Franchising: An adequate Business Model for the "Proactive University"? A Public-Private Perspective on German HE

Abstract

Public higher education institutions (HEIs) are experiencing circumstantial changes due to increasing financial pressure, higher autonomy and diversified actors on an increasingly challenging "market". These changes have led to forms of "entrepreneurial behavior" in public HEIs, such as franchising arrangements, which have become prominent in the context of internationalization and the export of study programs. Over the last decade, a growing number of franchising arrangements on an intrastate level can be observed between public universities as franchisors and private, non-state recognized HEIs as franchisees in the German HE sector. The German situation is of special interest because the HE system is traditionally state-run and emphasizes the university as a prestige and sound institution. Students pay almost no tuition fees for a public university degree except those students enrolled in a franchise model, where the fees are about 9 times higher. Special organizational structures like intermediary stock companies and either the lack of or not commonly interpreted regulatory instruments lead to critical discussions of these models. The most crucial assumptions are that financial motives dominate decision making rather than pedagogical considerations and that public services are exploited to mask the interests of individuals. Although these presumptions cannot be rejected through the empirical results of case study analyses, the opportunities of such strategic alliances are not to be underestimated. With adequate external and internal quality assurance mechanisms, franchising models can be used to strengthen the market position of public universities through a higher number of students and an extended portfolio of products and services. Additionally, HE programs can be offered more flexibly in regions with minimal HE infrastructure and / or with programs particularly designed for "non-traditional students".