British Franchising Association: The following key rules must apply to the business model for it to be considered a “Business Format Franchise”:
The business must involve a trademark
The business must have a defined and proven method of trading (proven system)
The franchisor and franchisee must use a license (Franchise Agreement) to use the trademark, which must be adopted and paid for by all franchisees
The franchisee must be able to sell the business on to a third party with the benefit of the goodwill derived from developing the business over time
What isn’t a franchise?
A number of businesses will run expansion models which may be very close to franchising but do not meet the specific criteria to be considered a “Business Format Franchise”. These are most likely to be some form of licence agreement or partnership.
Franchising as a business model is not mentioned in H&S material, and some would say it does not need to be, as franchisees are separately self-employed, and therefore the law is clear - each employer to their own. The example of City Link failure last year may help; those directly employed were made redundant. The many franchised s/e drivers were out on their own.
From a H&S perspective the question would be around 'undertaking'. It is possible that in the future this is widened to include franchisee businesses within the parent franchise, but it has not been thus far.
I have 'R - Replied' to each point in the post specifically below.
- "My employer owns the COFO asset and the COFO franchisee is not an employee of my employer".
R: If not an employee, what are they? Franchises normally operate under an Agreement (contract). If a proper franchise they are the owner and self-employed. Franchises are managed contractually under the Agreement, but this is unlikely to make the franchise owner-operator a contractor in the usual sense.
- "The COFO franchisee has little to no control on ways of working - my employer provides the equipment / training / safety manuals / risk assessments / procedures etc. for operating the site i.e. the franchisee does as they are told."
R: This is the contractual agreement as above. (they may actually have more control than is perceived). If they are not an employee, (as established) then they will have their own legal duties (not just H&S!) as self-employed, running their own 'undertaking'.
- "We treat COFO sites the same as COCO sites for reporting point of view"
R: Why? RIDDOR is employer duty. Probably historically this has been adopted, but is not really good practice. It may be that internal incident information is useful, the post does not separate the two. I would question the appropriateness / legality of this if RIDDOR is included.
- "The reason a COO franchisee (or their employees) would be travelling on business, would be because my employer has requested they attend a meeting or training event"
R: See my previous response on general expectation of attending meetings etc. Does not transfer liability.
- "The franchisee is "managed" by an area manager who will have a selection of COC) and COFO sites within their "area" .
R: Well, the term 'managed' is somewhat questioned in the post. It is normal for franchisors to oversee their franchisees - again mainly to protect the brand / product, but also to offer business support as the better the franchise does, the better for the franchisor. However, I daresay there is a historical perception that this equates to 'managing'. I say it equates to overseeing, possibly consulting, and details should be set out in contract as 'brand / product quality assurance'.
"My initial thoughts are that from a HSSE perspective, my employer has liability as we control the ways of working, directs what they do etc. Moreover we already provide the franchise with our safety systems, procedures etc. and expect them to comply with them."
R: I don't think that they DO control absolutely, if it is a proper franchise. Does the franchisor pay tax for the franchisee? Would the franchisor defend any action against franchisee for breach of tax rules, food hygiene etc? And pay fines?
If there was a breach of H&S down to the franchisee following specified 'rules' from the franchisor, there may well be a further trace 'up the line' by the enforcer, but likely to be pursued as the 'consultant' providing (wrong) advice (or flawed machine, materials, process etc.) The employer owning the franchise is a separate legal entity and undertaking. They (and franchisor!) may not even realise how this works. The agreement may / should clarify.
If I were advising the 'parent' company, I would re-evaluate the (H&S) procedures which are provided, possibly re-visit the agreement, and make it clear that the franchisee is responsible for compliance with the law, but that any information is provided to help them do this in the context of their own business.