Universities must ensure effective franchising risk management

The OfS recently published an ‘Insight Brief’ (12 pages / 322 KB) examining the growing trends of subcontractual arrangements in higher education. Subcontractual arrangements, also known as subcontractual partnerships or franchised arrangements, occur when a university or college allows an external organisation to deliver all or part of a higher education course on its behalf.

While franchise arrangements can offer significant benefits, including offering students alternative routes into higher education, they also present significant risks and challenges for institutions if they are not managed properly. The comprehensive report urges universities and colleges to adopt robust management and oversight practices to safeguard the interests of students, taxpayers, and the higher education sector.

The OfS’s recent report identifies several specific risks including the impact these arrangements may have on students. It found that students in subcontractual arrangements may not always receive the same quality of education compared to those taught directly by lead providers. Issues include inadequate support in some instances as well as lower course quality, with reports of unfair treatment also noted in the OfS document.

The OfS also identified potential risks to taxpayers’ interests, particularly if public funding it not used effectively. The report emphasises the need for stringent oversight to ensure that public funds are spent appropriately and that students receive value for money.

Poorly managed arrangements can potentially risk the reputation of the higher education sector, according to the OfS report. The OfS warns that such arrangements, if not carefully monitored, can lead to negative perceptions of both the quality and integrity of higher education in England. There are also risks related to legal and financial liabilities, with the OfS advising institutions to have robust governance structures in place to mitigate these risks.

Stephanie Connelly, higher education disputes specialist at Pinsent Masons, said: “The OfS plans to enhance its regulatory framework, which may involve revising existing consumer protection conditions and introducing more targeted requirements. The OfS also intends to increase oversight of franchised programmes, particularly in areas where student outcomes are at risk, and could impose sanctions if standards are not met. Universities considering franchised arrangements need to look at strengthening their existing safeguards to effectively manage these risks.”

To address these risks, the OfS report provides several recommendations for universities and colleges. For instance, institutions are being urged to establish strong governance to oversee subcontractual arrangements including the monitoring and evaluation of education provided by subcontracted partners. Universities and colleges should also ensure that contracts with partners are clear and comprehensive, outlining the responsibilities of each party. The OfS report also encourages higher education institutions to prioritise support to and engagement with students in subcontractual arrangements, ensuring these students have access to the same resources and opportunities as those taught directly by lead providers. Transparency is also vital, according to the OfS, with institutions urged to be open and accountable in relation to any subcontracts, providing clear information to students and other stakeholders.

“The higher education sector can draw valuable lessons from commercial franchising to mitigate these risks and enhance the quality and integrity of franchised education,” franchising expert Scott Oxley of Pinsent Masons said.

Oxley said: “Though not a typical commercial franchise model, whereby a franchisor licenses the use of its brand and know-how for a franchisee to replicate, there are many parallels between commercial franchising and the higher education sub-contract franchise arrangements. The success of the model hinges on rigorous quality control, robust oversight and governance, and the provision of comprehensive guidelines of operation by the franchisor.  By establishing clear standards and procedures for programme delivery, actively monitoring providers, and taking corrective action, higher education institutions can enhance their franchised education provision, safeguarding and growing their brand and reputation and ultimately improving educational outcomes.”