Summary, Challenges and Opportunities

We are cognizant of the fact that unlike most countries, the UK has no franchise-specific regulation, but it has the British Franchise Association (BFA) which has a strong and principled code of Ethics that mirrors the European code and the Global code.

However, there is a risk that the not-for-profit and voluntary BFA (which two-third of the franchisors in the UK choose to not join) may get a large proportion of its income from franchisors. Smaller and newer franchisees often have different sets of challenges but they cannot join the BFA and enjoy the protection of its code of Ethics unless their franchisor becomes a member of the BFA. I posit that regulatory committees need to be diverse and transparent.unless their franchisor does. Regulatory committees need to be diverse and transparent.

We are aware that the structure of franchising such as in New Zealand is very similar to the UK, and franchising in New Zealand (Franchise Association of New Zealand [FANZ]) is very successful. Unlike the BFA, FANZ is open to all franchisees and prospective franchisees whether their franchisor is a member of the association or not. FANZ provides its members several services which includes an independent complaints and mediation service, advice, training, and best practices guidance to its members. It also and have has an active relationship with the government and its agencies.

Interestingly, NatWest conducted a comprehensive survey on franchising in the UK with the outcome that all is mostly good with franchising in the UK. However, the fact that the survey was commissioned by the BFA makes one question the outcomes because assuming but not concluding that the participating franchisees and franchisors could be bias to those who are members of the BFA who have signed up to their ‘code of ethics, consequentially, the outcome of the survey may not depict the true state of franchising in the UK then does this bias ? the results as could only the more ethical members be part of the FPA and the more vulnerable two thirds of franchisees not be

The UK has strong laws on ‘Good Faith’ to ensure fairness. Unfortunately, the vulnerable and exposed franchisees of franchisors’ who are not members of the BFA have to seek refuge and protection under the generic provisions of the English Business law and the procedural rules of civil litigation in the UK which importantly includes the rules of procedure as it concerns the cost of litigation. The general rule is that the losing party pays the cost of the successful party.

What operates in reality is that parties to a dispute have their version of the facts that led to the dispute and their arguments are presented to the courts to determine which is more probable in the light of the provisions of the laws. The courts deliver judgment by accepting the position of one of the parties while rejecting the position of the other and the losing party will be mandated to pay the cost of litigation incurred by the party in whose favour the case was decided. The cost implication of litigation tends to be substantial and this is exacerbated by the franchisors who have the culture of hiring expensive law firms who also file unnecessarily voluminous applications to drive the cost of litigation up in anticipation of victory.

Indeed, the outcome of litigation can go either way, however, the unequal financial standing of the parties translates into a situation whereby should the case be decided in the franchisee’s favor, the franchisor, usually, can afford the legal cost of the franchisee [who in most cases hires affordable law firms]. Conversely, the cost implication on the franchisee in the event that the case is decided in the franchisor’s favor is substantially detrimental hence the fear of this potential huge financial liability not only operates to discourage franchisees from seeking redress in court when the franchisors take unconscionable steps, it is also exploited by the franchisors as a bullying tactic wherein they believe they can do as they wish because, ultimately, they have the financial wherewithal to settle the huge cost and judgment sums in the unlikely event that the franchisee is brave enough to seek legal redress.

In my humble opinion as someone who spent years being a franchisee:

• When entering into franchising, franchisees need a transparent and structured entry with a strict framework of fairly negotiated agreements and ethical practice which leads to a positively proactive culture that can help the brand develop and could reduce the need for conflict resolution.
• Smaller franchisees need a stronger UK franchise association for dispute resolution (we should have less disputes if there are regulations/ethics) whose regulations will be binding on all franchise practitioners in the UK. They need someone on their shoulder if they need to blow a whistle.
• Smaller franchisees need an all-inclusive association which will serve as a platform where they can share and learn best practices and communicate with other agencies (such as government and grants).

As an ultra-endurance adventurer and mountaineer, I have learnt this three core principles , which I sometimes I find to be applicable to other aspects of life : –

• Plan thoroughly and regularly self-check, attending to minor issues before they escalate.
• Trust you gut and surround yourself with peers you trust, we are only as good as our team.
• And most importantly, taken from the 1960’s ‘The Avengers’, always keep your bowler on in times as stress.

Perhaps these core principles are not exclusive to climbing mountains.