Handsworth College in Birmingham expanded by a record 79 per cent last year through franchises which involved community groups from London to Bradford running courses for 5,000 part-time students. But the scheme was fraught with controversy as teachers claimed they were owed thousands of pounds in unpaid wages.

Now an inspector’s report has criticised the Community College Network for poor teaching and accommodation, lack of quality control and poor communications among tutors, the 12 field officers and the college management.

Inspectors were keen to stress that this was an isolated case. But TES inquiries suggest deeper problems with franchising schemes in schools and colleges in England and Wales. Dubious practices include “franchising at a distance”, a sort of pyramid selling.

Schools without government approval for a sixth form recruit post-16 students and ask the local college to put on the courses. As local education authority funding can be up to twice that of the Further Education Funding Council, there are big profits to be split between institutions. Colleges then go a step further and pass on some students to even cheaper private training providers who have contracts with the college. The figures are massaged in consortium and other collaborative arrangements. One consortium manager said: “If the Government sets up an education system which is cash-driven, what else does it expect?” Everybody wins - the school has the prestige of a sixth form to sell parents and extra cash to subsidise the lower school. The college and others also have more cash than through the FEFC or training and enterprise councils.

The Association for County Councils has been alerted to the practice. Ian Langtry, education officer, said: “There are enough examples coming up to make us realise that the law is in chaos on post-16 planning.”

Colleges point out, however, that the Government’s antipathy to planning, and the 1993 Further and Higher Education Act which set schools and colleges in competition are easy to exploit. But who polices the system and how easy is it to keep a check on standards?

The Handsworth Community College Network has praiseworthy intentions, the FEFC inspectors say. It is aimed at ethnic minorities, and is “an imaginative and innovative development which is particularly effective in meeting the needs of groups who do not normally enter further education”.

But the remoteness of operations contributed to its decline. While the college as a whole got a grade 1, the highest, for its responsiveness and range of provision, the network gained a 4, which means “weaknesses clearly outweigh the strengths”.

Many tutors were inexperienced in FE, lacked teaching skills or used a limited range of teaching methods. Lessons were poorly planned, students were often on inappropriate courses and attendance was poor - an average of 66 per cent.

Not only did students lack the library and computer resources of those in the parent college but their classrooms, based often in medium-sized terraced houses used as family homes, caused health and safety concerns. Many rooms were “cramped” and some were “cold, bleak and poorly lit”.

Two Birmingham colleges have emerged from franchising ventures with fingers burned and reputations tarnished. Neighbouring Bournville scrapped a similar network for black and Asian communities in Luton and Walsall after finding that 90 per cent of the courses were not taking place.

Handsworth College principal Chris Webb is unrepentant, claiming that his network was a brave initiative that somehow went wrong. “People started classes without our authority and there was a level of misunderstanding. But no one could argue that we did not have the credentials. We are very proud of our activities within the Muslim community. The sector should be doing all it can to get people into learning.”

Union officials, closely monitoring franchise developments, say the problems are caused by the high concentrations of FE institutions in Birmingham. Paul Mackney, regional officer for the National Association of Teachers in Further and Higher Education, said: “In other cities, institutions have amalgamated, but in Birmingham there are about 20 colleges fishing for students. Competition is particularly fierce and therefore they tend to look for the most dramatic means of enhancing their numbers.”

If Handsworth and Bournville are isolated, it is only because of the dramatic publicity. Many college principals contacted by The TES said it had “a chastening effect” and made them “wary of entering into long-distance franchises”.

Others argued that it was “naive” to single-out distance as an issue, pointing to the success of the Open University and Open College Network. One suggested that the pyramid-selling of courses, often in collaboration with industry, may not bear too close a scrutiny.

FEFC chief executive Sir William Stubbs urges caution among colleges embarking on franchising and, while simultaneously describing the council’s role as “passive” and “hands-off”, has announced the council’s intention to set-up a working group to oversee operations and provide a guide for good practice.

Mr Mackney says the FEFC should adopt a much more influential stance and insist on strict educational quality assurance. “I cannot find anything in the FEFC guideline that insists on specific educational criteria. He insists that distance is the problem.

“The problems with having over-extended supply lines are that you cannot control quality or deal with the problems because the people in authority are too far away, and you are disturbing local provision.”

Rod Sawyer, vice-principal of Bradford and Ilkley College, is not too upset by Handsworth’s excursion into his patch. At the end of the day, people choose the place of study through recommendations of family and friends, and they work hard on “trying to hold on to students for life,” he says.