British universities at risk of bankruptcy due to unstable franchising deals

Up to ten British universities are at risk of declaring bankruptcy because of their reliance on unstable franchising deals, which allow private sectors to run and teach courses.

Initially started as a way for universities to reach disadvantaged communities in regions lacking higher education institutions, franchising a university’s name turned into a lucrative revenue stream. In doing so, the process provided universities with a substantial bonus tuition fee income for courses they weren’t directly teaching.

The rapid growth of this practice has led to increasing concerns about the quality of these external company-run courses and their links to fraud.

There are concerns […] that the collapse of franchised courses could cause bankruptcy for universities

Amidst mounting concerns, the government has announced a “crackdown” on such deals, aiming to diminish “rogue higher education operators” by imposing further regulations. The Education Secretary, Bridget Phillipson, has asserted that these moves are essential to “protecting students and safeguarding taxpayers’ money.”

While this could stop external companies from running such courses, there are concerns within higher education institutions that the collapse of franchised courses could cause bankruptcy for universities that have allowed companies to borrow their brand name.

With the number of students enrolled in these externally run courses having nearly trebled to more than 135,000 in four years, some UK universities have a higher number of students being taught by external providers than within the university itself.

When it goes wrong, the reputation of the whole sector is put at risk

Nick Hilman, Director of the Higher Education Policy Institute

Reports from 2024 show that agents recruited students to these courses under the premise that their resulting student cohort would be able to pay for various international holidays.

Nick Hilman, Director of the Higher Education Policy Institute (HEPI), said: “While it’s important to remember that franchising has a role to play in bringing higher education within reach of more people, it also needs to be remembered that, when it goes wrong, the reputation of the whole sector is put at risk.” This is in addition to the potential bankruptcy of ten UK universities.

Although the franchising model has been marketed as an enticing option, there have been reports of students enrolled in these courses producing plagiarised content. If a course is found to be inadequate, universities could be held responsible, which would create huge financial liabilities for institutions that are already struggling.