MY wife lyndah,who is my managing director our 19-year-old company GMB Franchise Developers Inc., was discussing on studying the possibilities of social franchising around three years ago when we were tasked by a government agency to explore taking their retail concept overseas as a franchise concept. Government agencies, as well as government-owned and -controlled corporations, always try to explore ways of bringing back profits or income into the mainstream budget so they could be more sustainable.
I think that with some agencies they are able to work with the Commission on Audit on how to disburse funds that they themselves made or raised (such as the overtime pay of the Bureau of Immigration or Department of Foreign Affairs some years back). If there were a policy on how to make agencies more sustainable, then we would probably need less money to run these offices.
The study on social franchising came about because we wanted the originator (or the owner of the idea) to share the concept but not necessarily profit much from it. The model was just to sustain its operations or what you would call in business as “breakeven.”In social entrepreneurship, it is basically the same. You make a profit but it does not all plow back to the owners as dividends. Rather it is plowed back to improve the business and expand the business, rather than put money in one’s pockets as with regular for-profit businesses.
I found out that the ECHOstore of Chit Juan, Reena Francisco and Jeannie Javelosa was already doing a model of social franchising. They partnered with Partnership and Access Centers Consortium Inc. (Pacci), composed of NGO networks around the country, and had Pacci turn their Village Store on Esteban Abada in Quezon City into an ECHOVillageStore. Reena designed the logo, the store interiors, and assisted Pacci on merchandising and pricing. Chit gave lectures on marketing under ECHOteach and would take stock photos for the web site and social media. Jeannie concentrated on product development under ECHOdesignlab.
For the ECHOtrio, they did not realize until later that what they were doing was actually franchising a concept. It was not ECHOstore per se; it was a hybrid model, but was replicable and somewhat franchisable.
ECHOstore was doing corporate social responsibility but was hatching another idea: a social franchise. Blessings do come easy when you mean well and do good.
Starting with the store on Esteban Abada in 2009, the ECHOVillage Stores now have opened in Puerto Princesa, Bacolod, General Santos and Baguio City. Before the end of the year, Sorsogon and Albay will also be opening. All the stores follow the colors, the look and the merchandise mix of all the others.
According to Chit, ECHOVillage Stores do not have to end with just the Pacci groups. Even government agencies partnering with local government units—say the Tourism or the Trade and Industry departments—can use the ECHOVillage Store if they can follow the rules set by its originators—and I can tell you Chit and Reena are the strictest franchisers on this side of the planet.
How serious is the Pacci with its social franchise?
They already acquired a computer system to track inventory in all the branches, and they hope to stock each store with products from around the Pacci communities around the country. This means finding GenSan tuna in Baguio, or finding Good Shepherd strawberry jam in General Santos City. We must remember that all Pacci members are NGO workers, but are now turning into social entrepreneurs. This is the formula mentioned in The Blue Way, a book published by the Ateneo on social enterprises.
So, can social franchises be borne only out of social enterprises? The answer is: Maybe, because one has to have a change of mindset first from pure business to adding a social dimension and therefore transforming into a social enterprise.
Does a social enterprise make money? It should.
After transforming into a social enterprise, you can then carve out a model for franchising—thus, it can now be called “social franchising.”
There are many groups now pushing for the development and promotion of social enterprises: Joey Concepcion’s Go Negosyo has started by organizing forums on the subject and also creating a new term—CSI or corporate social innovation. An example is Cynthia Villar’s “coconets” made by communities from coconut coir and used as soil erosion control. Villar saw the need in their real-estate projects and voilà! Coconets had a ready market, while Vista Land had a regular supply of erosion-control materials.
Another group pushing for social entrepreneurship is the Ateneo, which recently held a conference with Stephen Bubb, a UK social enterprise expert brought by the British Council to Manila. Danny Ocampo, formerly of the Catholic Relief Services, will be heading the Social Enterprise (SE) program at the Ateneo so we can create more SEs.
Fr. Xavier Alpasa recently called for a convergence meeting with government in attendance (Budget Secretary Butch Abad and Agrarian Reform Secretary Virgilio de los Reyes) to again bring together social entrepreneurs, government, the academe and NGOs like the Sumilao corn farmers group. Not to rally in Mendiola, but to come together to make change through enterprises. Featured social entrepreneurs were Ritual, Uma Republika and ECHOstore.
A formidable organization that used to just “reach out to the poorest of the poor” is Peace and Equity Foundation (PEF). This next decade the PEF will introduce social enterpreneurship as “the next business model.” And to further emphasize the change in mindset and influence the mainstream business leaders that this is the way to go, the PEF has brought with it in the upcoming October conference the key groups in the country: Philippine Business for Social Progress, PinoyME Foundation, League of Corporate Foundations and with blessings from the Management Association of the Philippines. The conference will be on October 20 and 21.
I think that the social franchising idea we thought of three years ago may have been just a little ahead of its time. But with all the developments this year and last year, I think that Lyndah and I should be ready for a slew of ideas that franchisers will consult us about. And that would be a welcome change. From just thinking IPO as the ultimate goal for many of our franchiser clients, many may start to think to become social entrepreneurs, making their business ideas help more people in the grassroots rather than just serving the profit-takers on Wall Street.
I think the time of social franchising has come.
