In Australia, where there is a thriving franchise industry that makes up a much larger proportion of GDP than here in the UK, there is a Franchise Act.
The Franchise Act specifies the responsibilities of franchisors, franchisees and people connected to the industry. Franchisors have to be registered and registration can be withdrawn. One of the results of such stringent legislation is that the rate of disputes between franchisors and franchisees are amongst the lowest in the world… and the franchise industry is a vibrant and important contributor to the wider economy.
Now, I’m not saying that we need more legislation but I do think that a sector as important as franchising in the UK economy should have some TLC lavished on it by the government. To all intents and purposes franchising is left to its own devices in terms of making its way in the economy. It has to comply with things like company and contract law but there isn’t really a figure in government who champions the cause.
And, as far as causes go, we have a really good one.
Franchising is the bridge between corporates and small business. It helps people get into business with much lower risk, it employs, either directly or indirectly, hundreds of thousands and the industry accounts for billions of pounds contribution to the economy.
And yet, largely, franchising falls below the radar in terms of support. Whereas the government has spent billions of pounds bailing out the banks, car manufacturers and other big businesses still it’s difficult for potential franchisees to raise finance to buy into a system that is statistically proven to have a higher success rate than starting up on your own.
Because the government has not taken the time to really understand franchising as a business model or how important it is to the economy… or indeed, how important it could become, if only some attention was lavished on it.
But the other side of the coin is that franchising, as an industry, doesn’t reach out enough.
If you look at the senior figures within franchising they’ve all come from franchising and consequently do not have an upward and outward looking aspect – rather, the industry is constantly looking inwards. As a result, the industry doesn’t have the profile it should have either in government or across the country.
Time for a true champion… perhaps a minister for franchising or, heaven forbid, a Franchise Tsar!