4th August 2009

The last 18 months of economic uncertainty have left consumers looking for even greater reassurances when choosing a letting agent. It is therefore imperative that agents not only ensure they are protected as a company but that they say clearly what they are doing to look after the best interests of their customers. The National Approved Letting Scheme (NALS) continues to protect tenants and landlords through their agent accreditation, which encompasses Client Money Protection (CMP) insurance. Recent news reporting multiple cases of fraud among some high profile lettings franchise operations has highlighted the vital importance of franchisor’s training, monitoring of compliance of standards and sound selection procedures before they take on a new franchisee.

NALS is currently dealing with a number of claims on its own CMP scheme where individual franchisees have defaulted. NALS CMP scheme guarantees full consumer reimbursement in the event of misappropriation or losses by franchisees.

Caroline Pickering, NALS Independent Chair, is adamant that franchisors cannot stand aside from any responsibility for cases relating to their businesses, particularly when consumers are being openly deceived.

“Some lettings agencies may be experiencing difficulties in this economic climate and now is the time that franchisors should be giving increased support to struggling franchisees, who may be new to the industry,” she says. “In relation to franchise operations, we should be stamping out any doubtful activity in order to protect the consumer. That’s why franchisors need to take responsibility by keeping a tighter rein on those who operate under their brand – not only to ensure the consumer is protected, but to fulfil their undertakings and safeguard their brand. Agents cannot use schemes like NALS’ CMP to bail them out. Such initiatives have been developed to protect the consumer – but they are not a ‘Get out of Jail Free card’ for rogue agents.”

These sentiments are echoed entirely by Mike Goddard; founder and chief executive of Belvoir Lettings. Goddard feels very strongly that while fraudulent franchisees must be held ultimately accountable for their actions, franchisors must exercise greater caution and ensure they’re operating responsibly from the outset.

“Franchising is essentially a process whereby people who often have very little experience of being involved in a particular industry, are equipped with the tools to run a successful business,” he says. “It is indisputable that the franchisor is wholly responsible for not only who is selected to represent their brand, but the franchisee’s initial and ongoing training and education, as well as constant monitoring to ensure that new branches and their management are completely up to speed. All franchisees are brand ambassadors and they must act as such.”

Goddard founded Belvoir Lettings in 1995, and opened his first franchise the following year. Today there are 146 branches across the UK, and as an experienced lettings franchisor, Goddard is also the chairman of the British Franchise Association (BFA).

“The purpose of the BFA is to promote standards-based, self-regulating, ethical franchising. While the organisation is committed to promoting best practice amongst businesses – our remit isn’t industry-specific. The BFA doesn’t provide client money protection, but that’s precisely why Government-backed schemes like NALS exist – to ensure that there are relevant industry defences in place for the consumer.”

Among letting agents, the NALS accreditation kitemark acts as a guarantee of best practice and is held in high regard in the sector. Any agency firm acting improperly is immediately stripped of their NALS accreditation. Whilst the vast majority of franchisees are operating in a perfectly proper and responsible manner, but a rogue franchisee not only damages the consumer, but undermines the work and standing of fellow responsible agents.

Where negligent franchisors continue to let failures fall by the wayside, NALS will act in the interests of both tenants and landlords to ensure that no innocent party loses out. But, as Pickering asserts:

“This is one of the reasons that NALS is working with Government to implement tighter industry regulation – to ensure that there are cast iron guidelines in place for everyone operating in the sector,” she says. “While NALS’ framework sets down firm criteria for best practice, franchisees that ‘buy their way in’ need additional support from within, and this can only be the duty of the franchisors under whose license they operate and who are well paid for their license.”