EUROPEAN FRANCHISE FEDERATION
EFF
The EFF is a not-for-profit association (established in Belgium under Belgian law, French linguistic role) which speaks for and represents the interests (legal and commercial) of the commercial franchising industry in Europe, and in particular in the EU.
ID: 755515438089-04
Lobbying Activity
Response to Revision of EU rules on late payments (Late Payments Directive)
8 Nov 2023
The European Franchise Federation (EFF) represents 18 national franchise associations, serving the interests of both franchisors and franchisees across Europe. The EFF is the voice of the many thousands of small businesses that use franchising as a strategy to grow a brand, providing opportunities for entrepreneurs and workers to find their place in the labour market. Membership of the association is dependent on adherence to the EFF Code of Ethics which sets out core principles for operating franchise concepts. EFF members operate in several business sectors including food and beverages, retailing, the leisure industry, homecare services and many others. Our franchise members have built up strong brands by, amongst other factors, adopting a culture of prompt payments in B2B transactions. Our members support the status quo as set out by the 2011 Late Payments Directive which is the correct balance for both suppliers and buyers. Longer payment terms of 60 days or more can be beneficial for both sides of an agreement, as they often increase the chances of a sale to a customer taking place. Longer terms also benefit cashflow and supply chain finance and improve the competitiveness of markets. For SMEs longer terms can even enable them to offer greater choice and assortments at competitive prices. The franchise sector opposes a one-size fits all imposition of 30 day payment terms, as this will bring disruption to markets where the current Directive allows regional and sectoral differences to be addressed in an appropriate manner. In France and Spain for example, different sectors are afforded different payment terms which match their rate of stock turnover. The impact assessment accompanying the proposal does not provide any convincing arguments over why this should be changed. SMEs will not benefit from 30 day terms. Emerging companies will often use payment terms flexibly with their customers in order to win new business and build a strong brand reputation. Requiring 30 day terms may seem a superficially attractive option, but in reality it will create more administrative burdens and make EU-based businesses more unattractive compared to foreign competitors. A more beneficial approach would be to ensure proper enforcement of existing EU and national rules rather than changing rules that have had a positive impact on the business environment. It also appears that the main problems are encountered through poor compliance in government to business payments, rather than in B2B environments. The move to 30 day terms and the use of a Regulation appear disproportionate particularly as the impact assessment does not provide a sufficiently robust case showing why the 2011 Directive requires any changes. Denis Séguier EFF Chair
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