PC PAL and European Code of Ethics
As unusual as it sounds, there is no specific legislation in the UK to regulate the franchise industry. However, since its foundation in 1972, the European Franchise Federation has promoted its European Code of Ethics for Franchising.
Its purpose is to promote a self-regulatory set of ethical standards. The Code of Ethics has proved itself fundamentally useful not only to self-regulate the practice of franchising on the markets in Europe, but by doing so, has guaranteed the EFF a forceful and credible role in its dealings as the federating representative of franchising with both national and European authorities.
As former long term members of The British Franchise Association, which is one of a number of voluntary self-regulating governing bodies for franchising in the UK, we were vetted against a strict code of business practice.
The following were the principles that are applied to franchisors applying for membership, and which underpin the accreditation process before membership is granted. As part of their application, franchisors are expected to demonstrate how they meet these standards, and provide evidence of same where appropriate.
- Viable: The business to be franchised must be viable. Evidence will show that the product or service is saleable, and at a level of profit that will sustain a franchised network.
- Transferable: There is a means for the transfer of the know-how to a new operator at arm’s length, essential if the business is to be franchised.
- Ethical: The franchise is structured and operated in accordance with the ethical principles set out in the European Code of Ethics for Franchising, which covers matters of advertising, recruiting, selecting, and dealing with franchisees. The applicant’s franchise agreement is formally assessed.
- Disclosed: All information on the business that is material to the franchise proposition and contract is disclosed without ambiguity to prospective franchisees.
However, we decided not to renew our annual membership from 1st October 2013 as we felt that the annual costs, which often amounted to over £5,000, did not represent good value for money. We continue to adhere to the accreditation criteria and our professional advisors all currently remain member of the BFA.