises.
Macken is one of many social enterprises that have received extensive support from ESF throughout the years. The main part of the support was for the skills development of participants in Macken’s different projects, through which they gained employment in Macken or in other companies. The support has also functioned as the risk capital that social enterprises would not otherwise have access to. By codifying this experience in the social franchising process it becomes easier to disseminate the results of the projects.
Thanks to financing from Explosion (ESF) and support from Coompanion, Macken has been able to expand and become a franchisor and establish the first franchisee . Explosion solved three problems:
1. The Project gave Macken access to the expert help and economic resources to write a manual, on which the transfer is based. Financing from the project a part time employee for Macken has meant that concrete help could be given to the franchisee.
2. Macken’s managers could run the Macken company, but had no experience in expanding and helping others to start a company. Through the project, Macken received support in how one could work with knowledge transfer. An example of support is that Coompanion frequently gathers managers from the six franchising providers for regular action-learning sessions.
3. The Project also assumed the risk, which the establishment of a franchise means. A risk that municipal or regional authorities would probably not have taken themselves. The Project financed a local project manager and Coompanions’ trainer for two days a week for a year.
In total, the franchising process, inclusive of one year’s training of the group of 15-20 people that make up Macken Högsby's operation, cost: 250 000€. The 12 month training in Högsby is the biggest part, and would have occurred in any training of long term unemployed.
The question if this way to fund the creation of job by using social franchise is transferable could be positively answered. But there are few obstacles. First, there must exist excellent social enterprises. Then, there must be a willingness from them to make the effort to start a new activity, to be a franchisor. Or alternatively, which occurs, that somebody else takes the role of franchisor on behalf of the owner of the brand.
Moreover there must be available fundings for the development phase and the programming authorities has to consider how to make it possible to create “a chain of projects”.