Guidance

Setting up a bus franchising scheme

Updated 29 January 2026

Applies to England

Who this guidance is for

All authorities should have regard to this statutory guidance.

Authorities that have published their statutory notice of intent but have not yet implemented franchising are impacted by the following sections of the Bus Services Act 2025:

• section 12 – miscellaneous amendments require the franchising authority to consider the policies of neighbouring Scottish transport partnerships and Welsh ministers as part of the assessment if the scheme impacts Scotland/Wales
• section 10 – the duty to consult with disabled people

Franchising authorities varying their scheme should follow the new processes set out in varying a franchising scheme.

Other new elements of the Bus Services Act 2025 (sections 1 to 6, 8, 11 and 13) contain transitional provisions and are set out in the new relevant sections.

This guidance also contains information relevant to bus operators affected by franchising, as well as other stakeholders involved in the franchising process.

Introduction

Since December 2024, bus franchising powers have been available to all local transport authorities (LTAs) in England. This guidance is aimed at those authorities that are exploring or progressing bus franchising.

This guidance helps explain the process of setting up and running a bus franchising scheme – as set out in Section 123A to Section 123X of the Transport Act 2000 (The 2000 act) and amended by the Bus Services Act 2017 and the Bus Services Act 2025 (the 2025 act). It is informed by local transport authorities’ experience of implementing franchising to date.

Franchising is not mandatory. LTAs, with their understanding of local challenges and opportunities of their areas, decide what the correct course of action is to drive improvements to bus services and deliver better outcomes for the public. To support them in this, the Department for Transport has legislated through the 2025 act to provide them with a toolkit of improved options. Pursuing franchising, through a simpler and less costly and time-consuming process, is one of these options, alongside strengthened enhanced partnerships with private operators and the ability to establish a local authority owned bus company.

Alongside legislative reform, the government is also increasing its capacity to provide practical support to local authorities which are exploring franchising or that have embarked on the process. Together, the guidance and the manual form a complementary set of resources. The guidance sets out the statutory framework, while the manual provides practical support for authorities exploring and pursuing franchising.

Franchising forms part of the government’s upcoming integrated national transport strategy, one of the key principles of which is to put people at the heart of everything we do, and with accessibility and inclusion one of its priority areas. Through franchising and other reform tools, the government is taking steps to ensure accessibility is at the heart of local transport planning.

This includes supporting LTAs to design networks that are inclusive of disabled passengers, responsive to the needs of rural communities, and aligned with wider decarbonisation and digital innovation agendas. This refreshed thinking will deliver networks that not only meet local demand but also remove barriers to travel, ensuring that public transport is a good option for everyone.

Franchising 

Bus franchising is used extensively across Europe and has existed in London for decades. When implemented effectively, in conjunction with infrastructure investment, it can deliver transformational improvements in local services.

Greater Manchester is the first LTA to use bus franchising powers to deliver a bus franchising scheme, with the first services implemented in September 2023. Reporting from Greater Manchester’s Bee Network has shown increases in patronage (up 14% year on year in the first franchising areas) and punctuality (76% compared to about 66% pre-franchising). A number of other local areas are exploring franchising or have committed to introducing franchising schemes.

In a franchising scheme, local authorities will determine the details of the services to be provided – where they run, when they run and the standards of the services. Bus operators provide services under contract to the local authority. No other services can operate in the franchised area without the agreement of the franchising authority.

Franchising does not always require the scale of LTA resource and planning seen in London or Manchester. There are also strong models of franchising in the Channel Islands and other countries which capitalise on the strengths of private sector route planning, marketing and investment as part of the tendering process, while ensuring stronger local accountability and financial incentives to prioritise bus services that are accountable to the local authority.

The bus franchising powers in the 2000 act are deliberately flexible. They do not have to be used across the whole of an LTA or require all bus services to be operated exclusively under contract – it does not have to be an ‘all or nothing’ proposition. For example, franchising could be introduced to maximise the benefits of a bus rapid transit scheme and cover that corridor only. In a rural area or market town it could also be used to deliver a fully integrated network, with good ‘branch’ connections to key corridors, through a combination of franchised services and commercial services operating under ‘service permits’ granted by the authority.

A number of potential models are set out in this guidance. Following completion of the franchising and bus reform pilots, the government will provide best practice guidance, templates and case studies to LTAs considering franchising models in their local areas.

Context for this guidance

The statutory process

The 2000 act, as amended by 2017 Act, sets out the process that any authority must follow before it can introduce bus franchising in its area. Two franchising authorities acting together may also make a franchising scheme covering the whole or any part of their area or combined area.

This guidance refers to ‘authority’, although it is accepted that there may be more than one LTA involved in developing a franchising assessment and scheme.

At a high level, the process to introduce franchising can be broken down into 5 key stages:

1. Committing to prepare a franchising proposal.

2. Developing and costing the franchising proposal and assessing it against (an)other option(s).

3. Consulting on the proposal.

4. Decision to proceed with franchising.

5. Transition and implementation.

Guidance on each stage is provided in this document and includes 2 different types of guidance. 

Standard guidance

Guidance which seeks to explain how the franchising legislation works in practice and how the government will approach giving local transport authorities access to franchising powers is not statutory. This means that there is no statutory requirement for a local authority or auditor to have regard to it. It may however reference requirements which are themselves set out in statute, such as requirements to follow a particular process or to consult.

Statutory guidance

Statutory guidance is guidance to which a franchising authority or auditor must have regard in exercising relevant functions. Text in this guidance shows where sections of statutory guidance wording begin and ends. 

It is issued under the following sections of the act:

• 123B(5) in relation to the preparation of a franchising scheme assessment by a franchising authority

• 123D(3) in relation to the matters to be taken into account by a franchising authority when selecting a person to act as an auditor of a franchising scheme assessment

• 123D(5) in relation to the matters to be taken into account by an auditor when forming an opinion as to whether the information relied on in a franchising assessment, and the analysis of that information, by an authority is of sufficient quality

• 123W(1) in relation to the exercise by franchising authorities of their functions with regards to franchising schemes

This guidance document is an aid to understanding the overall process. It should be read alongside the appropriate legislation, which sets the framework for interpretation. Individual LTAs must take appropriate legal advice on how the legislation most appropriately applies to their individual circumstances.

Start of statutory guidance wording

Any authority which published a statutory notice of intent to develop a franchising notice of intent on or after 29 January 2026 should have regard to the statutory guidance provided in this document.

End of statutory guidance wording

Setting franchising in a strategic context

All LTAs either operate a franchised network or have a strengthened enhanced partnership (EP) with private operators in place. It is also possible for both approaches to be deployed by an LTA to complement one another. Bus services should be considered in the context of passenger needs, the LTA’s longer-term objectives for the transport system and the area, including economic development, social and environmental objectives.

Achieving these outcomes requires improvements in both bus services themselves and the infrastructure on which they operate, and this must be reflected in the overall bus ‘offer’ to passengers.

Franchising concerns the provision of services. Many bus service improvements can be delivered through the detail of the franchise contracts subsequently awarded to operators, including fare structures and ticketing arrangements, vehicle standards, branding, networks, service levels and the inclusion of demand responsive services.

In some circumstances, an authority may review whether its current enhanced partnership remains the most appropriate mechanism for delivering further improvements. This may be in relation to the existing local bus network’s reliability, punctuality, journey times, accessibility, coverage, frequency, value for money, ability to capitalise on new growth opportunities and/or provision of socially necessary local services. Depending on local priorities and conditions, franchising may be one option among several that could be explored.

However, the cost-effectiveness and overall success of any approach in delivering a long-term strategy for the local bus network will be heavily influenced by the level and quality of supporting infrastructure investment. In particular, measures that prioritise buses, reduce journey times and improve reliability can have a substantial impact on performance, value for money and passenger outcomes. Infrastructure investment plans and their impact on service costs, passenger numbers and revenue will therefore need to be fully integrated into franchising proposals and time saving or reliability measures taken by the authority included in the franchising scheme.

Start of statutory guidance wording

A franchising authority should aim to achieve an overall positive transformation in local bus services by using a combination of its own resources and government funding. In doing so, it should:

• seek to ensure that franchising plans are complemented by measures to improve reliability and reduce passenger journey time on-route, caused by the effects of congestion or poor road layout

• consider how other LTA policies and action will indirectly support bus services (including park and ride) and make bus the mode of choice over private car – for example, the decision whether to use a car or the bus is greatly influenced by parking policy, cost and availability

• agree how success will be measured – how the data informing progress towards the immediate targets set out in the franchising assessment will be collected and appropriate action on them taken forward to contribute to longer term objectives

End of statutory guidance wording

Other strategic considerations

Local transport plans

An LTA’s local transport plan sets out an LTAs local transport policies and how they will implement them. Local transport plans are an important document that every LTA has a statutory duty to publish and keep under review. As part of the assessment of a proposed franchising scheme, LTAs must consider and show how whether the scheme would support the LTAs policies set out in their local transport plans.

