The Courier & Advertiser (Angus and Dundee)
Industry chief talks up benefits of model
British Franchise Association chief executive Pip Wilkins answers Business Matters questions about the opportunities and economic benefits of franchising
“Prospective franchisees should complete due diligence and get their agreement checked by a bfa legal affiliate. The bfa offer a host of online resources to help guide prospective franchisees during their initial research
Who is the British Franchise Association (bfa)?
The British Franchise Association (bfa) was established in 1977 and is the only voluntary self-accrediting body for the UK franchise sector.
Its aim is to promote ethical franchising practice in the UK and help the industry develop credibility, influence and favourable circumstance for growth.
It does this with a self-regulatory, standards-based approach to membership of the association.
In addition, the bfa works to increase the awareness of ethical franchising by communicating with government, academia, the media and the UK public on what constitutes franchising best practice.
What is franchising?
Business format franchising is the granting of a license by one person (the franchisor) to another (the franchisee), which entitles the franchisee to trade under the trade mark/trade name of the franchisor and to make use of an entire package, comprising all the elements necessary to establish a previously untrained person in the business and to run it with continued support from the franchisor.
Why should companies consider a franchising model for growth? Are there any disadvantages?
Franchising is appealing to prospective franchisors as it is an effective format for wider business expansion without the financial burden of opening and running company-owned outlets.
By granting a franchisee permission to trade under their brand and system, franchisors are trusting another individual to build their own business as a representative of their brand.
Franchisors are able to mitigate the risks of a rogue franchisee tarnishing their carefully built reputation, through the systems they put in place and the legally-binding franchise agreement both parties sign upon entering into their business relationship.
Why should individuals consider franchising? Are there any disadvantages?
From a franchisee perspective, franchising is an opportunity to build a business of their own and enter the world of self-employment with the training and support of a larger, proven business and brand.
This reduces the risk of starting a business alone, as the systems to be followed have been evidenced to show they work and the franchisor will provide ongoing support to help the franchisee to be successful.
However, franchising is not a licence to print money. As with any new business, there are always risks.
Prospective franchisees should complete due diligence and get their agreement checked by a bfa legal affiliate.
The bfa offer a host of online resources to help guide prospective franchisees during their initial research at www. thebfa.org.
The bfa NatWest Franchise Survey 2015 revealed 44,200 businesses in the UK were owned by franchisees.
On average, franchisee-owned businesses are becoming larger as the sector matures, with franchising contributing around £15.1 billion to the UK economy – approximately 1% of GDP.
More than half of these franchisees are reporting that their businesses are achieving an annual turnover of more than £250,000.
Besides the financial contribution to the economy, franchised businesses are also creating jobs for their local communities, with 621,000 people employed in franchising.
What are the prospects for franchising in the future?
As an association, we believe that the franchising community is stronger when we are working together.
Our shared ambition and successful collaboration are what strengthens our community and enables us to continue growing as an industry.
To celebrate and promote this further, the theme of our 2017 annual conference was “The Power of Collective Ambition: Strengthening Collaboration Across our Industry”.
The two-day event celebrated our achievements to date and our plans to work together to grow and better promote
the franchising sector moving forward.
The bfa NatWest Franchise Survey 2015 showed that the contribution franchising makes to the UK economy had increased 46% since 2005.
With successful and hard-working franchisors and franchisees forming the backbone of franchising, we look forward to seeing the uplift when the survey results launch later in the year.
Q Does Brexit pose any challenges to franchising? a
We work closely with international franchising associations such as the European Franchise Federation and World Franchise Council and will continue to do so in the future.
As with all other business sectors, we do not hold a crystal ball to reveal what leaving the European Union will bring.
We expect challenges and opportunities for our industry, but we regularly communicate with legal advisors who specialise in the areas impacted and we will work with our members to overcome hurdles while maintaining the ethics we proudly uphold.