Regulation 4 Food or drink SMEs

(1)

For the purposes of sections 321A(3), 368FA(2) and 368Z14(2) of the 2003 Act, a person is a “food or drink SME” during a financial year if that person—

(a)

carries on one or more businesses which involve or are associated with the manufacture or sale of food or drink during that financial year, and

(b)

on the first day of the financial year, employs fewer than 250 people for the purposes of those businesses.

(2)

For the purposes of determining how many persons are employed for the purposes of a business—

(a)

a business that is carried on pursuant to a franchise agreement is to be treated as part of the business of the franchisor and not as a separate business carried on by the franchisee;

(b)

persons employed for the purposes of the business in a country or territory outside the United Kingdom are to be taken into account.

(3)

For the purposes of paragraph (2), a “franchise agreement” exists where one undertaking (“the franchisee”) and another undertaking (“the franchisor”) agree that the franchisee carries on a business activity which includes the sale or distribution of food or drink (“the franchise business”), and paragraph (4) applies to the franchise business.

(4)

This paragraph applies to a franchise business if—

(a)

the food or drink provided in the franchise business,

(b)

the internal or external appearance of the premises where the franchise business is carried on, and

(c)

the business model used for the operation of the franchise business,

are agreed by the franchisor, and are similar to those of other undertakings in respect of which the franchisor has entered into comparable contractual arrangements.

(5)

Paragraph (4) does not apply to a franchise business if the franchise agreement is limited to the alcoholic drinks provided in the franchise business and the franchisee is free to determine what other food or drink is provided.

(6)

For the purposes of paragraph (1)(b)—

(a)

the employees of a business are the persons who are employed for the purposes of the business;

(b)

“employee” means an individual who has entered into, or works under, a contract of employment, whether that contract is for full-time or part-time employment;

(c)

“contract of employment” means a contract of service, whether express or implied, and, if it is express, whether oral or in writing;

(d)

persons employed for the purposes of a business include persons who are members of staff of an associated company of the business who also work for the purposes of the business, and for these purposes—

(i)

“associated company” means a company which is a parent undertaking or a subsidiary undertaking of the company which owns the business, and

(ii)

“parent undertaking” and “subsidiary undertaking” have the same meaning as in section 1162 of the Companies Act 2006^f1.

Annotations

Footnotes

f1: 2006 c. 46.