When producing local transport plans, LTAs have a duty to take into account government policies and have regard to any guidance issued by the government. The government is currently reviewing and updating guidance for LTAs on local transport plans.

Bus service improvement plans

An LTA’s bus service improvement plan (BSIP) document is a public document published on the LTA’s website, for anyone to read, setting out clearly the LTA and its partners’ vision, plan and proposals for improving bus services and growing bus patronage in their local area. Some neighbouring LTAs publish joint BSIPs. The government believes that BSIPs are important documents in ensuring a shared vision and plan for bus services between LTAs and bus operators and LTAs and remains committed to them.

The timescales for these ambitions and proposals in the BSIP have a dual structure, as follows:

• a long-term view of at least 10 years (such as 2025 to 2035, or 2025 to 2040, aligned with the LTA’s overarching local transport plan (LTP))

• a firmer set of prioritised proposals for implementation over the 4-year period 2025/26 to 2028/29

Local authorities may reference their BSIP within their franchising scheme assessment and may, additionally, refer to other strategy documents, not least LTPs which typically extend to 15 years and are updated every 5 years.

The department has previously published guidance on how LTAs and bus operators should work together to develop their BSIP. The guidance will be refreshed in 2026.

Local government reorganisation

The English Devolution Bill will deliver on commitments within the English Devolution White Paper and ensure a consistent approach to strategic authorities’ transport functions within a standardised devolution framework, empowering local leaders to deliver vital public services.

The bill also streamlines the process for establishing strategic authorities. They will be empowered to operate across 7 key areas, including transport and local infrastructure, skills and employment support, housing and strategic planning, economic development and regeneration, environment, health, wellbeing and public service reform and public safety.  

The bill will establish a devolution framework in statute – a consistent set of powers, functions and duties which will apply to future strategic authorities – which will apply automatically and provide a clear route to taking on greater responsibilities, including on transport.  

Bus franchising powers were granted to all types of local transport authority in England, outside of London, through a statutory instrument which came into force on 18 December 2025. This means that the decision to pursue franchising is entirely devolved, allowing authorities to decide what’s right for their area. Any plans will need to take account of factors like local government reorganisation, which may have implications for timing and governance.

In the case of both new combined or combined county authorities and where there is local government reorganisation, there are transitional arrangements to ensure services can continue to be provided and that any new body has sufficient time to develop its capability and capacity. In the case of new combined or combined county authorities, this is through providing time-limited concurrent powers on local transport authority functions before the new authority becomes solely responsible for exercising them. In the case of local government reorganisation, there are often joint committees or shadow authorities created to manage the periods of the transition before new unitary authorities come formally into effect. Ultimately, where there is a combined or combined county authority, it becomes the local transport authority.

While we understand that local government reorganisation can create short-term governance uncertainty, authorities can still collaborate and partner with neighbours to pursue policies, including on transport. In the meantime, strengthening enhanced partnerships could help lay the groundwork for a more integrated and accountable bus network. 

Integrated ticketing

Integrated ticketing plays an important role in improving passenger experience and supporting the delivery of a successful franchise or EP, enabling passengers to travel seamlessly across various routes, services, and modes of transport using a single, unified fare system.

A good way to achieve this level of integration is by implementing a contactless, pay-as-you-go ticketing system with fare capping. To support LTAs in delivering this, the DfT is funding Transport for West Midlands (TfWM) to develop a shared technology solution for simpler contactless payments known as ‘Project Coral’ in partnership with the UK’s major bus operators and Midlands Connect. 

The aim is to develop a ‘broker’ system to connect different operators’ payment systems, enabling multi-modal travel with fare capping on bus and tram and other local transport services, with the functionality to integrate other modes, including rail, in the future. 

Start of statutory wording

Authorities are expected to plan for integration and to maintain contingencies if project timelines shift. LTAs should also engage with TfWM to understand the technical requirements, integration timelines, and opportunities to align with local plans. Each authority should also set out in its franchising plan how it intends to integrate with Project Coral, including expected timelines and any relevant dependencies.

Because the government is funding the core development of Project Coral LTAs are expected to prioritise implementing the solution before consideration of developing their own multi-operator, contactless bankcard ticketing solution and replacing existing onboard infrastructure (such as ETMs) for this purpose.

End of statutory wording

This approach avoids the need for significant capital investment whilst enabling all LTAs to implement cross-boundary contactless ticketing schemes, including potentially with areas in Scotland and Wales. For bus franchising areas, the national ticketing solution is expected to be available ahead of the time required to procure and roll out a full franchise, with initial deployment planned for spring 2027. This means areas actively progressing toward franchising could potentially benefit from the solution during 2027, even if full rollout of their franchise is not yet complete. 

The solution also enables multi-phase rollout, allowing integrated ticketing to be delivered from the outset so passengers can benefit sooner rather than waiting for the completion of bespoke, local systems.

A guidance document is available to support LTAs in assessing their technical readiness and resource requirements for integration. authorities can request a copy of this guidance by emailing the project team directly at projectcoral@wmca.org.uk.

Zero emission buses

The full transition to zero emission buses is a vital part of the government’s plan to make buses better for passengers and to realise the benefits of lower running costs, cleaner air and smoother, quieter journeys.

The Bus Services Act includes a measure to accelerate decarbonisation of bus services, by placing a requirement on bus operators not to use new non-zero emission buses on local bus routes in England and Scotland. The Scottish measure will be administered by the Scottish government, including the date from which new non-zero emission buses cannot be used.

The date from which new non-zero emission buses cannot be used on English bus services will be specified by the Secretary of State in secondary legislation. However this will not be any earlier than January 2030. This will provide time and confidence for manufacturers to shift production and to operators and local transport authorities to plan the fleet transition.

Start of statutory wording

Prior to this date, the department expects MCAs to have a clear fleet decarbonisation strategy in place and not to purchase new non-zero emission buses unless there is a compelling operational case for them to do so.

End of statutory wording

We will work with LTAs to explore how we can work together to maximise the benefits of this shift to zero emission. We want to strengthen the emphasis and consideration of social value criteria in procurement, across the UK, when MCAs are purchasing buses. Our expectation is that social value criteria would form a minimum of 10% of bus procurement weighting.

Emphasising social value in bus manufacturing procurement will benefit UK bus manufacturers by recognising and rewarding their contributions to local employment, skills development and sustainable practices – strengthening their competitive position and supporting the broader UK economy.

Start of statutory wording

When considering different franchising models, LTAs should consider the extent to which those models enable transformational change, such as decarbonisation, and fleet renewal.

Electric buses have a higher capital cost than diesel buses but deliver savings in operating and maintenance costs. LTAs will need to consider this when thinking through whether it is the operator(s) or franchising authority that takes responsibility for procurement and ownership of assets. A range of financing options can be considered, to overcome upfront capital costs.

Where operators will continue to own the assets, LTAs should also have regard to any issues these may have in accessing funding, particularly if a SME.

End of statutory wording

Local authority bus companies

The 2025 act removed the ban on local authorities establishing new local authority-owned bus companies (LABCos) that had formed part of the Bus Services Act 2017.

A LABCo can be established either alongside a part-franchised network or as part of a fully franchised one. Local authorities interested in looking at a franchised bus network in the future may wish to consider including assessment of setting up a LABCo as part of their franchising plans.

The LABCo provision enabled by the 2025 act, will take effect once accompanying guidance on LABCos is published and the measure in the act is commenced. The LABCo guidance will cover areas including relevant procurement and governance provisions, subsidy control and financing options.

This guidance will not have retrospective effect. Authorities that started the franchising process before [publication date] and that do not wish to consider establishing a LABCo will not be required to re-start the franchising process to include consideration of a LABCo in the assessment.

However, authorities that have commenced the franchising process and who so wish to consider establishing a LABCo as part of their franchising plans will be required to re-start the assessment process, as per Section 123B of the 2000 act, with the LABCo option forming part of the business case.

Socially necessary local services

The socially necessary local services measure was introduced under section 14 of the Bus Services Act 2025. Its primary purpose is to provide greater transparency to passengers about changes to socially necessary bus services. Proper consideration needs to be given to alternatives in the event such services are cancelled or significantly altered.

The measure requires local transport authorities (LTAs) operating enhanced partnerships (EPs), working with operators, to identify which services they consider socially necessary and to set these out in their EP plans. Where a listed service is proposed for permanent withdrawal or substantial change, the authority and operator must consider potential alternatives or mitigations. Although the measure applies only to authorities using EPs, those authorities will need to comply with it unless and until they fully move to franchising.

Where an authority has decided to franchise its bus services, the material aspects of section 14 of the act are expected to inform the subsequent franchising process. This means that decisions about the protection and specification of key services to be agreed as part of the contractual discussions for effective implementation.

Identifying which services are socially necessary is important for authorities considering franchising, because it can inform decisions about which routes to contract and how franchising can be deployed to protect and sustain priority services over the long term.

Further information on socially necessary local services and expectations for LTAs operating under an EP is set out in EP guidance.

