ECSH44325 - The register: contents: agents or franchisees

Agents or franchisees

Franchise overview

Franchise business models can vary in their operation and in terms of how control of the franchisor is exercised over the franchisee.

A franchise is an existing business (the franchisor) that allows a third party (the franchisee) to trade using their branding/business model in exchange for a fee. This is different from a business having multiple branches.

There may be indicators that both the franchisor and franchisee can make decisions that could be viewed as being in control of how the businesses are conducted. Therefore, it is important for you to establish which party is responsible for compliance with the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLR 2017).  This can usually be done by communicating with the business and by inspecting its franchise agreement.

 

Who is responsible for registration?

The franchisee should know whether they are independent, however if they are in doubt, responsibility for anti-money laundering supervision will be detailed in the franchise agreement. If they are independent, they need to register with HMRC and comply with all its obligations under MLR 2017.

If the franchisee is an agent, then it is the franchisor’s responsibility to register with HMRC, including the franchisee as a premises on its application, pay the appropriate fee and provide all relevant information. 

Agents or franchisees premises

A business should register its agents’ or franchisees’ premises and pay the relevant fee if:

  • Any transactions are undertaken on its behalf from the agents or franchisees’ premises.
  • It is responsible for the way the agent or franchisee is run; and,
  • It has put in place the anti-money laundering controls and procedures used by the agent or franchisee when they deal with customers on behalf of the business.

A business does not have to register the agents’ or franchisees’ premises if the business has no control over the:

  • way the agent or franchisee operates
  • anti-money laundering controls the agent or franchisee has put in place

The agent or franchisee must then apply to register their own premises instead.