I.Economic data

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A. Macro-economic data

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- General data[1]

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Population 2021: 67,026,300 inhabitants

Area: 244,381 km²

Density 2021: 277.0/km²

GDP (nominal) 2022: $3.07 Billion (6th)

GDP/capita 2022: $45,295

GDP (PPP) 2022: $3.751 Billion (7th)

GDP (PPP)/capita 2022: $55,300 (11th)

Growth rate 2022: -0.5%

GNI/capita (PPP) 2022: $55,210

HDI 2021: 0.929 (18th )

Literacy rate: 99%

Life expectancy 2021: 80.70 years

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- Policy[2]

 

The United Kingdom is a parliamentary monarchy. Since September 8, 2022, Charles III has reigned as King of the United Kingdom.

 

The UK has no formal Constitution, so a body of laws, case law and treaties governs the parliamentary system.

 

The British Parliament consists of the House of Commons, the House of Lords and the King. Seats in the House of Commons (made up of 650 MPs, each representing a constituency) are determined by general election, while the House of Lords is made up by indirect suffrage, royal appointment or heredity. The House of Lords can examine bills approved by the House of Commons. However, it has no power to prevent the passage becoming law. The House of Lords may, however, invite the government to reconsider a bill.

 

The British Government is answerable to the House of Commons. In principle, the majority of Government members, including the Prime Minister, are members of the House of Commons. At the time of writing, Rishi Sunak, Conservative, has been Prime Minister since October 25, 2022.

 

From a European perspective, the United Kingdom joined the European Union on January 1, 1973. However, the British population voted 51.9% to leave the European Union in a 2016 referendum. On December 31, 2020, the UK left the European Union.

 

Since the result of the UK's referendum on membership of the European Union, the UK has experienced ministerial instability with the consecutive change of five Prime Ministers from 2016 to 2022 (David Cameron, Theresa May, Boris Johnson, Liz Truss and Rishi Sunak).

 

The British Government seems to be gaining in stability since the election of Rishi Sunak. The next elections to the House of Commons are due to take place before January 2025. However, Rishi Sunak stated on January 4, 2024, during a visit to Mansfield, that he wishes to call the next general election in the second half of 2024, but no specific date has yet been announced.[3]

 

- Economic development

 

A member of the G7, the UK is the world's 6th biggest economy in terms of nominal GDP.

 

The Covid-19 pandemic caused GDP to fall by -10.4% in 2020. The year 2021 was marked by an economic recovery with an 8.7% increase in GDP.

 

From a 40-year high of 9.6% in October 2022, UK inflation fell to 4.7% in October 2023[4]. This was due in particular to a 31% reduction in gas prices and a 15.6% drop in electricity prices[5]. These are the lowest inflation rates for gas and electricity since January 1989.

 

In July 2023, the UK unemployment rate was 4.3%[6].

 

The OECD has ranked the UK as the fourth most attractive country for start-up founders.[7]

 

- Resources

 

The United Kingdom's resources are mainly hydrocarbon (oil and natural gas in the North Sea), agricultural (cattle, cereals, fishing) and industrial (steel, automotive, aeronautics, high-tech)[8].

 

- Population

 

The United Kingdom is made up of Great Britain (England, Scotland, Wales) and Northern Ireland. The UK's urban population represents 84.6% of the population[9]. Nine-tenths of the UK population live an urban lifestyle.

 

England accounts for 83% of the UK population, Scotland 8%, Wales 4%, and Northern Ireland 2% of the population[10].

 

UK’s ten most populous cities are London (10,076,300), Birmingham (2,574,300), Manchester (2,538,600), Newcastle (853,100), Sheffield (822,300), Leeds (812,000), Bristol (762,800), Nottingham (664,800), Liverpool (640,600) and Bradford (546,400).[11]

 

- Foreign investment

 

The UK's exit from the European Union caused UK business investment to fall by around 10% in 2022, due to the uncertainty Brexit has caused for overseas investors[12].

