CIC Association

Serving Community Enterprise

CIC licensee closes up within a year despite significant support from state...

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I was involved in the orginal franchsied businesses (which are still trading profitably) so happy to explore this story further with people...
what went wrong Adrian? More than the stated reason of the economic downturn?

John
well, the official press release says it was due to 'the economic downturn' and given that there are now liquidators mopping up (never a good sign about how a business was being managed), its unlikely that we'll ever get a fuller picture than that...

however, the successful social firm/co-op that the model is based on traded succesfully through previous recessisons, and was always very realistic about its financial plans and models: it didn't (expect to) break even for at least the first 3 years of trading.
It also never received any financial support or grants like this licensee did... it traded, and continues to trade, on market mechanisms - took a commercial loan to set up and support cash flow, overdraft arrangements with the bank, and all revenues come from customer sales.


Wonder if this franchise model has perhaps set the bar too high in terms of expectations of turnover and return within first year?
Wonderful to be able to speculate, but probably only fuel rumour and heresay which will ultimately only cause more confusion and upset.

However, given it was a CIC, it would be useful if the Association could make a formal request to Social Firms UK and the liquidators for a copy of their final findings in making sure that any issues pertaining to their CIC status are fully appreciated and acted upon by the rest of the CIC community.
Good idea, it looks like they're still moving the general concept forward and from what I know of them they seem on the ball. Do you know any more about 'Co-op investors face deadline over losses' story thats happening over there?

Its an old cliche but there is more to learn when things go wrong, What do the Daily Bread Co-operative think about what went wrong? Have they done other licensing deals?

I'll be looking at the dissolution rates closely this year, as at 30 November 2009 only 143 CICs had dissolved which we think is a very low number, Do you think one of the reasons is most have very low investment levels? Do you know what the Co-ops / normal business dissolution rates are?
sadly the orginal (and still succesful) Daily Bread Co-op (DBC) was/is not involved in any way in the Wholefood planet franchise - as part of a national programme by social firms UK (SFUK) some years back, SFUK identifeid DBC as having franchise potential owing to the fact that the original DBC in Northampton had succesfully replicated itself in Cambridge with no external support or facilitation, and both are still in relationship with each other today.

The deal with SFUK was that the DBC in Cambridge received a single payment in respect of its 'business model'; this was then 're-created' as the Wholefood planet franchise, which, to my perception and understanding, is a poor imitation of the DBC business model in that it has not retained some of the core defining values or business case features, nor created any linkages to the orginal enterprises - a key part of any franchise model (private or social).



as for business failure rates - generally for private businesses, its a third in the first year - Co-operatives Uk will have more up to date figures for co-ops, but last I checked, co-op failure rate was so minimal within its overal business population that you hardly noticed it... except for if its one of the larger co-ops and the press pick up on it...
I often wonder to what extent social enterprises are on the same page with regard to supporting each other. Being paid for a business model is quite contrary to our approach of placing a 'profit for purpose' business model and subsequent strategy papers in the public domain.
its is an unusual arrangement, especially as the original DBC's were always very open to discussing replicaton with anyone who asked for free - the idea being that part of their core business ethos was to perpetuate their business model, and the original DBC felt that the best way to do this would be through a loose licensing arrangement which would base the relationship on non-financial terms, with the only financial committment being to seek to joint procure stock where possible.

DBC in Cambridge, although following this approach for a number of years, for whatever reason decided to engage with SFUK and become part of their replication programme.
However, given the changes that SFUK made to the orginal business model, DBC is still able to discuss replication with anyone who might wish to as while Wholefood planet is based on the award-winning and successful DBC business model, it varies in a number of underlying areas.
What I found interesting yesterday was to discover that the theoretical model we placed iin the public domain of a trading organisation yielding "at least 50% profit" to social benefit became the criteria for the new SE mark. In fact, with the proposition that company charter is modified to invest in community development, we have the essence of the CIC model distributed freely 1996 and published online in 1997.

Does that mean we might be entitled royalties from SE Mark or that CIC's including this failure need to pay for applying a derivative of our model.

I think not. The intention was to spread a meme - of capitalism serving the disenfranchised. The same as Phillip Blond who appears at Voice10 today, now advocates. Does he owe us too?

All we really want in fact is to raise awareness of what we're doing to leverage social enterprise overseas and the plight of some of the most vulnerable who are swept under the carpet.

Jeff
I suppose it all depends on the proportion of
SOCIAL and ENTERPRISE
That we build into the model.

I think we are about 90% SOCIAL and 10% ENTERPRISE, and that suits us fine and falls within our maybe overpadded comfort zone, but I really don't have an issue with CICs who want to reverse that equation and be really daring. Its all part of the fun, isnt it?
Suggest you take a look at national business and personal insolvency statistics and other useful related data - see the Insolvency Service website:

http://www.insolvency.gov.uk/

Regards.

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