Please tell us about the World Franchise Council and its role
The World Franchise Council (WFC) is made up of more than 40 national franchise associations from around the world. It was formed in 1994 to promote the growth of ethical franchising internationally and facilitate best practice. The Council meets twice a year, with countries bidding to host the meetings. Discussions focus on topics important to the industry, including regulation, the sector as a whole, and making sure we’re all working to the same good ethics and guidelines.
During the peak of the coronavirus pandemic the World Franchise Council was meeting once a week, and currently it’s every fortnight online. The meetings have been really important to learn from each other about how we can support franchisees during this time, and also if we need to lobby government for additional support.
Franchising is a huge industry that covers a lot of different sectors; some have been more affected than others. Personally, I feel like we’ve been well supported by UK government, both in terms of the vaccine rollout and support for staff working in the sector.
What is the European Franchise Federation?
The European Franchise Federation is very similar to the World Franchise Council, but on a European level. The European Franchise Federation is the leading advocate for the franchise industry in Europe and its goal is to develop and promote the franchise business model. Our members are national franchise associations committed to ethical franchising and sharing best practice within our growing industry community. For European associations to join the World Franchise Council, they must be a member of the European Franchise Federation first.
The Federation talks with the European Union but it’s a continental association, not a political association. Now that the UK has left the European Union, we will establish our own laws and regulations for the franchise sector, but it’s likely Britain will follow Europe’s lead when drafting these so it’s still important that we have a voice at the European franchise table moving forward.
Can you explain what the European Code of Ethics is?
The European Code of Ethics for franchising sets out how to manage a successful relationship between a franchisor and each of its franchisees. It was created by the European Franchise Federation to make sure there is a standard code of ethics across all European countries regarding franchising.
The code is underpinned by a set of ethics based on good faith and fair dealings, which if followed, will make sure that any franchisor-franchisee relationship is characterised by transparency and loyalty. All of the most successful franchises are based on this philosophy.
It ensures franchisors entering the market have the appropriate skills and experience. For example, they must have run a franchising pilot scheme to prove concept, and they must have a system in place for delivering training and support for franchisees. To be a member of European Franchise Federation, members must abide by the European Code of Ethics.
What impact has Brexit had on franchising?
The area where it has caused the greatest impact is international trade – bringing in products or exporting goods across borders. That’s been greatly affected. The administration and documentation involved has caused problems getting product out to international franchisees, and costs have increased significantly.
There was a lot of rhetoric around businesses not being ready for Brexit, but many of the forms businesses required weren’t ready on 01 January 2021 and as a result, people had to play catch up with the new regulations.
Supermarkets and larger businesses were given special dispensation up to October of this year, but smaller franchise businesses haven’t received the same benefit. There’s a concern the larger supermarkets have more influence with government, meaning those with influence are not aware of the impact on smaller independent traders.
What impact has the COVID-19 pandemic had on franchisors recruiting franchisees, and businesses becoming franchised?
In trading terms, COVID-19 has hurt some franchisors – especially those in sectors like hospitality, pet care, and gyms. The level of impact has very much depended on the sector of industry the franchise works in.
In terms of recruiting new franchisees, that’s been very strong. People have been reevaluating their lives during the pandemic, and franchising is an opportunity for people to run their own business without going back to the long compute to offices.
Higher investment franchisors have seen some issues in recruitment, because of problems accessing finance from banks – even opening a business account has been hard for some people during the pandemic.
As the economy continues its recovery now is a great time to get into franchising, especially with the focus on shopping local and supporting local businesses. It’s worth saying at this point that many people forget that their local Starbucks, Subway, McDonalds etc are in fact a franchise, so by shopping there you are supporting a local business. The brand, may be owned by a multinational company but the local business itself is owned by and employs people from the local area.
For someone interested in franchising, is now a good time?
It really is. For anyone interested in becoming a franchisee I would say do your due diligence and make sure it’s right for you. And remember that honesty and transparency works both ways.
Franchisors will tell you if you’re not right for their business, and it’s important that people listen to that and take on board the feedback. It’s usually because they’re under financed or don’t have the necessary skill set. As franchisors, it’s in our interest for people to be successful.
I believe when a franchisor, a franchisee and the wider franchise network work together, there’s no stronger business model. If I suggest to a franchisee something they don’t think will work in their business, they’ll tell me because they are in the front line and it’s in their interest to tell it as it is.
Franchising provides a really open and honest relationship that I think delivers real benefits for everyone involved.
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