 

In November 2023, the UK Government announced that £29.5 billion (€34 billion and $37 billion) would be invested in the UK by private investors. These include £10 billion from Australian fund IFM Investors, £7 billion from Spanish energy company Iberdrola and £2.5 billion from Microsoft in artificial intelligence infrastructure[13].

 

Inbound foreign direct investment in the UK amounted to $49.8 billion in 2019. The leading foreign investor was the United States, with $38.5 billion invested in 2019.[14]

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B. Economic data specific to franchising

 

- Historical background[15]

 

When it comes to franchising, the UK has become the place to be. Initially, brewers were the first in the UK to adopt a franchise-type model, back in the 18th century.

 

It was in the 20th century that today's franchise system was developed around the world. The Wimpy restaurant chain was one of the first commercial franchises in the UK. Bought out in 1955, Wimpy prospered until the arrival of McDonald's in 1974.

 

- Institution

 

In the UK, the British Franchise Association (BFA)[16] was set up in 1977. The BFA works in partnership with the European Franchise Federation and the World Franchise Council. Natwest[17], a British banking provider, is a member of the British Franchise Association.

 

The British Franchise Association has set up the BFA Academy, which organizes various trade shows and conferences to provide franchise training and professional development for franchisors and franchisees.

 

- Trade shows

 

As part of the BFA Academy, the British International Franchise Exhibition[18] and the National Franchise Exhibition[19] are held annually.

 

The British Franchise Association also organizes the annual BFA conference[20] and the BFA HSBC British Franchise Award[21] .

 

Finally, the International Franchise Association (IFA) organizes the International Franchise Show[22] in the UK.

 

- Statistics[23]

 

According to the 2018 survey by the UK Franchise Association and NatWest, there are 48,600 franchise units and 935 commercial format franchise systems. 93% of franchisees in the UK report being profitable.

 

There are 900 franchise brands in the UK[24].

 

18% of franchisees are now under the age of 30. Six out of ten franchise units claim to generate annual revenues in excess of £250,000[25].

 

A third of UK-based franchisors also operate internationally. The most significant growth areas for franchising in the UK are personal services and hotels & catering.

 

- Contract content

 

In practice, a franchise agreement is usually concluded for a period of five years. However, it is possible for the agreement to last up to twenty years[26].

 

The average cost of opening a franchised store is 71,209 euros. The average franchisee borrows 70,000 euros[27].

 

- Special features

 

In the UK, 87% of franchisee recruitment is online. However, franchisors have reported difficulties in recruiting due to a lack of management or managerial knowledge on the part of candidates[28].

 

- Economic impact

 

According to the 2018 UK Franchise Association and NatWest Franchise Survey (2018)[29], Franchising was a £17.2 billion market. This represents a 50% increase over the last 10 years.

 

The franchise sector employs 710,000 people in the UK, an increase of 14% since 2015[30].

 

- International

 

In the UK, 80% of franchised brands are national.[31]

 

Dugan Aylen, director of UK-based Franchise Recruitment Services, says that an overseas company wishing to recruit in the UK should either work closely with an experienced franchise recruitment consultant, or directly employ a UK-based consultant, who will be able to understand British culture and the decision-making process of British citizens[32].

 

II. Legal information

 

A.Legal information directly related to franchising

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- Applicable legislation

 

There is no specific franchise legislation for the whole of the UK. However, in early 2021, the Netherlands passed a law regulating franchising. Franchise law comprises contract law, company law, property law and intellectual property law. In addition, the 1996 Trading Schemes Act prohibits franchisees from sub-franchising[33].

 

Contracts between franchisors and franchisees are governed by common commercial law. However, the British Franchise Association has issued a Code of Franchise Ethics for franchisees and franchisors. The Code is not binding and has no legislative force. For this reason, the British Franchise Association recommends, among other things, that a written contract be drawn up, that the obligations and responsibilities of the parties be clearly and unambiguously set out, and that copies of the signed contract be given to franchisees[34].

