Thinking about a cleaning franchise
A cleaning franchise lets you run your own business under someone else's name and system. You pay the franchisor for that, at the start and usually for as long as the agreement runs. It helps to know the rules before you commit.
What the law asks of a franchisor
In the UK, franchising comes under the general law that covers any business contract. Nelsons, a firm of solicitors, says this is one reason franchise agreements are often long.
Each franchisor decides for itself whether to tell you how its franchisees are doing. The British Franchise Association says this kind of disclosure is voluntary in the UK, and it encourages buyers to ask questions.
You buy as a business
The Consumer Rights Act protects people buying for themselves, outside their trade or business. Someone buying a franchise is buying for a business, so those consumer protections generally do not cover the franchise agreement.
Other law still applies. Under the Unfair Contract Terms Act, some terms that limit a business's liability must pass a test of reasonableness. And misleading advertising aimed at traders is banned under the 2008 Business Protection from Misleading Marketing Regulations.
What a franchise advert must tell you
The advertising rules for business opportunities are in section 20 of the CAP Code, which the Advertising Standards Authority enforces. Before you commit, the advertiser must give you three things:
- its full name and geographical address;
- a clear description of the work involved;
- a statement of what you are committing to, including any money you put in.
Under the same rules, an advertiser must not quote earnings that are overstated or unrepresentative. It must not exaggerate the support on offer either.
What British Franchise Association membership means
The British Franchise Association, often called the bfa, is a membership body for franchisors. A franchisor joining it must show four things: that the business is viable, that it can be passed on to franchisees, that it discloses its proposition clearly, and that it will follow the bfa's Code of Ethics.
The bfa lists its members at four levels: Emerging, Expanding, Established and International. Some franchisors' own pages still use older names for these levels.
The bfa offers its dispute-resolution route only where the franchisor is a member. Franchisees of a member franchisor can join the bfa free.
Franchisors pay to be members, and the bfa sells them listings on its website. Read its member pages as information supplied by the franchisor.
Questions to ask before you sign
- Can I see the franchisor's accounts?
- Can I speak to current franchisees, and to people who have left?
- What will I pay at the start, and what will I pay each month or year after that?
- Do the prices I have been shown include VAT?
- Is my territory exclusive, and how is it marked out?
- How long does the agreement last, and what happens at renewal?
- Can I sell the franchise on, and what does the franchisor have to agree to?
- If the franchisor quotes earnings, are they sales or profit, and whose results are they?
You can ask a solicitor who knows franchising to read the agreement before you sign it.
Useful links
- Frequently asked questions (British Franchise Association)
- Franchisor membership and its criteria (British Franchise Association)
- CAP Code section 20: business opportunities (Advertising Standards Authority)
- Consumer Rights Act 2015, section 2 (legislation.gov.uk)
- Unfair Contract Terms Act 1977, section 3 (legislation.gov.uk)
- Business Protection from Misleading Marketing Regulations 2008 (legislation.gov.uk)
- Working for yourself (GOV.UK)