Franchising ‘code of practice’ needed, says Hepi report

English universities that are increasingly franchising their courses must help shape improvements to this type of provision or risk the “franchise baby being thrown out with the bathwater” amid intense scrutiny from regulators and politicians, according to a new report.

Senior leaders at Buckinghamshire New University (BNU) – which THE analysis showed as topping a list of universities with the highest number of subcontracted students – have authored a debate paper for the Higher Education Policy Institute, which argues that the sector should develop a code of practice to be adopted by franchisors.

It also says “rapid, light-touch and low-cost regulation” from the Office for Students is needed, with the authors – BNU’s vice-chancellor Nick Braisby, commercial and business development director Ian Harper and deputy vice-chancellor Damien Page – calling for the regulator to incorporate franchisees into a new section of its register of providers.

Franchising – whereby a university subcontracts out the delivery of a course to another provider – has become increasingly popular in recent years, with the number of students enrolled doubling from 50,440 in 2018-19 to 108,600 in 2021-22, according to a recent National Audit Office report.

This report also highlighted fraud in the student loan system connected to franchised provision, while the OfS has also said it will prioritise franchised courses as part of its next series of investigations into poor student outcomes.

“Franchise provision will need to meet ever increasing assurance requirements, including the need to protect public funds from the risk of fraud and students from the risk of mis-selling”, the report for Hepi says.

“If the sector fails to respond to this challenge, there is a real risk that the franchise baby will be thrown out with the bathwater. All that is good about franchise provision could be lost.”

BNU has already started developing a new relationship with its franchise partners, the paper says, “asking them to engage with us more deeply and with more focus in a way that is proportionate to perceived risk”.

This includes closer control of admissions practices, in-person visits from university staff to verify student attendance records and more scrutiny of finances and governance.

Recruitment of international students is “heavily restricted”, distance limits are being introduced between a partner’s campus and a student’s term-time address, and BNU has introduced its own student number control system to “ensure that individual partners are able to balance growth aspirations with quality requirements”, the report says.

But, it adds, action is needed beyond the powers of individual institutions, and it calls for the regulator to step in and register franchisees by collecting a “minimal set of information required to support due diligence – for example, ownership, finances, governance arrangements, registered offices and campus locations”.

Any franchisee not on this OfS’ register would be prohibited by the code of practice from partnering with universities, and the report also calls for the regulator to make available to lead providers any risks it identifies in relation to the institutions they are working with.

Professor Braisby said franchising brought many benefits for “widening participation, enhancing choice and flexibility for students and helping to level the playing field for higher education providers of all types”.

“However, to give greater assurances to stakeholders, we believe franchise provision needs to be managed for the long-term and through collaborative relationships among franchisors and franchisees,” he added.

The changes proposed in the report “would see franchise provision thought of differently”, Professor Braisby said, “not as a threat to the UK’s enviable reputation for quality, but as a different type of delivery model that enables more students to choose and succeed in higher education”.

tom.williams@timeshighereducation.com