Rules and ethics
Part of Franchise opportunities rules and ethics in England
Franchise opportunities advertising rules: testing an earnings claim
Test an earnings claim in a UK franchise advert: trace the figure to evidence, check its label and conditions, and keep forecasts apart from history.
An earnings claim in a franchise advert is a factual statement, and it needs evidence, conditions and a correct label. Test each figure as a reviewer would, whichever channel carries it. The wider UK advertising rules set the frame; the figure itself is where a review earns its keep.
What to take away
- Trace every earnings figure to its evidence before relying on it or publishing it.
- Label turnover, gross profit, operating profit and owner income correctly.
- Read any example together with the opening schedule, staffing pattern and owner workload it assumes.
- Keep a forecast for an English territory apart from historical network figures.
- Keep consent, original wording and the date for every testimonial that cites results.
Who applies the rule on earnings
The Advertising Standards Authority (ASA) applies the CAP Code, and its section 20, Employment, homework schemes and business opportunities, covers franchise recruitment material. CAP Rule 20.7 says business-opportunity communications must not use unrepresentative or overstated earnings figures or exaggerate support.
The burden sits on the evidence behind each number, not on how confident the headline sounds. Complaints about an advert can go to the ASA. The Business Protection from Misleading Marketing Regulations 2008 also prohibit advertising that misleads traders, and trading standards services can enforce them.
The rule governs the claim, not the channel. A social post, landing page, webinar, brochure and sales call can each shape the prospect's decision, so the same figure needs the same evidence in all of them. Qualified review is still required, because application depends on the audience and facts.
Trace the figure to its evidence
For each number, record the covered outlets, dates, geography, maturity, inclusions and exclusions. A figure that cannot be traced to a named set of outlets and a period is not yet a claim anyone can rely on.
| Label on the figure | Question to ask |
|---|---|
| Turnover | Which outlets, dates and geography does it cover? |
| Gross profit | Which costs sit before it, and are they the same across outlets? |
| Operating profit | Which franchise fees and continuing charges are inside it? |
| Owner income | Does it assume the owner works in the business, and for how long? |
Label turnover, gross profit, operating profit and owner income correctly, and never let one stand in for another. Where a return is quoted, trace it the same way. A return on investment means little until the capital and the owner pay assumed are stated.
Ask for the working, not just the result: the spreadsheet or report the number came from, with its date and author. An advert that cannot point to its working has nothing to show a prospect who asks where the figure comes from, and nothing to defend if the claim is challenged.
Put one claim through the test
Take the claim "Our franchisees build highly profitable businesses." Run it through four steps.
- Name the outlets and the period the figure covers.
- Say which measure it is, and what sits inside it.
- Point to the working it came from, with its date and author.
- Add the conditions the example assumes.
The claim fails at step one, because it names no outlets, no period and no measure. A passing version states a figure, names the outlets and the year it covers, says whether owner's pay is inside it and points to the accounts it came from.
Read each example with its conditions
If a result assumes a particular opening schedule, staffing pattern or owner workload, put that information where the reader can understand the claim. Do not let a footnote carry a qualification that reverses the headline.
Read the outlay beside the earnings. The CAP Executive's business-opportunity advice explains that the investment or outlay must be disclosed before commitment, even where all details are supplied in follow-up literature. An income figure cannot be judged without the entry fee, equipment, premises assumptions, stock, marketing contributions and continuing charges that make up the financial commitment.
Keep forecasts and history apart
A projection for an English territory needs its own assumptions. Historical network figures can inform it, but they do not become a local forecast simply by being placed beside a postcode map.
Ask what has changed between the covered period and today, and whether the advert says so. If the headline is history and the conclusion the reader is invited to draw is a forecast, the claim has crossed from one to the other without evidence.
Check the proof behind the numbers
Testimonials that cite results are evidence only if they are genuine. Keep consent, the original wording, the person's relationship to the business and the date.
If a page presents franchisee ratings or prospect reviews, document collection, moderation, incentives and removal decisions. A broker, directory, creator or existing operator may be paid, so make the relationship apparent where the recommendation appears.
Record the review
Keep one sheet for the campaign containing the final assets, destination URLs, claim evidence, audience, approvers and release date. Reopen it whenever a figure, incentive, form, testimonial or destination changes. Approval of one version should not be treated as approval of later creative edits.
Where the advert leads to an enquiry form, who receives the prospect's details is a separate data protection question and needs its own review. Name one person who owns each claim, so a prospect's question about a figure has a single place to go.
Before you act
- Run each earnings claim through the four-step test.
- Record the outlets, dates, geography and maturity behind each earnings figure.
- Label turnover, gross profit, operating profit and owner income correctly.
- State the conditions each example assumes.
- Keep forecasts separate from historical figures.
- Keep consent, wording and date for each testimonial.
- Reopen the campaign sheet whenever a figure changes.
Common questions
What does CAP Rule 20.7 say about earnings?
It says business-opportunity communications must not use unrepresentative or overstated earnings figures or exaggerate support. Each number should be traceable to the outlets, dates and conditions that produced it.
Can a network figure serve as a forecast for one territory?
Not on its own. A projection for an English territory needs its own assumptions. Historical network figures can inform it, but they do not become a local forecast by being placed beside a postcode map.
What should be kept for a testimonial that cites results?
Consent, the original wording, the person's relationship to the business and the date. Endorsements should be genuine, and any paid relationship should be apparent where the recommendation appears.
