‘Genie out the bottle’ on franchising despite new rules

The rapid growth of some providers operating under franchised arrangements with universities has been revealed in new figures, with experts warning that it will be difficult for the government to “close the floodgates”.

Ministers confirmed plans this week to make franchise degree providers with more than 300 students register with the English higher education regulator to help crack down on “rogue operators”.

Office for Students (OfS) data shows that 145,460 full-time undergraduate students were part of subcontractual partnerships in 2023-24 – up 24 per cent on the year before and more than double the number in 2020-21.

Of these, Times Higher Education analysis found that a record 32,110 (22 per cent) were taught at Global Banking School (GBS) – a 35 per cent rise on 2022-23 and a 500 per cent increase on three years earlier.

Initially a specialist training centre for finance and investment banking in East London, GBS has since expanded into 10 campuses across the capital, Birmingham, Leeds and Manchester, offering a range of courses such as construction, tourism and healthcare to domestic students.

With a revenue of almost £300 million in its 2024-25 financial accounts, GBS has been dubbed one of the country’s “most lucrative universities” and paid its chief executive a £76,000 bonus when he joined the institution in the last financial year.

It has partnerships with Bath Spa University, Canterbury Christ Church University, Oxford Brookes University, the University of Suffolk and Leeds Trinity University – which is currently “teaching out” the remaining students. Together these five institutions made up half of all students subcontracted out in 2023-24.

Another private provider, the London School of Science & Technology, increased the number of students it subcontracted in from 0 to 7,300 – 5 per cent of the sector total. It, like GBS, is already registered with the OfS.

Many of the biggest sources of subcontracted students increased their numbers massively in the three-year period – Canterbury (over 10 times more) and Bath Spa (over 28 times more). Some, such as Buckinghamshire New University, have announced a dramatic scaling back of activity since.

Roger Brown, a former vice-chancellor of Southampton Solent University, said many lower-tariff institutions use franchise agreements to recover revenues amid financial pressures, but that he is “naturally very suspicious” when numbers rapidly increase.

“It’s inevitable once you open up higher education to private capital, whether that’s from the student or from the entrepreneur or from the graduate, that changes the nature of the game, and there’s no putting this particular genie back in the bottle.”

Brown, who is an expert on quality assurance, said the record of franchisees is a “fairly mixed one” because assuring quality is a very difficult thing to do, particularly across several campuses.

Peter Scott, emeritus professor of higher educational studies at UCL, said he viewed the rapid growth of large-scale for-profit providers as posing a “grave quality risk” to the sector.

The public money they receive in the form of student loans would be “far better spent on addressing the underfunding of proper universities and colleges”, he added.

Alex Proudfoot, chief executive of Independent Higher Education (IHE), said subcontractual partnerships have made higher education more flexible and accessible but that the government’s new threshold for registration has been set too low.

And he warned that “registration alone will not be a panacea” and that providers teaching full programmes to thousands of students should invest in transitioning from a franchised to a validated model.

“The real and substantial risk to academic standards and public money identified by the [National Audit Office] and others exists in a very small number of fast-growing franchised providers, and it is here that investigations and enforcement should be concentrated.”

A GBS spokesperson said it had grown responsibly and that its size reflects a more flexible teaching model which operates seven days a week and includes evening classes.

“The GBS model shows that it is possible to deliver HE within the current funding envelope without compromising the resources and support available to students.”

“Student numbers is a reflection of a growing market for flexible higher education and of high demand for the sector-relevant courses that GBS offer, across priority areas like construction and healthcare, addressing skills shortages across the UK.”

The OfS said it will announce new requirements for universities to tighten control over their delivery partners early next year.