SPECIALFEATURE
more than 26 million businesses and is worth£11trillion.” This aside, I decided to do a little
investigation into the subject myself and gather my own evidence… Uncertainty didn’t come to surface once
the results were in; people and businesses were worried before the referendum took place. According to the Financial Times, start- up companies were “shell-shocked” with the result. But, although a seemingly startled reaction, many businesses were already putting plans into action way before the ‘shock’ result. This included French furniture franchise, Gautier. “As a business, we put measures in place before the referendum to make sure we could protect the franchisees, our customers and ourselves. We are in a good place at the moment, but, you’re right, there is that uncertainty drifting in the background,” commented Gautier’s managing director, Harvey Roberts. Although the franchise put precautions in place, Harvey was quick to reiterate: “The world isn’t going to grind to a halt because of this. England is the fifth biggest economy in the world and France is the sixth, so to say that the countries will stop trading is absurd. “At the moment, for Gautier, nothing
has changed, which, I assume, is what most companies are saying. I do think, however, the longer we don’t know what is going to happen, the harder it is going to be for businesses.” And Harvey seems to be right. The Bank of England revealed that although for many companies the result of the referendum had come as a shock, the tendency has been to adopt a ‘business as
usual’ approach. Franchisors seem to be stepping very
cautiously and avoiding any sudden movements when it comes to business. Howard Archer, chief UK economist at IHS Global Insight, stated: “While there may be some relief that the economy may have
“As a business, we put measures in place before the referendum to make sure we could protect the franchisees, our customers and ourselves”
dodged an immediate sharp slowdown from the Brexit vote, the danger is still very much there given the major uncertainty that is apparent.” According to Owen White Solicitors, it is
true that European law is embedded in the UK legislation that affects franchising, but it would be premature in the extreme to assume that something very different will be in place anytime soon. This is correct for both the franchisee and the franchisor, as the firm continues by saying that to consider changing franchise agreements at this time, as a reaction to the result alone, would be far too early. Any legislative changes will take years to come into force and the law that applied before the referendum still applies today. This
just reiterates the argument to steer clear of drastic decisions with your franchise at this moment in time. What is certain though, and we mustn’t
forget, is that franchising in the UK is at an all-time high. The most recent bfa/ NatWest survey revealed that the value of the industry in the UK is estimated to be worth £15.1billion, which is up 46 per cent since 2006. The sector doesn’t seem to be dwindling, however; the British Franchise Association has stated that what will be crucial for franchising is consumer confidence holding up, and it is likely that the commercial uncertainty will be one of the most important factors to keep under review. A record of being recession-proof, the
franchise industry historically kept above water in 2008 when the economy was low. And, if the economy is set to have a few not-so-great years, surely this means that franchising will be able to do the same again? With franchise licences lasting between five and 20 years, the industry can offer a way for franchisees to build an investment portfolio while the economy is low, allowing the franchisee to potentially sell it on for a profit when we’re out of the red. Whatever the outcome, when the
government triggers Article 50, and the UK officially leaves the EU, it won’t be the end for business and trade in the UK. It is almost impossible to predict what will happen to the United Kingdom, Europe and franchising in the next few years, but for now the franchise industry is thriving. What does seem to be a definite is the very British expression: keep calm and carry on. n
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