 

In the event of contractual breach, the UK Franchise Code of Ethics specifies that fairness characterizes the relationship between franchisor and franchisee. The franchisor must inform the franchisee of any breach of contract and allow the franchisee a reasonable time to remedy the breach[35].

​

The provisions of ordinary contract law and competition law also apply to franchise agreements.

 

- Pre-contractual information

 

There is no legal obligation to provide information to potential franchisees prior to signing the contract.

 

However, the British Franchise Association recommends that the franchisor provide the franchisee with a document setting out all the information contained in the franchise agreement before the contract is signed[36].

 

- Contract performance

 

Franchise agreements provide for an initial commitment period, at the end of which it is possible to renew the license.[37]

 

In practice, most franchise agreements do not include a clause allowing the franchisee to terminate the agreement prematurely by giving notice[38]. On the other hand, franchise agreements generally contain early termination clauses for the benefit of the franchisor, should the franchisee fail to comply with the agreement[39].

 

In the event of a dispute, mediation or arbitration may be considered. In this respect, the British Franchise Association has set up mediation and arbitration programs.[40]

 

- Jurisdiction and applicable law

 

On December 30, 2020, the United Kingdom and the European Union signed a Trade and Cooperation Agreement, which came into force on May 1st, 2021. The agreement establishes preferential arrangements for trade in goods and services, digital trade, intellectual property and public procurement. The agreement contains provisions designed to guarantee fair conditions of competition[41] .

 

- Trademark

 

Since the advent of Brexit, the UK no longer recognizes European trademarks. As a result, companies wishing to set up in the UK must register their trademarks in accordance with current UK legislation.

 

The Trade Marks Act of 1994[42] regulates trademark law. In the UK, trademarks are registered with the Intellectual Property Office.

 

Once a trademark has been registered, it is protected for a renewable period of ten years. To obtain a protected trademark, an application must be sent to the Intellectual Property Office, either online or by post[43]. When applying by mail, physical examples, models or prototypes of the invention[44]  should not be sent.

 

The UK is also a member of the Madrid System, enabling the UK trademark to be registered via the international trademark. The Madrid System[45] enables companies to obtain trademark protection in up to 130 countries by filing a single international application, in a single language, with the World Intellectual Property Organization (WIPO). Under Article 6 of the Madrid Agreement, a trademark registration is valid for 20 years. 

​

In the UK, trademark applications can be handled both nationally and through WIPO. Examinations are conducted on absolute grounds, with earlier marks potentially cited against the application, though no refusals are based on relative grounds. Multi-class applications are accepted. Trademarks become vulnerable to cancellation for non-use five years from the registration date. To develop a franchise in this country, it is advisable to cover "Business assistance relating to franchising" and "retail services" which are both accepted under class 35 by the UKIPO, with retail services requiring specification of the area. Recording a franchising agreement is not compulsory but advisable for legal advantages.

​

B. Peripheral legal data

 

- Competition law

 

The UK was the first European jurisdiction to adopt competition law. As early as 1948, the Monopolies and Restrictive Practices (Inquiry and Control) Act was enacted. Today, the Competition Act 1998[46] is in force.

 

The national competition authority is the Competition and Markets Authority.

 

In practice, franchise agreements include a clause prohibiting the franchisee from becoming involved in a competitor's business for a specified period (at least during the term of the agreement)[47].

 

UK competition law is similar to European competition law, which applied in the UK before Brexit. For example, under Section 2 of the Competition Act 1998, UK competition law only prohibits practices that have the object or effect of restricting competition within the UK.

 

In particular, it is forbidden to set minimum sales prices for franchisees[48], or to make the conclusion of a contract subject to the acceptance by the other parties of additional obligations which, by their nature or according to commercial usage, have no connection with the purpose of such contracts (Section 2, paragraph 1, e of the Competition Act 1998).

