Report calls for OfS powers to block high-risk university franchise deals

A New Vetting Regime for Franchised Degrees

English universities could soon be forced to seek explicit approval from the Office for Students (OfS) before entering large-scale franchising arrangements if recommendations in a new policy paper are adopted. The report, published on 6 August by the Higher Education Policy Institute (Hepi) and authored by former Quality Assurance Agency chief executive Vicki Stott, argues that the rapid expansion of franchised higher education has outpaced regulatory safeguards, leaving students exposed to poor outcomes and fraud.

Student numbers in franchised provision more than doubled in three years to 108,600 by 2021–22 and reached 135,850 in 2022–23, with the majority of those students not taught by OfS-registered organisations. Stott’s paper highlights that 53 per cent of Student Loans Company fraud in 2022–23 occurred within franchised courses, while continuation and progression outcomes for franchised students remain lower than for those in traditional routes.

The proposed framework would require partnerships deemed ‘high-risk’ to justify their educational need, abide by enforceable limits on student intakes, and be subject to clear suspension powers if they endanger access to quality education. Stott contends that the evidence of scale, opacity and fraud is serious enough that simply strengthening existing guidance would not restore confidence, and that parts of the system may need to be rebuilt.

Hepi’s director of policy and strategy, Rose Stephenson, said the sector needs ‘practical solutions rather than another round of abstract principles’, while Stott emphasised that partnership governance must move from a niche technical concern to a front-line duty of care towards students, standards and public trust.

Why the Current System Is Failing to Protect Students and Standards

Franchising’s Explosive Growth and the Fraud Problem

The numbers Stott presents reveal a sector that has embraced franchising as a growth engine without commensurate oversight. With 135,850 franchised students in 2022–23 and barely half of the providers registered with the OfS, the incentive to expand—often through opaque arrangements with private partners—has collided with financial fragility across the higher education landscape. The statistic that over half of all Student Loans Company fraud stems from franchised provision is a red flag for a regulator already under pressure to protect public money.

Why Vicki Stott Argues Guidance Alone Won’t Work

Stott’s call to ‘start again’ rather than tinker with existing rules is the paper’s most striking argument. She contends that the accumulated evidence of fraud, inconsistent quality and poor student outcomes means that non-binding guidance will not restore trust. An approval regime run by the OfS, with hard limits on student numbers and explicit suspension powers, would shift the burden onto universities to prove that a proposed deal serves a genuine educational purpose—not just a balance-sheet need.

The Proposal’s Impact on University Revenue Models

For institutions that have come to rely on franchised income to offset falling domestic undergraduate fees or volatile international recruitment, the proposal could force a fundamental rethink. A requirement to set a maximum income and student volume for high-growth franchisees directly curbs the financial upside of such partnerships. Universities with large, fast-scaling franchise operations would face not only compliance costs but also a hard ceiling on growth, potentially pushing them to diversify their course delivery or invest more heavily in direct recruitment.

How Universities Can Prepare for Tighter Partnership Controls

• Audit franchise partnerships for risk exposure. Map each existing arrangement against the criteria likely to define ‘high-risk’—size, growth trajectory, regulatory status of the delivery partner, and student outcome data—to identify which deals would fall under a future approval regime.
• Prepare educational need justifications now. Even before any statutory requirement, universities can begin documenting the specific educational and access rationale for each partnership, linking them to widening participation goals, local labour market needs, or specialist provision.
• Model the impact of intake limits. Scenario-plan for a mandated cap on student numbers and income from franchise operations, assessing how revenue, staffing and infrastructure plans would adjust if growth were restricted or suspended.
• Strengthen partnership lifecycle governance. Adopt the accountability matrix and intervention triggers described in the paper, so that boards and senior leaders can demonstrate to the OfS that they already have the operational discipline the new framework would demand.