Stage 1 – Committing to prepare a franchising proposal

To legally start the franchising process and proceed to developing an assessment, the authority must issue a notice of intent in a manner they find suitable. Issuing a notice is itself a significant decision.

The government has created a practical bus franchising manual to support authorities with the franchising process.

Stage 2 – Developing the franchising proposal and assessing it against (an)other option(s)

Once an LTA has issued a statutory notice of intent, the next stage is to develop the detail of its franchising proposal. The authority’s local transport plan will already set out its transport strategy.

The authority now needs to set out how franchising will deliver this and any longer term plans for bus service improvements – in whole or in part.

The authority’s overall plan is set out in a franchising assessment. This is effectively a proportionate business case which:

• describes what franchising is intended to deliver, how it will be set up, structured, funded, managed and complemented by other measures (especially bus priority measures where needed) – this includes setting out details of the initial local service contracts which will translate the authority’s franchising plans into bus services and other outcomes ‘on the ground’ (such as a new fares structure or integrated ticketing)

• compares franchising to the currently available EP

The franchising assessment is subject to independent assurance.

Alongside this, the authority needs to develop its proposed franchising scheme. This is the formal legal document that establishes franchising in an area. It sets out:

• how franchising will be applied within the LTA’s area – bearing in mind that franchising can take many forms and that franchised areas may be divided into ‘sub-scheme’ areas that may have different implementation dates – Section 123H(3) of the 2000 act

• the franchised local bus services intended to be provided under contract to the LTA

• the time interval between franchising contracts being signed and the franchised service starting to operate ‘on the ground’

• how the authority will consult users on how well franchising is working and at what frequency

• the facilities (such as ticketing sales, websites, vehicles or depots) that the authority will put in place to complement franchised services

The franchising assessment

Overview

Section 123B of the 2000 act requires franchising authorities to conduct an assessment of the proposed franchising scheme. The purpose of the assessment is to:

• outline the authority’s preferred franchising option

• explain how far it will deliver improvements to bus service outcomes

• confirm that it is affordable and deliverable

• allow an informed decision to be taken whether to proceed by comparing it to the currently available EP that has been tabled by operators

The legislation sets out a number of factors that must be considered as part of an authority’s assessment of its proposed franchising scheme. An authority can take other factors into account, provided that these are clearly set out and explained as part of the assessment itself.

Start of statutory guidance wording

In conducting a franchising assessment, authorities should identify the objectives which they will use to assess franchising against the EP.

These objectives should be specific, measurable, realistic and time-bound and apply to bus services in the relevant geographical area. It is for the authority to determine how many objectives are appropriate.

Consider how the targets set in it will be delivered by the franchising scheme.

End of statutory guidance wording

Assessment process

This assessment is the equivalent of a proportionate business case which supports informed decision making. It should:

• explain what changes are needed and why

• include a high-level comparison of the options to deliver that change

• include a detailed explanation of how the preferred option will be delivered

Start of statutory guidance wording

The assessment of the proposed scheme needs to contain sufficient detail to enable an informed decision to be taken by local decision-makers on whether or not to proceed with franchising or implement improvements using the currently available EP.

The level of detail provided for the franchising option should be broadly equivalent to other significant decisions taken by the LTA or mayor, for example, approval of a strategic document such as a local plan or a decision to award a large contract.

End of statutory guidance wording

A franchising assessment considers how improvements to bus services would be delivered under (a) the franchised and (b) the currently available EP option. The LTA then decides if the franchised model is better, or whether the desired bus service outcomes are best delivered via the EP.

Any decision to change the model of bus service delivery is significant and will impact the authority proposing the scheme, neighbouring local authorities, bus operators (both incumbent and aspiring to enter the market) and, most importantly, new and existing passengers. Franchising in urban and rural areas may need to be developed and implemented in different ways.

The franchising assessment is subject to independent assurance.

Overview of range of options

Section 123B provides that an authority’s assessment of their proposed franchising scheme must describe the likely effects of the scheme and compare making that proposed scheme to at least one other course of action.

All local authorities in England that have not implemented franchising have introduced an EP.

Start of statutory guidance wording

The assessment should compare the authority’s preferred franchising model to the currently available EP. A separate ‘do nothing’ scenario does not need to be considered.

A maximum of 3 months should be allowed to develop this option. The LTA should set out any proposals it has developed for interventions which would improve bus services in either an EP or franchised scenario and bus operators should table any improvements that they are willing to make under the currently available EP.

The 3 months begins from the date that the local authority publishes a notice under section 123C(4) of the 2000 act, stating the authority’s intention to prepare a franchising assessment. Any extension to this period – at the request of the operator – requires the agreement of the local authority.

If the authority decides not to implement franchising, all the obligations on operators and LTAs contained within their EP ‘offer’ will either be (a) immediately written into the EP scheme(s) or (b) included in other legally binding agreements.

In this guidance, a reference to ‘currently available EP’ should be considered to be this option.

End of statutory guidance wording

The currently available EP should take the form of clear commitments with timescales for implementation that can either be written into the EP scheme or enforced via another form of binding agreement – such as a contract. The currently available EP should be treated by the LTA as a ‘final offer’ once the 3 month period (or any additional period that has been agreed with the LTA) has elapsed and cannot be changed later. Consequently, all parties should be clear on the obligation and consequences of any EP arrangement before entering into it.

Start of statutory guidance wording

Before considering the specific requirements set in the act, the assessment should explain at a high level:

• the range of franchising options the authority considered – however, there is no requirement on the LTA to consider a range of franchising options or any franchising option that would not, in their opinion, deliver their objectives
• which one (or more) of these options is preferred and is examined in detail in the remainder of the assessment and why
• the currently available EP, including setting out what improvements are proposed for inclusion in it

End of statutory guidance wording

LTAs may assess more than two options in the franchising assessment if they consider it necessary. Nothing in this guidance is intended to prevent additional options beyond the currently available EP option and the LTA’s franchising option from being assessed.

Detailed assessment of franchising and the operator-tabled EP option

Section 123B of the 2000 act sets out the factors which an authority must consider as part of its assessment of its proposed franchising scheme. These reflect, broadly, the Treasury 5-case business case model. The 5 cases (strategic, economic, commercial, financial and management) are closely related and provide the opportunity for the authority to evaluate the case for franchising.

The assessment should compare franchising against the currently available EP for the strategic, economic and financial case. The commercial and management case need only be set out in detail for the franchising option.

The section below sets out guidance corresponding to the legislation on the strategic case. See also the section of this guidance on the economic, commercial, financial and management cases.

The strategic case – whether the scheme would contribute to the implementation of the authority’s and neighbouring authorities’ local transport plans and other policies affecting local services

Section 123B(3) (a) and (b) explain that the assessment must include consideration of:

• whether the proposed scheme would contribute to the implementation of:

a) the authority’s or authorities’ local transport plan policies made under section 108(1)(a) of the act 

b) other policies affecting local services that the authority has adopted and published 

• whether the proposed scheme would contribute to the implementation by relevant neighbouring local authorities of:

a) local transport authorities’ policies under section 108(1)(a) 

b) other policies affecting local services that a neighbouring authority has adopted and published

This is the strategic case for franchising. In this section the focus should be on the outputs and outcomes achieved under the 2 options.

Start of statutory guidance wording

The authority should set out whether – and if so how, the extent to which and how quickly – the options would contribute to the implementation of their local transport plan policies and any other of their published and adopted policies that affect local bus services.

In doing so, the authority should also explain how the options contribute to the overall ‘transport offer’ to local people – including how local bus services integrate with other types of transport such as light or heavy rail, DRT and services provided, for example, under Section 19 and 22 of the Transport Act 1985 and community car services.

The authority should refer to information about local demographics and bus passenger surveys to explain why it considers that its proposal is needed.

In particular, the authority should explain how each option will, with the expected funding that would be provided by the authority, help achieve their improvements to bus services. This should include for each option:

• the overall approach to service planning, including the extent to which services will be integrated with other modes and timetables co-ordinated where appropriate
• what bus reliability / time-saving measures are already in place or the authority (or relevant local highway authority) will implement (with implementation dates) and how they are expected to impact journey times
• the approach to and level of fares
• whether multi-modal / operator fares will be available and, if so by when and how widely
• the technologies expected to be used to sell tickets (for example, smart card, contactless, mobile etc) and whether cash will be accepted on-bus
• whether any DRT or other road transport services will be provided
• the nature, quality and consistency of network identify and branding
• the nature, quality and consistency of information (such as network diagrams) to be provided at bus stops and on bus and real time data
• how often timetable changes will be made and what exceptions to the standard are acceptable
• customer service standards – including redress arrangements and delivery of a passengers’ charter
• the levels of accessibility at bus stops and bus stations
• the strategy to decarbonise their bus fleet, including how and when emissions reductions will be delivered – for example, providing a target for the proportion of the fleet that will be zero emission by a given year
• the extent to which measures to improve accessibility of services, such as audio and visual information, next stop announcements and an additional wheelchair space, will be available across the network

In this section of the assessment the authority should also list its relevant local neighbouring authorities^{[footnote 1]} and consider at a high level the extent to which each option would help in (or otherwise impact upon) the delivery of relevant parts of their plans to improve bus services. To do so, authorities should proactively engage with neighbouring local transport authorities (and any other relevant local authorities who they consider may be impacted by the changes) to ensure they fully understand those policy objectives and the impacts that each option could have on bus services and transport in their areas.