 

- Personal data

 

Before Brexit took effect on December 31, 2020, the European General Data Protection Regulation (hereinafter "GDPR") applied. As of January 1, 2021, UK personal data law is no longer governed by the GDPR. Consequently, the UK government has passed a series of laws to transpose the European GDPR into UK national law. As a result, the UK has its own General Data Protection Regulation, which came into force on January 1, 2022 and has been incorporated into Chapter 2 of Part 2 of the Data Protection Act 2018.[49]

 

The European Commission considers that UK law provides a level of protection for personal data equivalent to that of the GDPR[50]. Consequently, an adequacy decision has been made between the European Union and the United Kingdom. In practice, European Economic Area operators can transfer personal data, provided it is necessary for their business, to the UK, without having to adopt standard contractual clauses or binding corporate rules.

 

The national authority responsible for personal data protection is the Information Commissioner's Office[51]. This authority has the power to handle complaints about personal data breaches.

 

- Special provisions for foreign investments

 

A foreign company can acquire 100% of the shares of a UK listed company[52].

 

A government website is dedicated to foreign investment[53]. It lists all the sectors in which it is possible to invest (aeronautics, virtual reality, food and drink, hydrogen, etc.). The government also publishes investment opportunities, i.e., current and future projects.

 

To encourage foreign investment, the UK has entered into 117 Bilateral Investment Treaties[54] which provide legal protection for investors from both countries party to the Bilateral Investment Treaty.

​

- Special features

 

As a former member State of the European Union, the UK was subject to EU law. Most European provisions, such as those on data protection and competition law, have been transposed into UK law. However, there are still some regulations, such as the European trademark, or freedom of movement and residence, which no longer apply in the UK.

​

Main websites

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- The British Franchise Association: https://www.thebfa.org/

- Intellectual property: https://www.gov.uk/government/organisations/intellectual-property-office

- Foreign investment: https://www.great.gov.uk/international/investment/

- Personal data: https://ico.org.uk/

- Legislation: https://www.legislation.gov.uk/

- UK budget watchdog: https://obr.uk/

- OECD: https://www.oecd.org/fr/

- The International Centre for Settlement of Investment Disputes: https://icsid.worldbank.org/fr

 

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[1] Unless otherwise stated, the data below are from Home - Office for National Statistics (ons.gov.uk).

[2] Unless otherwise stated, the information below is taken from https://www.touteleurope.eu/pays/royaume-uni/

[3] https://www.lefigaro.fr/international/royaume-uni-rishi-sunak-prevoit-les-prochaines-legislatives-au-second-semestre-2024-20240104

[4] Home - Office for National Statistics (ons.gov.uk)

[5] Ditto

[6] Ibid

[7] https://www.tresor.economie.gouv.fr/Pays/GB/

[8] https://www.larousse.fr/encyclopedie/divers/Grande-Bretagne_activit%C3%A9s_%C3%A9conomiques/185858#:~:text=Le%20Royaume%2DUni%20est%20le,'il%20n'en%20exports.

[9] https://knoema.fr/atlas/Royaume-Uni/Population-urbaine-percent-du-total

[10] https://www.larousse.fr/encyclopedie/divers/Grande-Bretagne_population/185857#:~:text=England%2C%20with%2049%2C,North%20and%2064%20in%20%C3%89cosse.

[11] https://la-carte-des-mondes.fr/10-plus-grandes-villes-royaume-uni/

[12] Economics Observatory  study, March 2023

[13] https://www.latribune.fr/economie/international/operation-seduction-reussie-pour-le-royaume-uni-qui-attire-30-milliards-de-livres-de-nouveaux-investissements-prives-984247.html#:~:text=The%20British%20government%20has%20announced%C3%A9,so%20investing%20in%20the%20Royalm%2DUni.

