BFA plans suppliers’ affinity scheme for franchisees

An ambitious affinity scheme providing supplier discounts to franchisees of its 289 franchisor members is being planned by the British Franchise Association, the industry’s trade body and self-regulatory authority.

The plan is for the BFA to negotiate cost-saving contracts with firms providing such services and products as credit cards, swipe terminals, mobile phone services, software, and similar services.

The scheme, part of the BFA’s One Vision development plan, calls for the setting up of a national franchisee register of its members’ franchisees. Each franchisee would pay a weekly subscription (likely to be between £1 and £2) which, if all joined, would bring in extra annual income of almost £1m at the £1 rate and £1.9m at the £2 rate.

Further income could come direct from the participating suppliers through commission on sales and over-riding discounts when overall targets are met.

The scale of the total income has the potential to transform the fortunes of the association by more than doubling its annual income.

The scheme’s early development will be funded from the BFA’s substantial reserves. Break-even is expected within three years.

The initial hurdle to be overcome is the creation of the continually updated national franchisee register. Franchise contracts typically include confidentiality clauses that prohibit the franchisor from revealing details of its franchisees. This prohibition needs to be lifted to enable franchisors to supply the BFA with the details it needs for its register.

Some progress on this issue was made back in March, 2007 when new members were requested to include in their contracts a clause permitting them to give details of their franchisees to the BFA. Existing members were also then required to add the clause to their contracts when they come up for renewal.

In cases in which this permissive clause has not yet been embedded in their contracts franchisors will need to get permission from their franchisees to waive this aspect of the confidentiality clause.

Furthermore, the BFA will need agreement from their franchisors to promote its affinity scheme direct to their franchisees.

Other major concerns are that the scheme risks trespassing on the franchisor’s traditional role in negotiating deals with preferred suppliers for the benefit of their franchisees. The BFA will, therefore, need to be careful to avoid treading on its members’ toes and upsetting buying arrangements that are already in place.

For example, the BFA scheme might beat the price for a mobile phone contract that the franchisor may have already “sold” to its franchisees. Also, such a deal might not sit well with a mobile phone supplier who is a member of the association.

Participating suppliers may require copies of the register to promote their offers directly to franchisees. This could give rise to a security issue as the register’s contents could find their way onto the computer systems of suppliers. The register would be of unique value to any firms or organisations which might want access to such a list for reasons which might prove detrimental to franchisors and the BFA.

Another concern of franchisors is that in the unlikely event that the scheme became mandatory they might find themselves having to pay their franchisees subscriptions if the latter were less than enthusastic about the benefits.

An encouraging sign, however, is that the BFA’s board has already unanimously agreed to require all members to keep the franchisee register up-to-date with details of their franchisees. The board’s members include such leading systems as McDonald’s Restaurants, Molly Maid, Chemex and Signs Express.

Other services the BFA is planning for franchisees are multi-brand local sales groups (local franchise networks), a news and information service, and e-training modules on such subjects as customer service, selling professional services, finance for non-financial managers, and credit control of business customers. Here again the association will need to avoid topics on which franchisors prefer to provide their own tailored training. The register will provide the means to promote these services directly to franchisees.

The scheme would operate through a website which would include a chat room. This would be moderated by the BFA to avoid it being used by aggrieved franchisees in dispute with their franchisors.

Members will have the opportunity to discuss the feasibility and structure of the scheme at their annual conference at the East Midlands Conference Centre, Nottingham, on June 2 and 3. They have been urged to attend by their chairman, Mike Goddard (Belvoir Lettings), who is leading the One Vision project.

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