'Interestingly enough we've turned to McDonalds for the business model of expansion which is most in keeping with the third sector.'
- Training for Life CEO Gordon D'Silva
Social enterprises should be learning from McDonalds when thinking about expansion, said the head of a leading social enterprise yesterday.
Training for Life CEO Gordon D'Silva was speaking at a CAN Breakthrough conference about mergers, acquisitions, franchises and other methods of expansion.
He said: 'Interestingly enough we've turned to McDonalds for the business model of expansion which is most in keeping with the third sector.
'I don't think the mergers and acquisitions model works for the industry, franchising does and the reason it does is it allows people to come into sector with passion, vitality and ownership, which you don't get if you're building an empire [through acquisitions].'
D'Silva's comments were backed by Brian Mullens, senior vice president of McDonalds UK and Northern Ireland.
Mullens told the conference that he believed that where social enterprises could learn from McDonalds was in its franchising method.
He pointed out that the rationale behind franchising for McDonalds was not a need to expand - which it has the capital to do without bringing in franchisees. But Mullens said the franchise model had brought the company '160 energetic, creative people with incredibly vested interests in the business - a great pool of people who can contribute to the future'.
'That in itself is a competitive advantage to franchising,' said Mullens.
McDonalds franchisees have to take on a 20-year contract, go through a three-month interview process, and work in the stores nine months for free before they are given a franchise.
John Bennett, CEO of social firm Pack-IT, also emphasised the importance of people. He said the key to successful replication for his organisation across the country was finding the correct person who would commit to the model.
A snapshot survey of 70 social enterprise leaders conducted by CAN found franchising, joint ventures or licensing were more popular forms of expansion than mergers or acquisitions, with 81 per cent considering the former and only 62 per cent the latter.
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