[14] OECD statistics on international direct investment

[15] Unless otherwise stated, the information below is taken from https://elitefranchisemagazine.co.uk/analysis/item/from-singer-to-subway-the-history-of-franchising

[16] Tel: +44 (0) 1235 820470; postal address: Merchant House, 5 East St Helen Street, Abingdon, OX14 5EG; general e-mail address: mailroom@thebfa.org; press e-mail address: press@thebfa.org

[17] Franchise Director (Kate Pullen) tel: +44 (0) 7917 837698; postal address: 250 Bishopsgate, London, EC2M 4AA; Kate Pullen e-mail address: katherine.pullen@natwest.com; general e-mail address: franchise@natwest.com

[18] February 2 and 3, 2024, Olympia, London

[19] October 6 and 7, 2024, NEC, Birmingham

[20] November 7, 2024

[21] November 7, 2024

[22] April 12 and 13, 2024, ExCel London

[23] Unless otherwise stated, the following statistics are taken from https://www.franchisecompany.co.uk/news/bfa-natwest-franchise-survey-2018/

[24] https://www.franchise-uk.co.uk/advice-uk/history-of-franchising/

[25] https://www.franchisedirecte.fr/information/lafranchisealinternational/votrefranchisepeutellesexporterauroyaumeuni/

[26] https://www.thebfa.org/expert-advice-zone/what-to-look-out-for-in-a-franchise-agreement/

[27] https://ac-franchise.com/article/la-franchise-made-in-angleterre

[28] Ditto

[29] https://www.franchisecompany.co.uk/news/bfa-natwest-franchise-survey-2018/

[30] https://www.natwest.com/business/business-services/franchising.html

[31] https://m.tradesolutions.bnpparibas.com/fr/implanter/royaume-uni/vendre#:~:text=80%20%25%20of%20brands%20franchise%C3%A9es%20are,law%20sp%C3%A9specific%20%C3%A0%20the%20franchise.

[32] https://www.franchisedirecte.fr/information/lafranchisealinternational/votrefranchisepeutellesexporterauroyaumeuni/

[33] https://www.thebfa.org/expert-advice-zone/what-is-franchising-law-in-scotland/

[34] https://www.whichfranchise.com/feature_template.cfm?FeatureID=88

[35] Ditto

[36] Ibid

[37] https://www.thebfa.org/expert-advice-zone/what-to-look-out-for-in-a-franchise-agreement/

[38] Ditto

[39] https://www.thebfa.org/expert-advice-zone/top-legal-tips-for-franchisees/

[40] https://www.thebfa.org/expert-advice-zone/how-to-manage-franchise-disputes/

[41] https://eur-lex.europa.eu/legal-content/FR/TXT/PDF/?uri=CELEX%3A22021A0430%2801%29&amp%3Bfrom=EN

[42] https://assets.publishing.service.gov.uk/media/63f8963e8fa8f527f110a2e6/Consolidated-Trade-Marks-Act-1994-February23.pdf

[43] Concept House, Cardiff Road, Newport, South Wales NP10 8QQ, United Kingdom

[44] https://www.gov.uk/government/organisations/intellectual-property-office

[45] Madrid Agreement Concerning the International Registration of Trademarks

[46] N°1998 c.41

[47] https://www.thebfa.org/expert-advice-zone/what-to-look-out-for-in-a-franchise-agreement/

[48] https://www.thebfa.org/expert-advice-zone/what-is-franchising-law-in-scotland/

[49] N°2018 c.12

[50] European Commission implementing decision (EU) no. 2021/1773 of June 28, 2021

[51] Tel: +44 (0) 303 123 1113 Wycliffe House Water Lane, Wilmslow, Cheshire SK9 5AF, United Kingdom

[52] https://www.la-fabrique.fr/fr/publication/royaume-uni-les-investisseurs-etrangers-au-secours-de-la-strategie-post-brexit/

[53] https://www.great.gov.uk/international/

[54] Complete list: https://icsid.worldbank.org/fr/ressources/base-de-donn%C3%A9es/base-de-donn%C3%A9es-relative-aux-trait%C3%A9s-bilat%C3%A9raux-dinvestissement