End of statutory guidance wording

Authorities are encouraged to actively and meaningfully engage with operators during this period to ensure that any transitionary risks are identified and mitigations planned for.

Putting people at the heart of franchising

Public Sector Equality Duty

Authorities will have a duty under the Public Sector Equality Duty (PSED s149 Equality Act 2010) to eliminate discrimination, advance equality of opportunity, and foster good relations among diverse groups.

In revising and implementing their franchise proposals, it is crucial for authorities to adopt a people-centred design approach that prioritises the needs and experiences of all users, particularly those from protected characteristics groups. This includes actively engaging with communities early on in the process to understand their needs and preferences and ensuring that services and infrastructure are accessible, inclusive, and equitable.

Authorities must clearly demonstrate how they have considered the diverse needs of communities in their plans, and they should regularly assess and report on the impact of their decisions to ensure compliance with the PSED. In ensuring that the needs of people are placed at the centre of their franchise proposals, authorities are not only fulfilling their legal obligations but will also be enhancing service accessibility and delivery, while increasing community trust and user satisfaction.

Chapter 4 of Bus Services Act 2017: New Powers and Opportunities contains further advice on providing and designing an inclusive bus network, driver disability awareness and providing inclusive information. It also provides advice on maximising social value and improving safety.

There is also guidance on how to comply with the new accessible information regulations.

The Protection from Sex-based harassment in Public Act 2023 is a law that aims to address harassment in public based on a person’s sex or perceived sex. When implemented, the act makes it an offence to intentionally harass, alarm or distress a person on account of their sex, or presumed sex, which could carry a maximum sentence of up to 2 years if convicted. The act’s purpose is to ensure that people feel safe on the streets and to tackle public sexual harassment.

Authorities are encouraged to consider how they can demonstrate their commitment to preventing violence against women and girls and other forms of abuse, such as through accreditation. Additionally, they may wish to direct operators to take similar measures to further promote this important cause.

Personal safety

Authorities should be proactive in upholding the personal safety of passengers and staff on the transport network at all times and mitigate the risk of passengers and staff being subjected to violence, harassment and discrimination. Particular regard should be given to groups with protected characteristics, and to tackling violence against women and girls (VAWG) and addressing anti-social behaviour (ASB).

Examples of ways that authorities could seek to do this when scoping and implementing a franchising scheme are provided below. These options are not exhaustive but focus on areas that are known to address issues that undermine feelings and experience of personal safety on the transport network.

Mandatory bus driver training

Training frontline staff on issues related to VAWG and ASB, will empower them to be able to recognise and deal with incidents linked to these issues effectively. Such training should focus on both incidents involving staff and passengers and enable staff to know how to signpost victims for further support. Specific guidance on this is being produced.

Reporting mechanisms

VAWG and ASB-related incidents are largely under-reported, particularly on the transport network.

Encouraging and enabling staff and passengers to report incidents can improve the data available to authorities on the types of incidents and when and where they occur. This can help identify problem routes and areas and inform where resources and interventions need to be targeted to tackle inappropriate behaviour. Consideration needs to be given to how incidents can be reported in a way that is consistent across the network and accessible for passengers and staff. It will also be crucial to consider how data collected will be acted on and shared with relevant stakeholders, for example enforcement authorities, civil society.

Authorities are encouraged to consider having a single reporting mechanism for all people using their franchised network which can be used to report a broad range of issues beyond VAWG and ASB, for example issues regarding disabled peoples’ travel experience. Consideration of interactions with other neighbouring networks and how best to make this work with partners, including the police, is also important but is for local decision-makers to determine.

Infrastructure design and maintenance

Well-maintained and well-designed environments are conducive to improved perceptions of safety. Careful consideration should be given to how bus infrastructure is designed and located. For example, authorities could encourage the use of CCTV and consider whether there is sufficient lighting and information (for example, up-to-date, legible timetable, real-time journey information if appropriate) at bus stops and stations. Where CCTV is deployed authorities should consider how it will be monitored, the associated resource required to do this, and where it could be most usefully deployed.

Authorities should also consider how they can facilitate reporting of faulty or poorly maintained infrastructure so issues can be addressed in a timely manner. In addition to making people feel safe, appropriate and well-maintained infrastructure is also relevant from an accessibility point of view – having appropriate shelter, seating, lighting, information provision, as well as ensuring that facilities on vehicles are in working order (for example, ramps, lowering mechanisms, AV equipment, call buttons) is key to providing a positive journey experience for disabled people.

Communications

Communications is a powerful tool in raising awareness and educating passengers on acceptable and unacceptable behaviours and how to deal with incidents if they occur. Both staff and passengers should be the target audience as part of any communications campaigns. Authorities are encouraged to give adequate space within their proposed marketing activity to the issue of passenger and staff safety.

Personal safety communications campaigns can focus on a range of issues – for example:

• raising awareness of inappropriate behaviours

• encouraging reporting

• discouraging perpetrators

• empowering bystanders

• signposting victims to support services

The focus of the campaign will depend on the specific issues that are being faced in a local area and police and potentially British Transport Police (where appropriate) input should also be sought whilst shaping a campaign. It is important to evaluate any campaign to understand its impact, enable learning and inform refinements to future communications.

Community Safety Accreditation Scheme (CSAS) accredited officers

Where local issues and priorities evidence the need for it, authorities are encouraged to deploy CSAS accredited officers specifically to work on the franchised network. Officers provide reassurance to both passengers and staff and are a visible deterrent to perpetrators, especially when they have a remit to act where they encounter unfavourable behaviour, including the power to enforce. Authorities and franchised operators will need to work in partnership with local enforcement agencies to agree which powers are available to CSAS accredited officers working on the transport network and how best to work together to achieve the common of objective of a safe transport network that feels safe for all passengers and staff.

Driver welfare standards

In planning routes and services and letting franchise contracts, authorities should, ensure that drivers have access to appropriate welfare and toilet facilities at the beginning and end of routes where those routes do not begin and end at the driver’s operating base as well as at depot locations. Authorities should also ensure that these facilities meet the needs of a diverse workforce.

Franchising authorities should ensure that drivers’ access to welfare and toilet facilities is considered when accessing proposed franchising schemes and throughout the entire franchising process. Any gaps in facility provision should be addressed.

Franchising authorities should seek views and advice from bus sector employees working in the area covered by the franchising scheme, including relevant trade unions, in developing their approach to this issue.

Training

The National Examination Board in Occupational Safety and Health (NEBOSH) and the Institution of Occupational Safety and Health (IOSH) certifications can play a valuable role in training local authority officers and elected officials in franchising authorities, particularly those involved in the health, safety, and environmental aspects of franchising schemes.

These qualifications build understanding of legal duties, risk management and safe operational practices, supporting more informed decisions when designing, negotiating and implementing franchise agreements.

Franchising authorities may wish to make such training available to officers and elected officials engaged in relevant activities, such as inspecting depots, assessing operators’ safety management arrangements or reviewing contractual compliance.

Gathering information  

An authority will need to gather what it considers appropriate and robust information and data to inform the preparation of the franchising assessment. In developing the assessment, an authority should draw on information about the current and predicted future performance of local bus services in delivering outcomes and relevant targets. LTAs should give consideration to what data they consider they need 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 operators, so LTAs should consider whether data is actually required before they request it. LTAs may wish to request:

• passenger numbers, possibly broken down by route, time of day and/or ticket type

• data on bus journey times and/or vehicle speeds by route and time of day, for example using GPS vehicle data

• fares data, such as volumes and average prices for the main single and multi-operator fares, and concessionary passes, as well as the split between cash and electronic payment

• bus service frequency (including days of operation)

LTAs should consider whether the Analyse Bus Open Data Service (ABODS) could help with information requests.

The ABODS, part of the Bus Open Data programme, is a service available to local authorities and operators providing bus service performance information. This may provide a more direct source when compiling bus data.

Analyse Bus Open Data is an extension to the Bus Open Data Service (BODS) that provides consistent and free-to-access reporting and analytics to operators and all local transport authorities (LTAs) and may be useful to support the monitoring and evaluation of franchised contracts.

The service provides a dashboard overview, data feed monitoring and on-time performance analyses for individual operators and services. Additional features include the provision of network corridor/route segment analyses and journey time analysis and can identify opportunities for bus network improvements.

ABODS also enables the use of punctuality data to inform and improve operational performance and compliance.

ABODS translates bus live location data into operational insights to help LTAs and local bus operators to deliver faster, better quality and more frequent bus services to the public. The ABODS analysis may also be able to help with developing a franchising assessment – as a tool to analyse current performance of the network as well as identifying gaps in service provision.

