Quality Franchise Association – Code of Conduct
Introduction to franchising in the UK
Franchising in the UK is not regulated by the government & membership of a non regulatory franchise association is voluntary for UK Franchisors. Many Franchisors seek membership of a franchise association so they can increase their knowledge of franchising & share best practice.
What is a franchise?
A franchise is a way to sell goods or services through collaboration of two financially & legally separate parties known as the Franchisor & Franchisee. The Franchisor is the party that created the business including the intellectual property, method & systems to trade. This knowledge is then transferred to the Franchisee through providing documentation, training & ongoing support to the Franchisee for the period of the agreement between the two parties. The Franchisor grants the rights to the Franchisee to use it’s intellectual property, method of business & this usually involves the Franchisee paying a fee, often called a franchise initial fee & ongoing fee’s for support & ongoing business & brand development by the Franchisor.
Our Franchisor code
The obligations of the Franchisor are:
1. Have sufficient knowledge & experience within their business prior to creation of a franchise network
2. Have a suitable level of working capital and financial stability to enable the Franchisor to successfully franchise its business
3. Either own or have legal rights to use the intellectual property, trade name & trade mark.
4. When advertising to recruit franchisee’s any materials should not contain any misleading statements.
5. Franchise recruitment advertising that relates to earnings potential should not be misleading & how the figures have been created made clear to prospective Franchisee’s. Advertising & other promotional materials will often include use of assumptions made by the Franchisor which can only be tested by the passage of time. Where an assumption has been made this must be made clear to the Franchisee.
6. Make best endeavours to recruit only individuals that appear to be suitable to run the franchise after the recruitment process.
7. The franchise agreement should comply with the national law. The franchise agreement should clearly set-out both parties initial & ongoing obligations & also ensure the protection of the franchise brand, Franchisor business & it’s franchisee network.
8. Deliver the obligations to train & support the Franchisee as detailed in the terms of the franchise agreement and operations manual which constitutes the entirety of the legal agreement between the Franchisor & Franchisee.
9. Not to discriminate against any individuals in the provision of services and/or the selection of the Franchisee and at all times comply with all anti-discrimination legislation, including the Equality Act 2010.
10.The Franchisor will advise the Franchisee in writing of any breach of the franchise agreement & grant the Franchisee a reasonable period of time to remedy the breach.
11. Should a dispute arise between Franchisor & Franchisee always make best attempts to mediate the dispute prior to any legal intervention.
12.To act in in good faith in its dealings with the Franchisee.
Our Franchisee Code
The obligations of the Franchisee are:
1. When providing information to the Franchisor with a view to joining the franchise network be honest in all disclosures. This includes the Franchisee’s financial position, health & any other areas which could effect the successful operation of the franchise.
2. If there is a pre contract that the Franchisor requires the Franchisee to enter into prior to completion of the franchise agreement the Franchisor will, subject to the terms of that agreement have the right to offset it’s costs incurred by them for providing information to the prospective Franchisee should the application not proceed to completion of the franchise agreement. This could also include noncompetition clauses & secrecy clauses to protect it’s brand & existing franchise network.
3. Provide any reporting & management information as required by the Franchisor as specified in the franchise agreement and/or operations manual to enable the Franchisor to support & provide guidance & any additional training, support as detailed in the franchise agreement and/or operations manual.
4. Should a dispute arise between Franchisor & Franchisee always make best attempts to mediate the dispute prior to any legal intervention.
5. Comply with all other obligations under the franchise agreement and operations manual which constitutes the entirety of the agreement between the Franchisee & Franchisor.
6. In recognition of the Franchisor’s time and investment in the franchise business, comply with all applicable restrictions following the end of the franchise agreement.
7. To use all reasonable efforts to promote, grow and maximise the profitability of the franchised business.
8. To exercise integrity and honesty in the operation of the franchise.
9. To act in in good faith in its dealings with the Franchisor
This Code of Conduct (“the Code”) forms part of the agreement between Quality Franchise Association (“QFA”) and its members. It has been produced for the sole purpose of setting down guidelines which QFA considers to be good practice between the Franchisor and its franchisees.
This document is not intended to form part of the franchise agreement and/or operations manual, nor the basis of a Franchisor’s or Franchisee’s decision to enter into a franchise. Neither this information nor its delivery to any Franchisor or prospective Franchisee will or is intended to constitute or form part of any part of the agreement between the Franchisor and Franchisee
No liability, howsoever arising, is or will be accepted by QFA, its directors, officers, employees, affiliates, agents or advisers for the failure of the Franchisor or the Franchisee to comply with the provisions of this Code; for the accuracy or completeness of any information (including all estimates, forecasts, assumptions or statements of opinion or expectation) provide by the Franchisor or Franchisee; or for the consequences of any reliance upon or other use of this Code.
No representation or warranty, express or implied, is or will be made by QFA as to whether the Franchisor or Franchisee has or will comply with the provisions of the Code.
QFA shall have no obligation to provide this Code to either the Franchisor or Franchisee, or provide any further information, to update the information in the Code or any other information, or to correct any information contained in this Code or any omission from it. The information in the Code is subject to change, completion or amendment without notice.
The Code does not purport to contain all the information that a Franchisor or Franchisee may want or require when deciding to enter into a franchise. Prospective Franchisees are advised to seek their own financial, legal and other professional advice and must make their own independent assessment of the merits of entering onto a franchise.