Preparing a franchising framework

Once an LTA has decided it that franchising is their preferred option to improve their bus network, the LTA needs to progress with the statutory franchising process. As part of that process they will need to set out how the franchise will deliver their ambitions for improving local bus services as set out in their relevant general policies.

Geographic area

It is important for the LTA to think carefully about the area in which to implement a franchise as they will need to demonstrate in their assessment how the franchising framework can be put into practice effectively across the whole of the proposed geographic area. The LTA should make sure that the framework contains a map of the geographic area. This will provide stakeholders and members of the public with a visual of the franchising area.

The geographic area is not restricted to the area of the LTA, it could be smaller (i.e., covering an individual corridor or single urban area). Similarly, it could also be larger, cover all or part of multiple authorities (where those LTAs act jointly together). See later in this document for information on multi-authority franchising.

Authorities exploring the franchising option will need to consider:

• how the bus network currently operates in the area;
• interactions with bus networks in neighbouring areas
• current journey times, and
• travel patterns and any changes to these in recent years.

Period the franchise will remain in operation

It is for the LTA to determine how long they want their franchising framework to operate (i.e. it could be for 10 years or 100 years). As part of the assessment, the LTA must set out how they propose to review the effectiveness of the proposed framework once made. This could include the timescales for the periods of review or certain criteria that must be met to require a review.

Exemptions

The proposed franchising framework may also provide for the exemption of such local services or provide a description of such local services as the LTA may specify, as well as specifying conditions (if any) when such exemptions are to apply.

Exemptions could include services on a specific route, (i.e., a service running from the city centre to an airport) or certain types of services (such as hop-on hop-off tour buses, or services used primarily for school transport). Particular consideration should also be given to whether exemptions are required for services which start and or finish out with the franchise area.

The LTA can also specify conditions where such exemptions can apply, this can include a requirement to register the exempted services with the franchising authority or exempting all services operating a certain percentage of their mileage out with the franchise area.

Exemptions play an important role in ensuring that access is maintained for passengers both within and outside of the franchising area to key facilities such as hospitals, places of education and transport hubs. Careful consideration should be given in developing the franchising framework to ensuring that impacts on those travelling across the boundaries of the franchise area are fully taken into account.

Potential standards to include in the franchising framework

The proposed franchising framework must specify the standards to which services must be provided when operating in the franchising area. These could include standards that address frequency, reliability, vehicle types or emissions, customer service, or accessibility. The LTA may also wish to apply specific, more extensive standards to individual franchising agreements dependent on the local need.

LTAs should have the capacity to effectively monitor standards, and a mechanism to impose measures or penalties on operators that do not meet these standards. LTAs should also consider commercial incentive schemes to reward high-achieving operators. Having a franchise, in place of a deregulated market, means that LTAs will need to consider how to directly reward investment and innovation which benefits passengers (within the franchise and / or through the tendering criteria). Failure to do so may result in passengers facing lower standards for the duration of the franchise contract, and the effectiveness of competition for the market may be undermined.

Neighbouring LTAs exploring other bus powers

The LTA will need to consider the impact of bus franchising on services not only within the area concerned but also services that serve neighbouring areas. This is particularly relevant where neighbouring LTAs may also be exploring, or have already implemented, the bus powers available to them, such as running their own services in-house, or via an arm’s-length company, or opting for a BSIP or a separate franchise.

If the area of the proposed franchising framework includes an area where a BSIP is already in place, then the franchising framework must provide for the revocation or variation of any existing partnership scheme. See later int his document for information on transitioning from BSIPs to a Franchise.

Gathering Information

An LTA will need to gather what it considers appropriate and robust information to inform the preparation of their franchising framework and assessment. LTAs are expected to give consideration to what information they consider necessary and the level of granularity they require.

The volume of data required to develop a franchising assessment will be substantial and supplying it will be challenging for bus operators, so LTAs should consider whether data is actually required before they request it. The Bus Services Improvement Partnerships and the Local Services Franchises (Provision of Information) (Scotland) Regulations 2023 (“the Information Regulations”) sets out the relevant information that an LTA may request from operators, including:

• total number of journeys undertaken by passengers
• how and when passengers use relevant local services
• structure of fares,
• types of tickets, and
• revenue received for local services.

Section 13R of the 2001 Act makes clear that an LTA can only use the information for the purposes of exercising the function for which it was obtained: -

• preparing and making a franchising framework,
• reviewing the effectiveness of the framework, or
• varying or revoking a franchising framework.

An operator may only be required to provide the information that is no more than 5 years old, and in any form that it is reasonable to expect operators to provide it in, bearing in mind the ways in which operators currently hold the information. The LTA can also specify that such information must be provided before the end of a specific period.

Where the Traffic Commissioner (TC) is satisfied that an operator of a local service has, without reasonable excuse, failed to provide that the relevant information (including a requirement to provide it within a specified time or in a specified form) under section 13R(2) of the 2001 Act, the TC may impose a penalty as specified in section 39 of the 2001 Act. It is the responsibility of the LTA to ensure that sufficient evidence is provided to the TC to support consideration of enforcement action.

A breakdown of the information that an LTA can and cannot request from operators can be found in Appendix A.