Financial benefits of franchising ‘prioritised over quality’

Some universities have prioritised the financial benefits of subcontracting their courses over maintaining a high standard of provision, with students recruited missing out on a quality education as a result, an Office for Students (OfS) report has found.

Highlighting data collected as part of its increased focus on “franchising” arrangements, the regulator said that more than 50 per cent of students enrolling on such courses had no or unknown qualifications prior to starting their studies, compared to 9 per cent of the total undergraduate population.

In 2022-23 and 2023-24 “just over 65 per cent of students eligible and applying for Student Loans Company funding to study on subcontracted courses were from nationalities where English is not the first language”, the Insight brief produced by the OfS further highlights.

They are also more likely to be mature students, from the most deprived areas of the UK, or living locally before entering higher education, it says.

While the data will likely strengthen the argument for those who claim franchising is widening access to higher education, the OfS said the profile of the students involved meant they would likely require additional support, but were not always receiving it.

Some universities entering into franchising agreements “have prioritised the financial benefits of these arrangements over the quality of courses – for example by reducing the entry requirements for students, and so putting pressure on staff to support students to remain on unsuitable courses, and resulting in poor student outcomes and potential regulatory action”, the OfS report says.

Examples of bad practice found at the partner delivering the course included a lack of data on their students, no clear attendance policies and staff encouraging academic misconduct, meaning that student loan payments were paid to students who did not genuinely intend to study.

Last year, the National Audit Office highlighted examples of fraud relating to franchised provision, bringing increased attention to what had previously been a little-understood practice.

Franchising has boomed in popularity in recent years with 138,000 students – 5 per cent – taught in this way in 2022-23, double what it was in 2019-20.

“In some cases there has been an exponential growth in student numbers in subcontractual partnerships over the last few years, with some lead providers now teaching more students through these arrangements than directly on their own campuses,” the OfS report highlights.

Some 62 per cent of all students taught via franchising were enrolled on business and management courses, mirroring the popularity of these subjects at a sectorwide level but raising questions about whether the arrangements were meeting gaps in specialist provision, as claimed.

The OfS said it considers “a university or college with a business model that involves substantial subcontractual arrangements to represent an increased regulatory risk”.

David Smy, deputy director for enabling regulation at the OfS, said while the report highlighted “many benefits can be achieved through subcontractual partnerships, for both students and higher education…partnerships need robust management and oversight if they are to achieve these benefits, and deliver for students and taxpayers”.

“In these financially challenging times for higher education providers, it’s more important than ever that they recognise that business models that rely heavily on subcontractual partnerships carry additional risks, and these risks must be effectively managed,” he said, adding there were ”serious risks to public money where these arrangements are not managed properly”.

tom.williams@timeshighereducation.com