As we move into the second year of the divorce negotiations, many in Britain feel as if nothing has really changed yet and the practical impact on the UK franchise industry has also been negligible so far.
The areas of concern around Brexit are about the changes to the movement of people, the movement of goods and services and to the law. Tutor Doctor is an international business and alongside my work in the UK I also spend time visiting our franchisees around the world. Because franchisees are rightly focused on their local market, the consequence of cross-border trade is something that just isn’t relevant in our business and for many franchises, this will be the same. With the exception of some larger product-based franchises, most franchisees will buy within the UK and sell within their particular territory – in the UK.
People movement could still present a major challenge and we have already seen a dramatic drop in the number of people coming to the UK from Europe. This hasn’t affected our business too much as our franchisees tend to work with tutors who are established residents in the local area, rather than people who have recently arrived from overseas – though that’s not always the case. Other franchises in the home-care or food-retail sector will inevitably have been hit harder by the reduction in numbers of people coming to the country.
While it’s no clearer now what the legislative changes from Brexit will be than what it was around the referendum, it could have potentially huge legal ramifications for the franchise sector. Franchise law doesn’t exist in the UK but all franchises operate under a mix of UK and EU law. I would expect the franchise sector’s representatives to ensure franchising isn’t forgotten by the government amid the rumblings coming from the Brexit train. It can be hard in normal times to ensure that franchising gets a voice but when the political games are so big we need to work harder than ever to ensure our sector is represented.
The unspoken impact of Brexit on franchising is on confidence. The population is more cautious now. Even after what seems like an age of Brexit talks, the uncertainty around what will happen is still an issue. Theresa May said “Brexit means Brexit” but until what that actually means is resolved, the uncertainty is having an impact on companies. Franchisees may be more cautious about expanding and franchise recruitment has become more challenging as investment decisions are taking longer. While a good investment is still a good investment, franchisees take more time doing their due diligence.
Given the wider sector continues to grow despite the concerns over the negotiations, I expect the light at the end of the Brexit tunnel will be a train coming the other way full of business owners determined to build a legacy – despite the best efforts of our politicians.