One Vision. The British Franchise Association sets out its vision for members
The British Franchise Association is proposing a new membership deal to encompass franchisees and professional advisors
If the British Franchise Association (bfa) is about anything, it is about standards of good franchising - and since there is no purpose in standards if nobody knows about them, the Association is also about promoting good franchising. The bfa's promotional work enables prospective franchisees to recognise a good franchise when they see one. It tries to persuade government agencies, the media, business schools and anyone who will listen that franchising, when it's done well, is a remarkably secure way of getting thousands of small businesses up and running and continuing to succeed.
So, standards of good franchising and promoting good franchising go together - one is no good without the other. The bfa does both and both have a cost. In the early days of the bfa those costs were shared just among franchisors by way of their subscription to the bfa. If you pay for standards to be applied, you have a right to expect that they will be applied fairly and objectively. That demands good governance and the Association was founded on a democratic structure to ensure that no one member could unreasonably influence the application of the bfa's standards or secure for themselves an undue share of the promotional benefits of sticking to those standards.
In a voluntary regulatory system it's not just standards and promotion that go together, it is standards, promotion, funding and governance (see Diargram 1). There is of course one last piece to this regulatory jigsaw, a benefit for the franchisors that fund it. In exchange for compliance with agreed standards and for the money to run the scheme, good franchisors get enhanced access to good franchisees; they get a representative body with the clout to keep unnecessary and expensive regulation at bay; and they get a guardian of the value of franchising as a brand which is reflected in the value of their businesses.
REGULATION AND PROFESSIONAL ADVISORS
The standards of good franchising that the Association represents cover the structure of a franchised business, its financing, the terms of the franchise agreement and the information provided to prospective franchisees. These elements of franchised businesses are matters which are the every-day fodder of franchise consultants, franchise lawyers and franchise specialists in the banks, in accountancy firms and so on. These specialists are an essential part of the voluntary regulatory scheme that the bfa runs. If the professional advisors to franchising decided not to support our standards, those standards would not last long. Fortunately, and because bfa standards are good business as well as good practice, professional advisors agreed a quarter of a century ago to support our standards and have gone on doing so (see Diagram 2).
Professional advisors, like franchisors, will only support the voluntary regulatory framework if there is a benefit in so doing. In exchange for supporting industry-led standards and for contributing to the cost of managing compliance, professional advisors get enhanced access to the franchisors that make the best clients - good franchisors. But the bfa won't do that for just any old ex-marketeer or bombast who fancies calling themselves a franchise specialist. That wouldn't advance the cause of good franchising. The professional advisors in the bfa are also subject, just like franchisors, to standards of good practice.
The virtuous combination of standards, promotion, funding, governance and benefits applies in exactly the same way to professional advisors as it does to franchisors. There is just one problem - the bfa has not been as assiduous in the application of standards to our Affiliated Professional Advisors as it has been in the application of standards to franchisors. But then neither have we been as equitable in our advisors' involvement in our governance. Professional Advisors provide around a quarter of our funding but have just one elected Director on our Board amongst 12 elected franchisors.
The new deal that the bfa Board and its Regional Chairmen have unanimously agreed to put in front of our professional advisors is to say to them: 'If you'll get together with us to be more serious in the development and application of standards to your franchise specialist advisory functions, then we'll get more serious with you about your share of the governance of the Association.'
Make no mistake about the complexity of this ambition or of the many steps that will be needed to find a way of realising it. But make no mistake either about the long term necessity of freezing rogue advisors and ignorant advisors out of the system.
THREATS TO THE DEFENCE OF GOOD FRANCHISING
The biggest threat to good franchising is bad franchising. Getting full engagement in standards of good practice from franchisors, and professional advisors, both developing and established, is essential. It is also only the beginning of the bfa Board's vision of the Association's possible future.
