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New guidelines intended to prevent a repeat of the Handsworth College debacle which shook further education earlier this year are unlikely to curb a franchising explosion.

Significant numbers of colleges are hoping to expand franchising to make up student numbers next year despite evidence of widespread mismanagement of franchised courses in Handsworth and elsewhere in the college sector.

One of the main difficulties in large-scale franchising is maintaining quality control of courses. But the special committee set up to advise the Further Education Funding Council has uncovered tensions between free marketeers who want to see minimal regulation and those who would prefer much more stringent rules.

Some extension of existing guidelines was circulated by the council today but the main report is not yet complete. Key changes include assurances that claims for funding reflect the work done by colleges; written confirmation from the franchisee that council funds will not displace other public funds; evidence that the college is able to manage franchised provision.

One special committee member said legal complications meant the guidelines were unlikely to stem the expected tide of new franchise agreements awaiting the report's arrival in the New Year.

The funding council is said to prefer stricter regulation of franchising which could earn colleges millions of pounds if they are allowed to exploit the market. Its inspectors investigated franchising at Handsworth College and Bournville College in the West Midlands earlier this year. Both institutions were criticised for the quality of long-distance franchise courses.