The inability of the public sector to satisfy social needs such as poverty alleviation, social inclusion of disadvantaged groups and unemployment, have redefined the relationship between governments and citizens by making the latter play an active role as providers of the welfare state. Citizens, through their entrepreneurial activity, have been pulled into the third sector leading to the emergence of new organizational forms including social enterprises, social franchises and various types of social cooperative ventures and social interfirm alliances. This chapter provides a description of the concept of social franchising identifying its main characteristics and distinguishing it from business format franchising. Information on the process of formulating a social franchise, and lessons learned from various case studies are set out and a model for approaching the formation of social franchising from the lenses of systems theory and social network theory, the SoFraM – Social Franchise Model – is proposed. The model recognizes that the behavior of actors and organizations in the social economy sector is influenced by the properties and dynamics of elements coming from the political, social, organizational and individual level. Based on this approach a number of research questions are suggested which should lead to a deeper understanding and interpretation of the dynamics of the formation of social franchises.