A recent survey found that 87.8% of franchisors entering the Elite Franchise Top 100 Awards* lack confidence in the government’s commitment to small business interests. Following this sentiment, the Labour government has announced the Employment Rights Bill, set to come into force in 2026, alongside impactful fiscal changes outlined in the recent budget. Franchisors and franchisees alike are left contemplating the potential effects on their businesses as they consider the broader impact on the franchise sector – a sector that, according to the British Franchise Association, contributes £19.1 billion to the UK economy through over 1,000 franchised systems and more than 50,000 franchise units. Yet, for many, a clear answer remains elusive.
One question on the minds of many is: “What is the Employment Rights Bill, and how will it impact my business?” In summary, the Bill aims to expand employee rights, presenting both challenges and new obligations for employers.
The proposed legislation seeks to enhance worker protections by removing the two-year qualifying period for unfair dismissal claims and establishing a standard nine-month probation period. Additionally, the Bill proposes to eliminate exploitative zero-hour contracts, offering workers the opportunity to secure regular hours. Practices such as ‘fire and rehire’ will be prohibited, and flexible working requests will become the norm wherever feasible. In a bid to improve employee wellbeing, the Bill also seeks to broaden statutory sick pay eligibility by removing earnings thresholds and waiting periods, allowing more workers access to these benefits.
Meanwhile, the Autumn 2024 Budget introduces additional financial considerations. Employer National Insurance Contributions (NIC) will rise from 13.8% to 15%, with the threshold lowering from £9,100 to £5,000. Employers will also need to account for an increased national living wage, which will jump from £11.44 to £12.21 per hour. Many small franchisees feel these added costs will pressure their budgets, though the government argues that the impact on long-term business planning will be minimal.
Alan Bark is the Head Performance Business Coach and Senior Partner at ActionCOACH Chester supporting local business owners since launching the business coaching franchise in April 2017.
“Running an efficient business with a focus on growth means the increase in wage costs will have little impact. What I may consider over the next 12 months is to test and measure ‘off shoring’ some of the administration and even some of the sales activities, keeping the team small and focused on delivering great service.”
For some franchise leaders, the Employment Rights Bill aligns with their values around worker ethics. The impact assessment of the Bill suggests that up to 10 million workers stand to benefit, particularly those in lower-paid, less secure roles. The reforms are expected to boost workforce motivation and overall wellbeing, which should, in turn, improve service quality and productivity.
Dan Archer is the UK CEO of in-home care franchise Visiting Angels. Many care franchises use zero-hours contracts for care staff but Visiting Angels started their business in the UK in 2017 with the aim of rewarding their care givers properly and that meant a ban on zero-hours contracts from the start.
“By offering better pay and benefits, training, career progression and mental health support, we’re showing the sector how to deliver the care the right way.”
Dan’s flexibility, dedication and commitment to creating a better workplace for all has helped over 70 franchisees up and down the country flourish, which has subsequently enabled Visiting Angels’ clients to do the same.
“The flexibility and rights within the proposed bill will give all care providers the impetus to change the way they operate for the better. It clearly works because the national turnover rate for care staff is around 73% but our business now sits at just 11%, 30% of our new hires come from staff referrals and mental health absences have reduced from 16% to 3.3%.”
The assessment further reveals that although some businesses may experience additional costs, the potential economic and social benefits should ultimately strengthen the UK’s business landscape. However, many companies expect to adjust hiring practices, potentially leading to reduced employment rates – a challenge for an already strained labour market.
“The proposed changes in the Employment Rights Bill mean little change for us at ActionCOACH. The critical success factor here is the recruitment process – one that will test for an exceptional cultural fit, aligned to strong values and purpose will build an engaged team who care about the success of the business. Help that team to thrive in a high-performance environment with effective leadership and management and you can provide much more than the new bill – for example, we’re working towards a 4-day work week,” added Alan.
So, whilst employee-focused businesses and franchise brands are likely not to see a drastic change in the way they operate as many already have the proposed reforms in place as company standard policy, some small business owners may struggle at first to navigate these HR and financial challenges.
We’ll reveal the annual Elite Franchise 100 ranking here on our website on Wednesday 4th December.
*125 franchisor respondents