Read separate guidance about the Bus Open Data Service.

The 2000 act also enables an authority to request certain data from operators of local services in the area in which the franchising scheme is proposed in order to help develop their assessment – the specific categories of information that can be requested are set out in section 143A(3) of the act and in regulations. (The Franchising Schemes and Enhanced Partnership Plans and Schemes (Provision of Information) Regulations 2017 (2017/1091)).

An authority can request the information in any form that it is reasonable to expect operators to provide it, bearing in mind the ways in which operators currently hold the information, and within such a reasonable timescale as the authority may set out. Examples of data that can and cannot be requested are set out in the section of this guidance on information provision. This is for information only. The precise information that can be requested will, of course, depend on all the applicable circumstances.

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An authority should engage proactively with local operators before and throughout the information request process to understand the ways in which operators hold the relevant information and how long it may take them to collate and provide it.

Operators should be proactive in engaging with an authority in the provision of data. If an operator fails to provide information within a reasonable timeframe, an LTA is entitled to notify the traffic commissioner. The department would also like to be notified.

In addition, an authority should look to supplement the information gathered from operators with other information to ensure they have a strong evidence base on which to take decisions regarding the most suitable model to deliver bus service improvements. This should include information gathered from passenger surveys or information about local travel patterns, other research and evidence about the likely benefits or impacts of particular changes to bus services. 

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The franchising scheme

Overview

The franchising scheme is the legal document through which franchising is implemented. The contents of the scheme itself are comparatively limited.

 The scheme needs to specify the following.

The geographical area(s) that franchising will cover

A franchising scheme can cover the whole of a local transport authority’s area, but it does not have to. For instance, a scheme could cover a single town or bus priority corridor. A scheme can also cover multiple areas, which are not contiguous, such as two non-adjoining towns.

Franchising authorities also have the flexibility to to phase in their franchising scheme in stages through the use of ‘sub-areas’.

See sections 123H(2)(a) and 123H(3) of the 2000 act.

The local services to be provided under franchised local bus service contracts

The authority has significant flexibility in how franchised services are specified and in what level of detail.

New subsection 123H(2B) of the 2000 act, inserted by the Bus Services Act 2025, permanently allows authorities to specify local services in more flexible ways when making franchising schemes.

Franchised services may be specified in the following ways:

• by reference to the routes or places intended to be served
• by describing the services in general terms
• by any combination of the ways above
• in such other way as the authority thinks fit, as long as it enables the services to be identified

The authority can use this flexibility to manage certain changes to franchised services once a scheme is operating. Changes to elements specified in the scheme document must go through the formal legislative variation process, including consultation. However, changes to aspects not defined in the scheme document do not. By choosing carefully what to specify in the document, the authority can retain the ability to adjust some services quickly – for example, to respond to changing passenger demand. It should therefore consider its approach to service specification with a clear view of enabling proportionate future changes.

Transitional provisions mean that schemes consulted on before [XX publication date] but not yet made can use the new flexibility introduced through the Bus Services Act, and for 2 years after commencement, existing franchising schemes can be varied to update only the specified services without going through the full variation process outlined in new schedule 9A of the 2000 act.

See sections 123A(3)(a) and 123H(2)(b) of the act), and the service permit proposals (sections 123P to 123T).

The date when initial franchising contracts are first to be entered into, and the time interval to those services starting to operate ‘on the ground’

This time interval, which is sometimes referred to as the ‘mobilisation period’, is the time between a local authority awarding a contract and the operator actually starting services. It is used to prepare to transition and can be of a length of the franchising authority’s choosing.

When setting the mobilisation period, authorities should allow enough time to inform local people and both current and potential operators about when the franchised bus network will start. The authority should also consider the potential benefits of delivering franchising outputs for passengers sooner rather than later in setting a mobilisation period.

On a transitional basis, franchising schemes consulted on before the Bus Services Act 2025 takes effect – but not yet implemented – may set a minimum period of less than 6 months when they are made or updated if they wish.

See sections 123H(2)(c) and (d) and 123H(4) of the act.

How the authority will consult users on how well franchising is working

See section 123A(9) of the act.

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This should set out the frequency of consultation and the initial groups to be consulted (recognising that these may change over time). As a minimum this should include Transport Focus or any successor body. It should not be a generic statement such as that the authority will consult “such groups as it sees fit” at “periods of its choosing”.

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The facilities that the authority will put in place to complement franchised services

See section 123A(3)(d) of the act.

In ultimately achieving an all-ZEB fleet, we would encourage LTAs to consider carefully future electrification needs in relation to charging infrastructure. We would encourage them to engage with the relevant distribution network operator at the earliest opportunity.

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The authority should set out in the scheme any facilities that it is providing which are central to the success of franchising. This might include depots, ticketing systems, equipment or other types of facility. The authority should also include in the scheme all existing and funded measures to improve bus reliability/ journey times that it provides or intends to provide, including for future measures their expected operational dates.

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Franchising authorities can exempt certain services from regulation arising because of their franchising scheme (and so allow to continue to operate as now). For example, school services provided by or for local authorities which will be covered by the franchising scheme, unless the authority exempts them from it in the scheme itself. Only school services that fall within the definition of a ‘local service’ need to be considered for an exemption.

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An exemption should also generally be made for a service that has 10% or less of its overall distance (not just the distance within the franchised area) registered as a local bus service. This might include interurban or other long-distance scheduled services that are not generally used for local journeys within the franchised area, but may use bus stops within it and would not compete with a franchised service.

Rail and light rail replacement services are automatically exempt from franchising schemes. This means they do not require a service permit. from franchising schemes.

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In addition, all services operated under permits issued under section 22 of the Transport Act 1985 are automatically exempt from the requirement to hold a service permit in a franchised area. Operators of section 22 services may continue to operate independently of the franchised network but may also choose to bid for franchised contracts where eligible.

These services (or relevant parts of them) should continue to be registered with the traffic commissioner, as they are currently.

The geographical area of a statutory partnership scheme cannot overlap a franchised scheme area. If the geographical area of a proposed franchising scheme would overlap an existing advanced quality partnership scheme (AQPS) or enhanced partnership (EP), in whole or in part, the franchising scheme must make provisions to revoke the AQPS or EP in the overlapping area when it is made (section 123H(6)–(9) of the 2000 act).

Authorities should note that if only part of a route is incorporated into a franchised area, this could affect the financial viability of depots or operators serving routes wholly within the remaining EP area. These impacts should be considered when designing the franchising scheme.

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LTAs should discuss with operators the effect of any revocation of a statutory partnership scheme on services within or crossing into the proposed franchised area. This is particularly important where a franchised area would replace, be surrounded by or adjoin a revised EP area.

This might happen, for example, where a franchising scheme only covers the geographical area of a large market town, with the remainder of the LTA area surrounding it covered by a pre-existing EP.

It may also adjoin an EP in another LTA area.

Where a franchised area also adjoins another area, the LTA should discuss with the other LTA(s) and its operators the effects of introducing an adjoining franchising scheme and how to avoid adverse effects to passengers, particularly on cross-boundary services.    

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Additional business cases

In addition to the strategic case, the legislation (section 123B(3) (c) to (f)) also requires the authority to produce 4 additional business cases that cover different elements of the assessment.

The department intends to develop template documents for franchises, including the business case.

Read this section of the guidance for more information about the 4 additional business cases.

Conclusion

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The authority should clearly set out its conclusions having completed the detailed assessment of the options, drawing clear distinctions between the performance of each option with respect to achieving its desired outcomes.

The authority should then identify its preferred option, clearly setting out the rationale for this decision.

The assessment should conclude with an executive summary setting out the recommended option and the key reasons for it from each of the other sections.

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Independent assurance report

Once a franchising authority has prepared its assessment it must obtain an independent assurance report on its assessment. The assurance report must outline whether:

• the information relied on by the authority in producing the economic (value for money) and financial (affordability) cases of their assessment is generally of sufficient quality

• the analysis of that information is of sufficient quality

• that the authority has had due regard to guidance issued by the Secretary of State under section 123B of the 2000 act in preparing its assessment

Although the 2000 act requires the report to be prepared by an ‘auditor’ this is not intended or required by the act to be a formal audit report in accordance with Financial Reporting Council guidelines. The policy intent of the legislation is that the report provides a high-level independent assurance that the assessment prepared by the authority has been produced in good faith and professionally and does not contain obvious material or arithmetic errors which could cast doubt on its overall conclusions. In particular, the aim of the report is to provide assurance:

• in the accuracy of the data used

• that the affordability and value for money analyses have been developed with appropriate care by suitably qualified experts

• that the process followed was robust

Together, the assessment and report should allow a decision on whether or not to proceed with franchising to be taken with confidence and reduce the risks of an authority’s decision being challenged in the courts on the grounds of reasonableness.

The report is not designed as a test to be passed or failed.

