The Franchise Centre

What Social Franchising can learn from the rise of B Corporations

By Centre Contributor

What Social Franchising can learn from the rise of B Corporations

‘You can make money and make a difference’. That is the mantra of the growing global movement of B (Benefit) Corporations and its message rings true for the franchise sector.

This year the Asia-Pacific Centre for Franchising Excellence has been examining the emerging topic of Social Franchising as a new pathway for leveraging the franchise model to ‘do good’.

Social Franchising, the application of commercial franchising methods to achieve a social goal, is a concept that is gaining traction as a way to scale up successful projects and programs to address a range of local and international social issues.

The potential of Social Franchising to tackle issues as diverse as unemployment, poverty, disabilities, the environment and refugees is enormous as it provides not only an effective means of harnessing the power of business but also lessening the burden on government.

A similar movement to that of Social Franchising is B Corporations – a certification standard for companies that have a positive impact on society.

B Corporations are to business what Fair Trade certification is to coffee and Certified Organic is to food. It is a rigorous assessment process that examines a company’s social impact and requires it to consider all relevant stakeholders, not just shareholders.

There is a growing community of B Corporations around the world, including here in Australia, comprising 2,251 businesses in more than 50 countries and 130 industries.

Their aim is to redefine success in business by competing not to be the best in the world, but to be the best for the world.

This movement has arisen from the USA, where many States have implemented legal reform to enable companies to opt-in to become a registered B Corporation. This allows company directors to pursue both profit-making and the public good, which considers all stakeholders in decision-making not only those with a financial interest in the company.

There are now early stage discussions underway in Australia to push for a similar legal framework to support companies designated as B Corporations.

One Australian company that has achieved B Corporation certification is Silver Chef Ltd, which provides funding for commercial restaurant and kitchen equipment. It is a major supplier to the franchise sector and independent café, bar and restaurant operators.

In a recent interview on ABC Radio National, Silver Chef Executive Chairman Allan English explained the benefits the certification process has delivered to the business. He said Silver Chef has always been a purpose-driven organisation as it provides hospitality equipment funding to new businesses that may not otherwise have access to capital.

However, he said the rigorous B Corporation certification was “transformative” in building a better quality and more resilient business. B Corporation certification looks at a company as a whole, not just its particular product or service, in measuring its social impact on customers, employees and the community.

It was like finding our tribe, Allan said of discovering thousands of other businesses around the world who also believed you could use business as a force for good.

Silver Chef achieved B Corporation certification in 2015 and Allan said the company’s growth in its overall value proves it is a misconception that organisations focussed on their broader benefits to society, not just their shareholders, cannot perform financially.

After listing on the Australian Stock Exchange in 2005 with a market capitalisation of $11 million, Silver Chef grew its value to $32 million by 2010. A lot of work was then done around values, culture, people and purpose in the lead-up to B Corporation certification. Following that journey, Silver Chef now has a market capitalisation of $320 million.

Allan said the Silver Chef experience shows that having an all-encompassing view of a company’s impact on society is not just the right thing to do, it also creates better businesses with enhanced value, attraction and retention of talent, and customer loyalty.

One of the biggest benefits that Allan sees is in attracting talent, particularly young people who will dominate the future workforce within 10 years.

He said Gen Ys and Millennials not only want a good job, they want to change the world and they can do that by aligning with a purpose-driven organisation. When great talent joins a company for a purpose, there is increased customer satisfaction, more repeat business and economic growth, Allan explained.

Both B Corporations and Social Franchising are riding a rising wave of interest from customers, staff and the community in sustainable companies that have a positive impact on society at large.

For anyone looking to get involved in the fledging Social Franchising movement, the experiences of B Corporations is instructive. By broadening a company’s focus beyond its shareholders to include all stakeholders in society and the shared value that can be delivered, there are other flow-on benefits particularly in attracting the talent of the future.

It can pay in many ways to look past just your bottom-line and be the change you want to see in the world.

Social Franchising is crucial to this conversation as the franchise model arguably has the biggest potential to efficiently and effectively scale-up solutions to many of the world’s most pressing social issues.

Franchising’s proven systems to quickly replicate products and services in multiple locations can make a real difference – even more so if the best available talent is added into the mix.

We would love to hear your thoughts on Social Franchising, B Corporations and the power of business to have a positive impact on the world.

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