What the Franchising Crisis Means for Providers Seeking Authorisation

The publication of the Office for Students’ detailed outcomes data for subcontracted partnerships marks a significant moment in English higher education regulation. After years of concern about specific forms of franchised provision, we now have empirical evidence on a subset of privately owned, for-profit providers delivering business and management courses. The data indicate continuation rates of 70 per cent against a sector average of 88 per cent, completion rates of 70 per cent versus 87 per cent sector-wide, and progression to graduate employment or further study at 53 per cent compared to 71 per cent across the sector.

These figures warrant careful consideration, not merely for what they reveal about current practice, but for what they signal about the regulatory environment within which providers seeking degree-awarding powers or OfS registration must demonstrate their readiness.

Understanding the Regulatory Response

The regulatory response has been comprehensive and purposeful. The Department for Education’s consultation proposes requiring delivery partners with more than 300 students to register directly with the OfS. Meanwhile, the regulator itself has introduced a new condition of registration (E8) for lead providers with franchise arrangements involving more than 100 students, clarifying accountability structures. Under proposed TEF reforms, Bronze-rated institutions may become ineligible to apply for or extend degree-awarding powers, whilst those rated ‘Requires Improvement’ could face reassessment of their existing authorisation.

For providers currently pursuing authorisation, whether through initial registration, New DAPs, or Full DAPs, these developments provide useful clarity about regulatory expectations. The OfS reopened applications on 28 August 2025 after an eight-month pause and whilst the regulatory framework has evolved, well-prepared providers with robust evidence bases remain well-positioned to demonstrate their readiness for authorisation.

Strengthened Evidence Requirements

The new initial conditions of registration (C5 on treating students fairly and E7 on effective governance) require providers to demonstrate comprehensive governance arrangements and student protection mechanisms before authorisation. The OfS has introduced requirements for financial scenario modelling with associated commentary and mitigations, reflecting appropriate caution about provider sustainability in a sector where, according to the regulator’s analysis, up to 72 per cent of providers could face deficit positions without mitigating action.

For DAPs applicants, these changes provide helpful clarity about expectations. The OfS now explicitly requires providers to demonstrate “comprehensive arrangements in place to prevent, detect and stop fraud and misuse of public funds”: language that reflects appropriate regulatory due diligence. Assessment teams will examine whether providers’ governance structures, financial models and partnership arrangements demonstrate the sustainability and integrity necessary for authorisation. For well-governed providers with sound financial planning and robust quality assurance, these requirements formalise practices that may already be in place.

Demonstrating Partnership Quality

For emerging providers building towards degree-awarding powers, the regulatory clarification around partnerships offers an opportunity to strengthen existing arrangements. Providers often rely on validation partnerships during their developmental phase and the new condition E8, which requires lead providers to maintain detailed governance oversight and operational procedures for provision which they franchise, sets clear expectations about what robust partnership management entails.

The key question for DAPs applicants becomes: how do you evidence the quality and sustainability of your partnership arrangements? This requires demonstrable systems, clear accountability structures, evidence of effective oversight and outcome data that validates the quality of provision delivered through partnership arrangements. Providers with well-structured partnerships and evidence of positive outcomes can use the regulatory framework to demonstrate their readiness for the responsibilities of degree-awarding powers.

Financial Planning and Sustainability

Recent OfS analysis reveals that more than half of providers new to higher education, or in early stages of operation, significantly underrecruited in years immediately following registration compared with their forecasts, with many underrecruiting by 80 per cent or more. This finding, combined with broader sector financial pressures, indicates that financial modelling within DAPs applications requires careful attention and realistic assumptions.

For DAPs applicants, this suggests the value of growth plans that integrate quality assurance, student support and outcome monitoring at each stage of development. Providers demonstrating sustainable growth trajectories, where expansion is matched by infrastructure development and quality enhancement, can address regulatory expectations whilst building foundations for long-term success.

Strategic Opportunities in a Clarified Environment

Providers currently developing DAPs applications benefit from increased regulatory clarity about expectations. The OfS has indicated it will prioritise work on paused applications before progressing new applications, which provides useful information for planning timelines. Simultaneously, the regulator has streamlined its evidence requirements for DAPs assessments to reduce duplication and remove unclear or less relevant requirements, creating a more focused assessment process that emphasises substantive quality indicators.

This combination of clear expectations about quality and sustainability alongside reduced procedural requirements enables applicants to concentrate their cases on demonstrating capability. The franchising data has clarified what regulators prioritise: positive outcomes for students, transparent and accountable governance, and sustainable financial models. Providers able to demonstrate these characteristics have a clear framework within which to build their applications.

Practical Considerations for Applicants

For institutions considering degree-awarding powers, the current regulatory environment suggests several practical considerations. First, the timing of application warrants thoughtful assessment. Whilst the OfS pause created a backlog, applications submitted now benefit from clarity about expectations. Providers should assess whether their evidence bases are sufficiently developed to address the strengthened requirements, considering whether additional preparation time might serve their strategic interests.

Second, the proposed integration of TEF outcomes with DAPs eligibility creates useful planning parameters. Understanding likely TEF positioning can inform application timing, particularly for providers operating in subject areas or with student demographics where benchmarking may require careful contextualisation.

Third, the emphasis on treating students fairly requires providers to demonstrate that institutional culture and practice genuinely prioritise student interests. For well-governed providers with student-centred approaches, this represents an opportunity to showcase existing strengths through evidence of fair treatment, transparent policies, and responsive complaint procedures.

The Current Regulatory Environment

What makes the current moment notable for providers seeking authorisation is the convergence of multiple regulatory developments. Recent events have clarified expectations across registration conditions, TEF integration with regulatory interventions, financial sustainability requirements and student protection; all within a sector navigating considerable financial pressures.

For providers seeking authorisation, these developments establish the baseline against which readiness will be assessed. The regulatory framework now emphasises student outcomes and institutional sustainability with particular clarity. Well-prepared providers with robust governance, sound financial planning and evidence of positive student outcomes can demonstrate their readiness within this clarified framework.

Building Strong Applications

Recent developments offer useful lessons about regulatory priorities and evidence. Concerns about certain franchise arrangements existed for several years before data publication confirmed specific weaknesses. The regulatory response, when it arrived, addressed issues where evidence indicated problems. For providers building cases for authorisation, this underscores the value of robust evidence that demonstrates quality, sustainability and student-centredness.

The question facing providers is not “can we meet the DAPs criteria as they currently exist?” but rather “does our evidence demonstrate the quality, sustainability and student focus that regulators appropriately expect?” The latter question requires thorough preparation, but providers with strong foundations can still answer it convincingly.

Recent regulatory developments have clarified something important: authorisation depends on demonstrating institutional capability through evidence of quality governance, sound financial planning and positive student outcomes. For providers able to build compelling evidence bases, the current regulatory environment, whilst demanding thorough preparation, provides a clear framework within which to demonstrate readiness for the responsibilities that degree-awarding powers entail.

The regulatory environment has evolved to emphasise outcomes and sustainability more explicitly. Providers seeking authorisation who can demonstrate these qualities through robust evidence are well-positioned to pursue their strategic objectives successfully.