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Authorities are encouraged to invite the auditor to become involved in the assessment process as soon as the LTA believe it is sensible to do so, and at least to review a small number of drafts of the assessment before a formal report is provided.

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This will allow any significant weaknesses to be identified and addressed before a formal report is produced. The auditor should work collaboratively with the authority to strengthen the quality of the business case, assumptions used and/or approach adopted. While the auditor must remain independent, the aim should be to improve the documentation, so an informed and robust decision can be reached as quickly as possible.

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Any reviews of the draft assessment should be documented by the authority, including the views and recommendations of the auditor and any actions taken as a result.

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The 2000 act requires the Secretary of State to issue guidance in relation to two issues in connection with the assurance process. The first is guidance for franchising authorities as to the matters to be taken into account by a franchising authority when selecting a person to act as an auditor. The second guidance is for appointed auditors, concerning matters to be taken into account by auditors when forming an opinion as to whether the information relied on by the authority, and the analysis of that information by the authority, is of sufficient quality.

Matters to be taken into account by a franchising authority when selecting a person to act as an auditor

The 2000 act specifies that the auditor must be a person or body with a recognised professional accountancy qualification offered by a qualifying body. The act also explains that the auditor must be able to act as the auditor of the franchising authority’s or authorities’ accounts in order to perform the franchising audit function.

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This means that the auditor needs to be a qualified accountant with no conflicts of interest that would lead to difficulties in acting as the auditor of the local authority’s or authorities’ account.

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The auditor must at least be a statutory auditor, as defined by s.123D(8) of the act. The auditor should act with independence and ensure that the authority is in the best position to take a well-informed decision in the interests of passengers.

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The authority should ensure that the auditor has, or has access to, appropriate transport experience to inform their report. This experience could be provided by another individual or body who offers advice on the assessment and/or contributes to the auditor’s report, provided that the final report also represents the auditor’s own view on the assessment having considered the advice available to them.

A franchising authority should not appoint an independent auditor or audit company for the purposes of section 123D of the 2000 act if that auditor or company (or any adviser to them with transport experience) was also engaged by the authority in relation to the assessment of its proposed franchising scheme, unless the authority is confident that appropriate arrangements are in place to ensure that the report is not influenced by work undertaken on the assessment. Any such arrangements should be set out clearly in the audit report.

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Matters to be taken into account by the auditor when forming an opinion

Appointed auditors must have regard to the statutory guidance in this section when forming an opinion for the purposes of section 123D of the Act.

The independent assurance report must state whether, in the opinion of the auditor:

• the information, considered collectively, relied on by the authority in considering the matters referred to in section 123B(3)(d) or (e) of the 2000 act is of sufficient quality

• the analysis of that information in the assessment is, considered collectively, of sufficient quality

• the authority had due regard to guidance issued under section 123B of the 2000 act in preparing the assessment

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When forming their opinion as to whether the information relied upon and the analysis of the information by the authority is of sufficient quality, auditors should look at the assessment in the round. The auditor does not need to review in detail every data source or assumption, but should consider whether there are significant areas of weakness, omission or error which individually or collectively could have a material impact on the assessment’s conclusions on the costs, benefits, risks or value for money of any of the options. In doing so they should consider:

• whether there are any significant and material gaps in the information used

• whether the information used generally comes from recognised sources

• whether the information used appears to have been selected objectively, rather than to support the arguments in favour, or against, any particular option

• whether the assessment takes into account any effects or potential effects from the COVID-19 pandemic

• whether the information used, collectively, is relevant and not significantly out of date

• whether the assumptions used in the assessment are recorded and, where reasonably possible, supported by recognised sources

• whether, where information and evidence is less well defined, but would otherwise lead to an absence of data from the assessment, the authority’s approach is not unreasonable and potential risks associated with the assumptions made are identified

• whether appropriate ranges have been used for forecasts and associated uncertainties identified in the assessment

• the mathematical and modelling accuracy of the analytical methods used to calculate the impacts of the options

• whether the authority’s assumptions on the costs and benefits of the best EP reflect the evidence available of what could realistically be delivered through an EP at the point at which the assessment was developed

• the availability, quality and – where relevant – timeliness of receipt from bus operators of the information available to the authority

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Where information and evidence is less well defined, but would otherwise lead to an absence of data, the authority should flag where an auditor has questioned the basis of the assumption and include the potential consequence to the business case of the assumption being removed. This allows the potential risk identified by the auditor to be clearly included within the business case and addressed via a sensitivity.

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The auditor should not expect the authority to update the assessment for information that becomes available or is updated at a late stage unless they consider it would have a material impact on the conclusions of the assessment and the choice between options.

Should the auditor consider that there are material issues with the quality of the information or its analysis they should advise the franchising authority accordingly and identify, where relevant, what different approach or data source they would recommend. 

The auditor should not report or pass judgement on the decisions taken by the authority or the outcomes of the assessment – their role is purely to consider the process that has been followed, the accuracy and robustness of the information that has been used in the analysis, and that the mechanics of the process have been carried out correctly.

As explained above, the auditor is not expected to produce a formal audit opinion within the scope of Financial Reporting Council guidelines.

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The Bus Services Act 2025 introduces planned changes to the independent review process. However, these changes will not take effect until the necessary secondary legislation is introduced. Once this happens, guidance will be updated to reflect these changes.

Stage 3 – Consulting on the proposal 

Following the preparation of the assessment, and the report prepared by the auditor, the authority should then consult widely on their proposals. This should ensure that local passengers, businesses, the bus workforce and trade unions and transport providers are able to comment on the proposals before the authority takes the decision as to whether to implement the franchising scheme.

The 2000 act requires an authority to publish, as part of the consultation process, the following documents:

• a consultation document relating to the proposed scheme

• the assessment of the proposed scheme

• the report prepared by the auditor

The act also explains what the authority should include as part of its consultation document. In summary, the consultation document should include:

• a summary of the assessment of the proposed franchising scheme

• the area within which the franchising scheme would operate, and any sub-areas within it

• a description of the franchised services that the authority proposes to provide

• a description of any services, or types of service, that the authority proposes to exempt from regulation arising because of the franchising scheme – including any routes or services that will continue to be provided by the commercial sector under service permits

• the date on which the authority proposes to make the franchising scheme, together with the first date or dates by which the authority proposes to enter into contracts with operators to provide franchised services

• the periods that must expire between the authority entering into a contract, and services starting to be operated under that contract

• a description of the authority or authorities plan for ongoing engagement throughout the life of the franchising scheme to seek views on how well the scheme is working

• a description of how the authority’s or authorities’ plans to facilitate involvement of small and medium sized operators through the procurement process

• the date by which responses to the consultation must be received

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An authority should aim to make their consultation materials as accessible as possible to all interested parties and ensure that local passengers in particular are aware of, and able to input to, proposals relating to their local bus services.

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The 2000 act also specifies a number of key stakeholders that an authority must consult on their proposals, including: 

• local bus operators and other PSV operator’s licence and permit holders who may be affected
• representatives of employees of such operators
• organisations representing local passengers
• any local authority that would be affected by the proposed scheme, including National Parks authorities and regional transport partnerships in Scotland, where relevant
• the Welsh ministers, if any part of Wales would be affected by the proposed scheme
• a traffic commissioner, chief officers of police for areas to which the proposed scheme relates, Transport Focus (the Passengers’ Council), and the Competition and Markets Authority
• people with disabilities who are users or prospective users of local services or organisations representing disabled bus users or prospective users

An authority must consult these individuals and bodies, but they have the freedom and flexibility to consult any other individuals or bodies they consider appropriate. Following any initial consultation, consideration of the responses or subsequent events may lead an authority to decide that some further consultation is required as a matter of fairness or would be desirable before any decision is taken.

Consultation with disabled people

This guidance identifies the statutory duty for disabled people or organisations representing them, to be consulted when new franchising schemes are introduced or amended. We recommend that this guidance is followed for all such consultation.

Consultation should be conducted consistent with the Gunning Principles. In summary, they are that consultation should:

• occur when proposals are at a formative stage
• give sufficient reasons for any proposal to permit intelligent consideration
• allow adequate time for consideration and response

There must be clear evidence that the decision maker has considered the consultation responses, or a summary of them, before taking its decision.

Legislation permits authorities discretion in who they consult, and they should use it to seek and understand the perspectives of people and organisations representing a locally relevant and broad range of disabled people’s experience, proportionate to the scale of change being proposed. In particular, consultation should:

• include engagement with local disabled people both those who do and those who do not currently use local bus services, as well as local organisations which represent the interests of such people
• engage solely with national organisations representing the interests of disabled people only where they have been unable to engage with local disabled people and local organisations representing them
• plan engagement proportionate to the scale of change being proposed, with engagement sought with a broad range of disabled people and representative organisations for new franchising schemes and fundamental changes to their reach and application, but potentially more targeted engagement principally with local representative organisations where changes are minor and technical, with minimal impact on the experience of passengers
• seek the perspectives of disabled people with a range of impairments, including, physical, sensory, cognitive learning and mental health, as well as neurodiverse people and people with both visible and less visible impairments
• ensure that consultation materials and processes are accessible, including making documents available in accessible digital and hard-copy formats, and considering where in-person engagement can increase participation and representation

Following consultation, the authority should publish a summary and analysis of responses received, alongside a summary of how they have informed the proposed policy or product (that is, the franchising scheme assessment or variation).