Franchising continues to grow in size and economic importance - we now provide jobs and occupations to more than 380,000 people - 380,000 direct jobs with franchisors and franchisees, not counting the many thousands more that are employed in businesses that supply and support franchised businesses. This is no small beer - you can more than populate a city the size of Leicester with less. With more franchising comes more risk of failure, more risk of bad practice, more consequent risk of bad press and in its wake bad regulation and more risk that unscrupulous groups can set up as representative of 'good' franchising, when they are no such thing (see Diagram 3).
The media's job is to inform. If the franchise community wants to ensure that the stories which are told to the media are properly influenced by a representative body, then the franchise community should make sure that its representative body is representative. This is the mantra which Sir Bernard Ingham, the bfa's President, has been delivering to the Association for most of his nearly 15 years in office. It is a mantra which has led to a number of different attempts to involve franchisees in the work of the bfa. None so far can claim to have made the bfa the true voice of business format franchising.
THE FRANCHISE COMMUNITY INCLUDES FRANCHISEES
The problem with involving franchisees in the bfa is the trick of engineering the virtuous jigsaw pattern of standards, promotion, funding, governance and benefits, which has worked and worked well for the other parties in the franchise community. Franchisors engage in the self regulatory system for the benefits of franchise promotion to prospects, to the media, to the government and so on. Professional advisors participate in the self regulatory system for the benefit of enhanced access to the client community. Why should franchisees participate?
There will not be one right answer to this question and the Board of the bfa is not pretending that it already knows the answers. However, there are opportunities to explore. Many franchisees have achieved great personal success without qualifications of any kind. They and those that brought previous academic or professional success to their franchised business have not been recognised for their competence in running a small business in a franchised network. Formal recognition of achievement can be a great motivator.
Research which the bfa did in 2006 showed very clearly that many consumers surprisingly had a basic understanding of the difference between a corporate chain, an independent single outlet and a franchised outlet, and would prefer by a margin of two to one to shop in a franchised outlet if they had the choice. The biggest problem these consumers had was that they just did not know which outlets were franchised. Why not? Because the franchise community for the most part does not tell them.
This sad state of ignorance led to the bfa's Proud to Franchise programme through which we aim to get as many of our Members' franchisees as possible, and that's more than 15,000, to promote franchising to their customers because franchising delivers the benefits of local ownership and customer care, with the back-up and purchasing power of a national group. The benefit for franchisees of promoting franchising is higher consumer sales (see Diagram 4).
The possibilities of delivering benefits by way of increased consumer sales and by way of national recognition for business achievement are just two among a range of benefits that could be delivered to franchisees as the benefit they can derive from participation in the virtuous pattern of franchising standards, promotion, funding and governance. Will a benefits package of this kind be enough to drive a funding stream from franchisees for the delivery of the benefits? How can franchisees who participate organise themselves so as to participate effectively and democratically in the governance of the bfa?
The Board of the bfa recognises that these questions cannot be answered for franchisees by franchisors, they must be answered primarily by franchisees themselves, but ultimately with answers that carry the consent of the whole franchise community - franchisors, professional advisors and franchisees.
THE WAY AHEAD
The Board of the bfa and the bfa's Regional Chairmen with the Chairman of the Franchise Group for Scotland decided that the ideas set out in this article could only be pursued effectively if the debate was opened up - not just to the existing Members of the bfa but also to the group most notably disenfranchised under the current arrangements, franchisees.
The leaders of the bfa recognise that there are many obstacles along the path towards their vision of truly becoming the authoritative voice of business format franchising in the UK. They also believe that those obstacles should not turn us from the destination and that with goodwill, wise counsel and the dogged determination that is a part of good franchising, we should set out on our way towards it.
The debate is now starting with the bfa's Franchisor Members, with our Affiliated Professional Advisors and with our National Franchisee Forum. It will also be started by this article. All the stakeholders in the ethical franchise community are urged to contribute. A consultative document is being published now and any respondents are invited to get involved through the bfa website at www.thebfa.org. We will look forward to hearing from you.
Written by bfa Director General Brian Smart