SCP began investing in franchises as a means to reduce some of the risks involved in starting a new business. We already had significant experience starting small ventures and are aware of the value that an established brand name, proven operating system, ongoing support and, in certain cases, national purchasing power can provide. A franchise network also provides SCP with the opportunity to efficiently scale our social employment model across multiple locations. It is for these reasons that our first step on the road to investing with in a franchise is to ensure that the franchisor is aligned with our social mission.
We see significant social benefits in investing in franchises as well. Working with an established business formula will allow our businesses to grow profitably while continuing to hire employees from a target community. Ongoing support and training provided by franchisors fits with our desire to provide skill development opportunities for the employees of our portfolio companies.
Our franchise financing strategy does not replace our work with more “traditional” social enterprises. It simply provides us with another avenue that we hope will help make the concept of social enterprise more mainstream in Canada. The maximum amount of financing available from is $300,000 per franchise but the actual amount will vary depending on the needs of a particular franchisee and the number of employees that will be hired through community programs that help those facing employment barriers.
For more information on our franchise financing packages, please see the Financing section of this website.
Benefits to Franchisors
We believe that there is a clear opportunity for SCP and our target populations to benefit from this franchise financing strategy – but it is not a one-way street. A franchisor will also benefit from a relationship with SCP:
- Access to financing will help franchisors expand their network while ensuring that a franchise is fully supported and appropriately capitalized.
- The financing program will provide a vehicle for franchisors to grant franchises to individuals who have all the necessary business and personal qualities but lack the unencumbered capital. For instance, franchisors could potentially award a franchise to a successful manager of a company-owned store who would not otherwise have the financial net worth to become an “owner”.
- We believe that the franchisor will benefit from positive public sentiment. Social Capital Partners and its portfolio organizations have been featured favourably on CBC’s Venture, in the National Post, the Globe and Mail, The Toronto Star, and several other local and national publications.
- Our partnerships with many dynamic community organizations, in addition to our own experience in establishing appropriate social support infrastructure in the social enterprises we fund, allows us to ensure that people hired in the franchises are properly screened, trained and supported. This will permit the franchise owner to concentrate on the business aspects of building a successful operation.
What SCP looks for in a Franchise Relationship
Experience has taught us that not every franchise is the right fit for investment through Social Capital Partners. When evaluating an investment opportunity, we consider the following:
- The quality of the jobs being created - SCP gives a strong preference to investing in franchises that offer their employees the potential for a meaningful career. Not only do we consider the starting wage social hires will earn, but also the potential for career advancement, skills development and access to benefit plans.
- Good corporate citizens - We look to invest in franchises that have an established track record of being active in the communities where they operate.
- Labour intensive - There are many great franchises out there that only employ one or two people. Where SCP facilitates an investment, we need to see the potential for a number of jobs to be created proportional to the amount of funding requested.
- Growth - SCP looks to arrange for investment in franchise chains that are growing and opening new locations. Not only does this help to mitigate the financial risk associated with the investment, it also creates an opportunity to scale.
- Good franchisor/ franchisee relationships - We look to facilitate investment in franchises that have demonstrated a commitment to making their franchises successful over the long term.