Whilst  consultation at set points in the development or review of policy can help ensure that it is reflective of the experience of disabled people, we recommend that wherever possible authorities adopt a co-design approach to the development of policy impacting disabled people, so that their needs can be built in from the beginning and helping to ensure that service provision works for as many people as possible.

Stage 4 – Decision, consultation response and making the scheme

Following the consultation process, an authority must prepare and publish a report setting out their response to the consultation together with their decision as to whether or not to proceed with the proposed franchising scheme.

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An authority should summarise and address key issues raised by respondents to the consultation as part of their response, including setting out any changes to the franchising assessment and scheme that they intend to make as a result.

Depending on the significance of any changes, an authority may choose to consult again.

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Where the authority is an MCA, the 2000 act provides that it must be the mayor that takes the decision as to whether or not to proceed with a franchising scheme.

If the authority decides to proceed with the franchising scheme, they must include within their response to the consultation, how they will facilitate the involvement of small and medium sized operators in the provision of services through their procurement processes.

In giving consideration to the role of small and medium sized operators, LTAs should consider the nature of the local bus market and capabilities of current local operators and potential new entrants. Options could include some smaller tenders, which smaller operators might be able to bid for, or alternatively, to give consideration to how to encourage sub-contracting.

Read DfT’s bus franchising manual for more detail on how to consider small and medium sized operators.

At the same time as the authority publishes its response to the consultation, it must also make and publish the final version of the franchising scheme.

It is important to note that the legislation does not require the authority to pass a particular test to introduce franchising. Nor does the Secretary of State need to be consulted or give any kind of approval.

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It is for the mayor or authority to decide, using the assessment of the proposed franchising scheme, the results of the consultation and any other relevant factors, whether franchising is the right course of action to deliver their desired outcomes, the targets it sets, and other outcomes that individual LTAs consider necessary to improve bus services. That decision can be subject to legal challenge through judicial review, as is the case for any local authority decision. 

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Where an authority has conducted a franchising assessment and decides not to implement a franchising scheme, it is anticipated that further assessments would generally not be undertaken for around 5 years, so as to provide certainty to enable bus operators to invest in the market and support ongoing investment.

Stage 5 – Implementation

Where an authority has decided to implement a franchising scheme the market will need to transition to the new system. The 2000 act and supplementary regulations set out a number of measures to help smooth the transition and ensure that passengers are provided with reliable services during the transition period.

See The Public Service Vehicles (Registration of Local Services) (Franchising Schemes Transitional Provisions and Amendments) (England) Regulations 2018.

Direct award of contracts to incumbent operators

The 2025 act introduces changes to enable franchising authorities to direct award the first bus franchising contracts to the incumbent operator(s), using net cost contracts.

The direct award measure can be used to reduce the transitional risks of moving to a franchising model. It can provide service continuity to passengers, by removing some of the uncertainties of a ‘cliff-edge’ cutover to a new system – such as the transition of staff and assets where applicable. It can drive effective performance and long-term procurement by enabling earlier data collection and other contractual requirements. Finally, it can provide incumbent SME operators with experience of operating in a franchised system, supporting them to stay in the market in the long term.

Direct award under the new measure can only be used if all the specific circumstances below are met.

Net cost contracts

The measure creates a new direct award exception for contracts procured under the Public Service Obligations in Transport Regulations 2023 regime. This governs the award of net cost contracts for the provision of bus services. Under net cost contracts, the operator provides the franchised services in return for at least part of the fare revenue and must retain a ‘real operating risk’.

First franchise contracts

This is deliberately a time-limited, transitional measure. Thereafter, franchise contracts should generally be competitively tendered under the relevant procurement regime.

Incumbent operators

A franchise contract can only be directly awarded under the measure to an operator, or operators, who have been providing the same, or substantially similar, bus services in the area to which the franchising scheme relates, for at least 3 months prior to the start of the contract. This may include both commercial and tendered services.

‘Substantially similar bus services’ is intended to cover a scenario where the franchising authority wants to make minor revisions to the service, for example changing the route to add or remove stops. Significant network changes are not intended during the direct award period, to allow time for data collection and network planning in a franchised environment. Further information will follow in the updated guidance.

Contract duration

A maximum duration of 5 years. LTAs would be expected to set the duration of direct awarded contracts to suit the local context and existing local bus market. They will need to balance the potential higher costs of direct award contracts against the benefits of the certainty and opportunities to phase the roll-out of franchising. In some cases, a shorter contract duration may be appropriate.

Further information on the application of direct award will follow in detailed guidance.

Transitional notice – extending the cancellation or variation notice period

An authority should be provided with notice of upcoming changes to services during the transition phase, to enable them to take action where necessary to ensure that services are maintained or replaced.

Regulations made under the 2000 act provide franchising authorities with the option to extend the cancellation and variation notice period that operators must observe from the usual 70 days (made up of a 28-day pre-notification period under regulation 3(3A) and (3B) of the Public Service Vehicles (Registration of Local Services) Regulations 1986, and the 42-day period before a variation or cancellation takes effect under section 6(8)(a) of the Transport Act 1985 and regulation 5(2)(b) of the 1986 regulations) to a maximum of  to a maximum of 112 days.

The maximum 112-day period replaces the mandatory 42-day period before a variation or cancellation comes into effect and does not incorporate the separate 28-day pre-notification period, which remains required in addition.

Should an authority wish to increase the notice period they must publish a ‘transitional notice’ at the same time as they make and publish their franchising scheme setting out the new notice periods.  

An authority is able to set different notice periods for different circumstances or different types of services. For example, an authority may want to consider leaving the current cancellation and variation notice periods for services which only have a few stopping places in the franchising scheme area, whilst increasing it for services that operate exclusively within it.

Ability to register services at short notice

The relevant regulations also enable certain services to be registered at short notice, where the authority has entered into an agreement with an operator to provide a service in the transition period. Where this is the case, the service can start to be provided from the point at which the traffic commissioner accepts the application to register the service, without the need for the current notice period.

Where an authority decides to reduce the area to which a franchising scheme relates, or to revoke a franchising scheme, the market will need to transition from a system whereby the majority of services are operated under local service contracts to the deregulated system where operators operate services registered with a traffic commissioner. Regulations under the 2000 act provide that a traffic commissioner must not accept an application to register a service, or vary or cancel such a service, if the application is made later than 70 days before the reduction or revocation of the franchising scheme in which it has a stopping place. This does not apply to a service that is to be provided under an agreement between an authority and an operator. 

Staff transfers

The 2000 act recognises that where franchising is introduced staff may need to transfer to new operators who win local service contracts and provides that in those circumstances the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) would apply. This should protect existing staff working on the affected bus services, help reduce the burden of redundancy payments for operators who have to cease trading or downsize because of franchising while ensuring that there is a workforce ready to provide the new franchised services.

Regulations made to support the act set out further detail regarding the processes to be followed when applying TUPE. (The Franchising Schemes and Enhanced Partnership Schemes (Application of TUPE) (England) Regulations 2017.)

The Bus Services Act 2017 introduced protections for existing bus employees when services transfer to a new operator, requiring that transferring staff receive pension benefits that are the same as, or broadly comparable to, those provided by the previous operator – or that they are compensated if comparable benefits cannot reasonably be offered.

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The franchising authority should in the first instance look to reach agreement with the existing local operators who are affected by franchising, and local employee representatives about the criteria to be applied when determining which staff are ‘principally connected’ with the affected local services and therefore in scope for TUPE and potential transfer to a new operator. This determination of whether employment is ‘principally connected’ could be made on the basis of the amount of time an employee spends working on services that will be affected by franchising, or on whether the staff member forms part of a particular groups of employees that work on certain services.

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At the start of the process towards reaching any agreement, regulations require the franchising authority to publish a notice setting out:

• the criteria by which they propose to determine whether a member of staff is ‘principally connected’ with the provision of particular services and should therefore transfer under TUPE

• the consultation process and agreement sought

• the time period over which the consultation process will take place

• what constitutes agreement between the parties

The franchising authority should then consult with the relevant local employers and employee representatives, with the aim of reaching agreement and publishing a final notice setting out the agreed criteria by which to determine whether staff members are in scope for TUPE and should transfer.

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The authority should engage with affected local operators and employee representatives as early as possible in the process and ensure that sufficient time is given to the consultation, bearing in mind the complexity of the proposed franchising scheme and potential for staff to be transferred.

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In practice, it may be difficult to reach agreement locally. The regulations provide that where there is no agreement, the determination as to whether employees are principally connected is to be based on whether such employees spend at least half their working time assigned to affected services.

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This provision should only be used if the authority is content that agreement cannot be reached between the three parties.

