Brexit marked one of the most significant political and economic changes in modern British history. The UK’s departure from the European Union brought about wide-ranging consequences across industries, including franchising. This sector, which relies heavily on cross-border trade, international brand recognition, and a stable regulatory environment, has been particularly sensitive to the challenges and opportunities created by Brexit. Understanding how franchising in the UK has been affected since leaving the EU helps prospective franchisors, franchisees, and investors navigate the new landscape.
Shifts in Supply Chains and Logistics
One of the most immediate impacts of Brexit on franchising was the disruption to supply chains. Many franchises, particularly in retail and hospitality, depend on goods imported from Europe. With the introduction of customs checks, tariffs on certain goods, and delays at borders, the smooth flow of supplies was interrupted. This created challenges for franchises that required regular stock replenishment, from food and beverage outlets to fashion retailers.
In response, some franchisors were forced to rethink their logistics strategies. This included sourcing products from within the UK, finding alternative suppliers, or adjusting their stockholding practices to mitigate delays. While this added cost and complexity, it also created opportunities for local suppliers and manufacturers to strengthen relationships with franchise networks.
Regulatory Changes and Compliance
Brexit also altered the regulatory framework in which franchises operate. Previously, UK franchises benefited from EU-wide regulations that ensured consistency across borders. Post-Brexit, the UK has been free to diverge from EU standards, creating the possibility of differing rules on issues such as food safety, employment law, and data protection.
For franchisors with a pan-European presence, this means adapting operations to meet both UK and EU standards, often at additional cost. On the other hand, Brexit has also given the UK government the flexibility to shape domestic regulations in ways that could benefit businesses, potentially reducing red tape over time. However, the transitional period has undoubtedly increased complexity and uncertainty for franchise operators.
Labour Market Challenges
The franchising sector is a significant employer in the UK, particularly in industries such as hospitality, retail, and care services. Many of these businesses relied heavily on workers from EU countries. Following Brexit, restrictions on freedom of movement led to staff shortages across key sectors. This created recruitment and retention difficulties for franchises that require large workforces, such as restaurants, cleaning services, and logistics operators.
In response, franchisors have had to rethink their recruitment strategies, offering more competitive wages and investing in training to attract local talent. While this has increased costs, it has also encouraged some franchises to explore technology-driven efficiencies, such as automation in quick-service restaurants or digital tools for administrative tasks.
New Opportunities for Domestic Growth
Although Brexit brought challenges, it has also opened up opportunities for franchising within the UK. With greater emphasis on supporting British businesses, consumers have increasingly sought out local brands. This trend has benefited UK-born franchises, allowing them to expand more confidently in a market where consumer demand for homegrown businesses is strong.
Furthermore, some international franchisors see the UK as a gateway to markets beyond Europe, such as the Commonwealth and North America. This has created fresh opportunities for franchise partnerships that are less dependent on the EU and more globally diversified. While the adjustment period has been difficult, the resilience of the franchising model has allowed businesses to adapt to new realities.
Summary
The impact of Brexit on franchising in the UK has been significant, touching on supply chains, regulations, labour markets, and consumer behaviour. While many franchises faced initial disruptions, the sector has shown resilience by adapting to new logistical and operational realities. Labour shortages and regulatory divergence remain ongoing challenges, but opportunities for domestic growth and global partnerships continue to emerge. For both franchisors and franchisees, the post-Brexit environment requires flexibility, innovation, and a willingness to adapt. Ultimately, Brexit has reshaped franchising in the UK, creating a landscape that is more complex but also full of potential for those prepared to navigate it.