Franchising became a legitimate and potentially lucrative route to expansion after colleges quit local authority control in 1993.
Courses developed rapidly as colleges strove to meet training targets but while most were successful, some projects backfired spectacularly.
Bournville College, Birmingham, ran into trouble after it paid Pounds 140,000 to four franchisees who were running bogus courses. College managers alerted West Midlands CID, who are still investigating.
Principal Patricia Twyman says the new model contract could not have prevented the collapse of the courses. "We had a watertight contract and that was how we were able to stop the work once we discovered that their paperwork didn't match our standards."
Franchising makes up around 15 per cent of Bournville's business.
"For most colleges it is a growth area and the model contract will make it a lot easier for colleges who are not yet involved in franchising to get started."
The Community College Network set up by nearby Handsworth College, offering courses to students as far afield as Bradford, London and Milton Keynes, saw college enrolments leap by 80 per cent. But this well-intentioned initiative came to grief when inspectors found classes were poorly-taught, badly-attended and in some cases, non-existent.
Principal Chris Webb calls the network a pioneering scheme which was ambushed by being inspected at short notice. He added publicity surrounding its early failings did them no harm.
"We feel vindicated by what's happened. We have turned away vast amounts of work - we could have doubled in size if we wanted to this year - because people know our credibility in dealing with the black and Asian community."
He welcomed the FEFC circular. "It's good news and it recognises franchising is a flexible and effective way of delivering education."
Halton College in Widnes, Cheshire, has a happier history of franchising. It set up a wide portfolio of contracts including training 9,000 Tesco employees. zPrincipal Martin Jenkins said: "I am pleased that the FEFC has confirmed its support for this approach. We will review our procedures but I think we have got everything covered."