Understanding franchising regulations in the UK

The most favourable areas for establishing franchise business in the UK are:

• Fast food or catering or restaurant • Retail shops • Health saloons • Leisure • Computers • Business services • Distribution or delivery services.

However, Europe is more equipped with franchise business concentrated in retail shops when compared to franchising in the UK.

According to a recent NatWest BFA Franchise Survey, while the annual business turnover of format franchising in the UK was around 9.65 billion pounds, 695 systems existed with 33,800 franchise units in total.

The Association has introduced a set of the European Code of Ethics published under Article 3.3 for its members to follow. It states:

“In order to allow prospective Individual Franchisees to enter into any binding document with full knowledge they shall be given a copy of the present Code of Ethics as well as full and accurate written disclosure of all information material to the franchise relationship within a reasonable time prior to the execution of these binding documents.”

The European Code of Ethics does not bind the franchisees under any obligations, which on the other hand does not apply to franchisors either, as they are not members of the BFA to comply with the Code.