Subway is a franchised company, managers invest into, and run the branch on behalf of the corporation. To the customer, it appears they are buying from a well-known global chain, it looks like they are actually buying from Subway, with the same menu and the same global standards. The actual branch is owned and run by the local manager (who also pays an initial franchising fee of $15,000 and 12.5% of gross sales every week to the corporation). Franchising puts the financial risk on the local manager, who effectively buys a chunk of the reputation of the corporation. The customer is reassured by the global reputation and it is this that the franchisee purchases.
In the case of Hinchingbrooke the franchise arrangement is turned on its head. The franchisee is Circle, who are taking over the running of an NHS Trust. The trust is still owned by the NHS so one could say that Circle are buying part of this "brand". But it is important to note that - unlike Subway franchisees who own their shops - Circle does not have the financial risk of investing in the ownership of a hospital. Normally the franchisee buys the reputation of the organisation, and while Hinchingbrooke will still be branded as an NHS Trust, the intention of the government is for the public to think it is a Circle hospital. This is franchising back-to-front.
Clause 178 of the Health and Social Care Bill abolishes NHS Trusts. But, you say, Hinchingbrooke is an NHS Trust, so what will happen there? Clause 178 (3) covers this:
178 (3) Where arrangements ("franchise arrangements") under which a person exercises (or is to exercise) the main functions of an NHS trust on behalf of the trust are in force immediately before the commencement of this section, the trust is to continue after that commencement to be constituted as an NHS trust until--This says that since Hinchingbrooke has been franchised before the Bill, it will remain an NHS Trust while the franchise arrangement is in force (or 178(3)(c), the franchise is renewed). Joe Farrington-Douglas points me to the following parliamentary question:
(a) it is dissolved or becomes, merges with or is acquired by an NHS foundation trust,
(b) where none of those events occurs before the end of the period of three years beginning with the day on which the franchise arrangements come to an end, the end of that period, or
(c) where other franchise arrangements come into force before the end of that period, the end of the period of three years beginning with the day on which those other franchise arrangements or any subsequent franchise arrangements come to an end.
Andrew Gwynne (Denton and Reddish, Labour)So Hinchingbrooke is intended to become an FT at the end of the franchise. The franchise is for ten years, so Hinchingbrooke Health Care will be an NHS Trust until 2022. However, clause 178 (1) and (2) say this:
To ask the Secretary of State for Health whether the NHS Trust for Hinchingbrooke Hospital plans to pursue its application for Foundation Trust status; what the timetable is for any conversion to Foundation Trust status; whether there will be any differences in the process followed; and what consultation he has had with Monitor on this issue.
Simon Burns (Minister of State (Health), Health; Chelmsford, Conservative)
Hinchingbrooke Hospital NHS Trust is expected to become, or become part of, a national health service foundation trust. There is currently no agreed timetable for this, which will be determined ahead of the end of the franchise contract when it is anticipated the trust will be ready to move forward to foundation trust status.
All future applicants for foundation trust status will follow the current process to apply to Monitor. There will be no lowering of the standards required to achieve foundation trust status. Through regular meetings with Monitor, (the statutory name of which is the Independent Regulator of NHS Foundation Trusts), the Department is assured that Monitor is aware of the trust's current position.
178 Abolition of NHS trusts in EnglandSo Hinchingbrooke Health Care will be an NHS Trust for ten years but this says that the concept of NHS Trust will have been abolished! To accommodate this 178 (5) effectively says, "the laws abolished in sections (1) and (2) continue to apply to NHS Trusts that have been franchised". Since 178 (3)(c) says that the trust can be re-franchised, Hinchingbrooke Health Care can be an NHS Trust forever.
(1) The NHS trusts established under section 25 of the National Health Service Act 2006 are abolished.
(2) Chapter 3 of Part 2 of that Act (NHS trusts) is repealed.
Hinchingbrooke Health Care will be a zombie trust living a state that does not exist.