Franchises

The Regulations are very specific with regard to the registration of franchisors and their franchises. If an individual franchise meets the two registration thresholds (turnover over £2M / handling 50 tonnes of packaging) alone then it has the option to register separately from the franchisor, but can choose to register with their franchisor instead.

However, if a franchise does not meet the thresholds, then their total packaging obligation has to be met by the franchisor (as long as the franchise group as a whole meets the thresholds).

Franchisors have an obligation on both the packaging they provide to their franchises and on packaging that the franchises have to use under the franchisor, e.g. a fast food franchisor may state in their franchise agreement that all franchises must use their familiar packaging and as such the franchisor will be obligated.

Example

  • Franchise A can register individually due to being obligated on its own
  • Because Franchise B and Franchise C don’t reach the thresholds individually but as a group the three franchises have a total turnover of £4.9M and a total packaging handled amount of 100 tonnes the Franchisor is obligated for Franchise B and Franchise C
 Franchisor
 ↓
Franchise A

  • Turnover £2,000,000
  • Handle 50 tonnes of packaging
Franchise B

  • Turnover £1.9M
  • Handle 49 tonnes
Franchise C

  • Turnover £1M
  • Handle 1 tonne

Subsidiaries

For groups of companies, the relevant turnover is the aggregate turnover of all the companies in the group (holding company and subsidiaries) that supply packaging. If this turnover exceeds £2M and the packaging handled is 50 tonnes or above, the group of companies will be obligated.

In short, if a holding company and all of its subsidiaries who handle packaging added their turnover and packaging handled amounts together and the total exceeded the two thresholds, the group of companies would be obligated.

Example

The first Group consists of a holding company and three subsidiary businesses with a cumulative turnover of £26.5 million.  They handle 2 tonnes, 3 tonnes, 8 tonnes and 36 tonnes respectively.

The holding company and subsidiaries are all producers and the Group satisfies the turnover threshold test, however, it only handled 49 tonnes of packaging, so it is not obligated.

The second Group consists of a holding company and twelve subsidiaries. Three subsidiaries are not producers (i.e. they do not carry out activities on packaging which they own and which they supply to another stage in the chain or to the end user). In this case, the holding company and the 9 subsidiaries are the producers and must therefore combine their turnovers and packaging weights to determine their obligation.

The third Group consists of a holding company and four subsidiaries. Their aggregate financial turnover exceeds £2 million and they handle more than 50 tonnes of packaging between them. In this case, despite the holding company not being a producer, it can register on behalf of all.

Where the holding company and all the subsidiaries are producers, they can register together

Where each subsidiary and the holding company is a producer, each can register individually

Where the holding company is a producer, it can register in respect of one or more of the subsidiary companies that are producers, while all remaining subsidiary businesses that are producers must register individually – they may not join together in one registration without the holding company

Where the holding company is not a producer but its subsidiaries are, the holding company can still register on behalf of all.

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