Whether organized as a for-profit private system, a
non-profit private system, or as a public system of
schools, it is important to centralize those services that
can benefit from economies of scale and at the same time
localize those services that are best provided on small
scales. Given that different schools may have different
local needs it is important to provide flexibility while at
the same time having system wide standards that are
uniform. Our analysis suggests that franchising networks
are an optimal arrangement that allows the central service
facility, run by the franchisor, to do what it does best
while reserving to the individual schools, the franchisees,
some discretion for adapting to local needs. In terms of
the legal aspects of franchising networks, only the
franchisor is normally required to be a for-profit entity.
The franchisees are not restricted as to their business
format: they can be for-profit, non-profit, or government
organizations.