Pip Wilkins, CEO of the British Franchise Association (bfa), outlines how the organization is helping international franchisors to enter the U.K. market
Entry into the U.K. market comes with unique challenges and these must be recognized and overcome in order for franchise systems to prosper.
It can potentially be very difficult for brands in Europe and further afield to enter the U.K. market (or any new market for that matter), talk to the right people, understand the franchising landscape, and potentially adapting the model if it needs fine-tuning to optimize operations. And, of course, all of this is before you even consider other issues, such as potential language barriers.
This is why the bfa set up the ‘UK Developer’ category.
In order for a transition into the U.K. market that is as smooth as possible, it is imperative for international franchisors to partner with the right companies. The bfa is able to point franchise systems in the right direction for bespoke advice, tailored to the needs of the franchisor looking at entry.
In order for the franchise system to become accredited under the UK Developer category, the bfa reviews the existing franchise model and makes sure that its practices are ethical and the business model is proven. This includes adhering to the European Code of Ethics. Obviously, gaining this accreditation with the bfa then makes it a really exciting proposition for investors, even before entry into the U.K., as prospects are aware that the company is fully compliant with the standards required for bfa membership.
As UK Developer members, franchisors can transition into the U.K. market by using both the significant expertise within the bfa, and also connecting them with franchise professionals within the membership, as well as a raft of other benefits.
Things to consider when entering the U.K. market
The bfa helps international franchisors from Europe and elsewhere enter the U.K. with as little disruption as possible, but it’s still worth franchisors considering the following before entering.
1. TESTING THE MODEL
Despite all the research before entering, it is imperative you test the model to ensure the proposition you are offering is something that has demand in the U.K. At the bfa we suggest that you directly run a pilot or sell a master license.
This pilot should be run for a sustained period of time to properly see how it is performing and also whether it has staying power – the suggestion is the pilot is run for a minimum of six months and up to a year before scaling up. Before launching the pilot, you should consider whether your franchise needs adapting at all to potentially ensure it fits with British tastes and trends.
The fact that the system must prove successful over time is actually directly referred to in the Code of Ethics, which states: “4.1.2 Success must be demonstrated for a reasonable time. What is reasonable will inevitably depend upon the circumstances and the nature of the business. Factors to be considered will include the seasonality of the business, the period of time required to build up the type of business concerned and exceptional trading conditions such as extremes of weather, recession etc”.
2. GETTING THE FRANCHISE AGREEMENT AND OTHER LEGALESE SORTED
Before entering the market, documentation such as the franchise agreement and operations manual should be in place (indeed to get a UK Developer accreditation this is mandatory). These should be in place to help prospective business owners in areas such as managing finance and taxes, among others.
3. LOCATION
For premises-based franchises, choosing the right location can be absolutely imperative to the success of the unit. First things first, a feasibility study will need to be conducted in order to check that everything you require or desire is actually available. Planning permission, especially if the building has certain restrictions on it, can be an arduous process and, of course, the location is critical.
As per the introduction in the Code of Ethics, the most common reasons a franchise system fails can be:
+ Inadequate pilot testing
+ Poorly structured system
+ Lack of capital
+ Poor selection of initial franchisees
Franchisors looking at U.K. entry should have many of the requisite skills to increase the chance of success but, as with everything, it is very important the correct franchisees are chosen and the model is adapted to the U.K. market for the business to be a success.
How the bfa adopts and implements the Code of Ethics
Just like the European Franchise Federation (EFF), the bfa is committed to driving excellence in franchising and sees standards as a critical component to the success of the industry at large.
The bfa adopts EFF’s Code of Ethics, designed to uphold the values of ethical franchising. Central to this is ensuring that franchise systems are not misrepresenting financial projections in order to recruit (either intentionally or otherwise). Furthermore, it is very important that the renewal fee for a franchisee to cover legal and admin costs for the franchisor, not a money making exercise. These are just two factors covering a document of 50 pages designed to uphold the highest of standards within the industry.
The bfa’s involvement with the EFF
The bfa has a seat at the EFF, and delegated board members and myself regularly attend and discuss the franchise landscape. Topics relate to the local franchising landscape and how to share and improve practices between the associations.
The bfa is committed to increasing awareness of the industry and helping it continue to grow in the U.K. and abroad. Entry of European and international franchise systems into the market will help increase the diversity of the sector, enable more employment, and ensure the sector continues to thrive.
ABOUT THE AUTHOR
Pip Wilkins is CEO of the British Franchise Association. Find out more at thebfa.org