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Once the authority, operators and employee representatives are in agreement about the staff who should transfer, a process should be undertaken to determine where they should transfer to, i.e. which employees should transfer to each individual local service contract. The regulations require authorities to consult affected operators and employee representatives about the proposed ‘allocation arrangements’ – the plan which sets out which employees should transfer to which local service contract.

All affected employees who transfer when franchising is introduced should be provided with access to a broadly comparable pension scheme. The regulations set out the requirement placed on the new employer of transferred employees to obtain a pension statement.

The statement is to be provided in writing from a Fellow of the Institute and Faculty of Actuaries who is to certify that the new employer’s pension scheme offers the transferred employees’ rights to the same or broadly comparable pension benefits as they had with the former employer. It is the responsibility of the authority to ensure this is achieved.

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Therefore, the franchising authority should ensure that local service contracts are made on the basis that bidders commit to providing broadly comparable pension schemes.  

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Employee related information

To aid with this and later processes, the regulations enable the authority to request information from operators about employees at any point after they have made their franchising scheme. The regulations provide details about what relevant employee information can be requested. When requesting employee information, the authority must:

• specify the date by which the operator should respond to the request, which must not be earlier than 21 days after the request is issued

• ensure the request contains sufficient information about the franchising scheme to enable operators to respond effectively

• only request the information that they need to carry out their functions in connection to TUPE

• refrain from requesting personal data, unless in connection with employee representatives

Should an operator, on receipt of such a request, be of the opinion that the authority has not included sufficient information about the franchising scheme to enable them to respond effectively, they should inform the authority within 14 days of receiving the request and provide a description of the further information they require. On receipt of such a request for clarification from an operator, the authority should consider the extra information that the operator may require, and provide that information to the operator, together with specifying a revised time period within which the operator should provide their response, which must not be less than a 21-day period.

The regulations provide further detail regarding the obligations on operators when they receive such a request for information from an authority, including the process to be followed should an operator consider that they are unable to provide any of the information requested. Operators should ensure that the information they provide is complete and accurate, and should provide revised information at later stages, should it change. 

Implementation and operation of a franchising scheme   

Service permits 

Where a franchising scheme is introduced, an authority will also need to operate a ‘service permit scheme’. A service permit is required for any additional registered local bus services operating in the franchising scheme area, carrying passengers for hire or reward, which are not provided under a franchised contract or have not been exempted from the scheme.

Further to the section of this guidance on potential types of franchising agreement, a franchising authority should determine the ways that a service permit scheme can support the franchised network, provide additionality and help deliver desired outcomes. For example, the permit scheme could enable and encourage commercial operators to (continue to) provide services which:

• complement franchised services, such as feeder services

• provide links to key destinations that are not provided by the franchised network

• cross the scheme’s boundaries

• can be viably operated and therefore contribute to delivering desired outcomes

• support a phased approach to implementing a franchising scheme by keeping the existing network running in any area where the scheme has started but the franchised services have not yet begun

In some cases, a franchising authority may have both franchised services and a complementary enhanced partnership operating within its area.

Authorities will need to balance the use of service permits with franchising schemes and enhanced partnerships, particularly where only part of the authority area is franchised. When granting permits, the authority should assess how proposed services integrate with the wider network, ensure they do not undermine franchised operations, and safeguard seamless journeys for passengers. Used carefully, service permits can provide consistency across boundaries while also supporting innovation and responding to local transport needs.

Before an authority can start to operate its service permit system, it must first consult on its proposed service permit system. An authority may want to combine the consultation on the service permit system with the consultation on the proposed franchising scheme, but the precise timing of this is at the authority’s or authorities’ discretion. However, if an LTA decides that overall service provision should be provided by a mix of a franchised and encouraged service permit network, it should consult on both at the same time.  

As part of the consultation on the service permit scheme, the authority should set out:

• the procedure that must be followed by a person applying for a service permit

• the information that a person applying for a service permit must submit with the application

• the fee, if any, that must accompany the application

• the period or periods of time within which the franchising authority must take a decision on an application for a service permit

• the period or periods of time that must expire before the service permit is effective

• the period or periods of time which must expire before the variation or withdrawal of a service by an operator is to take effect, which must not exceed the statutory notice period for doing so

• the time period or periods for which permits will be valid

An authority can also set out the time period that the permit is valid, for example a 3-year or longer period. This gives operators more certainty over the length of the commitment they will need to make to the services and gives an authority the ability to review the services after a period of time.

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The authority should ensure that operators of local services are consulted on the proposed service permit scheme, together with any other local authorities that will be affected by the granting of the service permit, and any other people or organisations that the franchising authority thinks fit. Services operating under service permits will have a key role in facilitating bus travel across the boundary into other local authority areas. A franchising authority should engage closely with neighbouring local authorities about the operation of their service permit scheme to ensure that services are sustainable and meet the needs of both the franchising authority and neighbouring authorities.

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Following the consultation, the franchising authority should then consider the response and update its service permit scheme accordingly. The authority should then publish a consultation response setting out:

• a summary of the consultation responses received

• the authority’s proposed actions in light of the responses

This should be published together with a notice setting out the final details of the service permit scheme (but no earlier than the date the franchising scheme is published), covering the aspects set out above.  

In addition to the notice mentioned above, the 2000 act also allows an authority to publish a notice setting out the conditions that they may decide to attach to service permits.

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Before they publish a notice, franchising authorities should also consult on the sorts of conditions they may decide to attach to service permits as part of their wider consultation on the service permit scheme.

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The service permit consultation will ensure that neighbouring authorities and operators in the area are able to feed back about the potential impacts of proposed conditions on services. The sorts of conditions that an authority is able to attach to service permits are set out in regulations which supplement the act. No other conditions may be attached to a grant of a service permit.

Franchising authorities are able to attach different conditions in different circumstances, or for different sorts of services. For example, the authority may apply a ‘lighter-touch’ set of conditions to services which have a limited number of stopping places in the franchising area, but may require services which operate wholly within the franchising area to comply with more stringent conditions, to ensure they integrate effectively with the network of franchised service.

They might also offer permits for tourist services that are registered as local bus services that confer a right, but not an obligation, to operate. In addition, franchising authorities are able to specify different periods of time in which they can take their decision regarding whether or not to award a service permit with respect to different sorts of services, or in different circumstances, and likewise for the period of time that must expire before the service permit is effective and the period of time which must expire before a variation or withdrawal is effective.

This should provide franchising authorities with the flexibility to cater for the range of scenarios that they foresee, for example to award permits at short notice should there be an urgent transport need.

Service permit applications and decisions

Once the franchising authority has issued its notice setting out the details of the service permit scheme and the notice of conditions they may decide to attach to permits, they can start to take applications from operators.

The 2000 act requires the authority to grant service permits where the service in question will benefit local passengers in the franchising area, and where it will not adversely impact any of the services in the franchised network. This test forms the minimum basis on which the franchising authority must assess service permit applications.

Following changes to the 2000 act made by the Bus Services Act 2025, authorities now have discretion to apply additional tests.

If the service crosses into another authority’s area (a cross-boundary service), the authority or authorities may, if they wish, consider whether:

• the benefits for passengers using the new service are greater than any negative impact it might have on an existing franchised service(s), or
• the benefits to the local economy or local residents are greater than any negative impact on an existing franchised service(s)

If the service stays within one area (not a cross-boundary service), the authority or authorities may, if they wish, consider whether the benefits to the local economy or local residents outweigh any negative impact on an existing contracted local service.

These are optional tests that authorities may choose to use. If they decide to apply them, they should grant the permit where, on balance, the benefits of the proposed service are considered to outweigh any potential impact on franchised services.

Compared to the minimum test the franchising authority must apply, the additional tests offer advantages where the authority seeks to harness the added value that services proposed by operators can provide – to take a more holistic view of local transport needs.

It will be down to each franchising authority to decide whether to grant applications for service permits on a case-by-case basis and which criteria to apply. The authority should be able to demonstrate a clear and transparent rationale for its decision. Therefore, the authority should think carefully about the information that they require operators to provide when making their applications to ensure that the authority’s decisions are well-evidenced.

Where a franchising authority rejects an application for a service permit it should clearly set out its reasons in writing to the operator concerned. They must give the applicant notice of their reasons within 10 days.

To manage the process effectively, an authority should set out a clear, transparent framework for assessing permit applications. This will usually include published guidance explaining the statutory test and any additional tests the authority plans to use, along with a standardised approach for assessing revenue and passenger abstraction, operational impacts, and wider social, economic or environmental benefits.

Clear internal governance – such as an assessment panel or formal decision records – helps ensure consistency. Engaging with operators, passenger groups, and neighbouring authorities can also support well-informed decisions.

Suspension and revocation of service permits

The 2000 act and supplementary regulations^{[footnote 2]} set out the details regarding how permits can be suspended or revoked. The act sets out the grounds on which a franchising authority can revoke or suspend a permit. These grounds are:

• that the service no longer satisfies the test which was used to grant the permit

• that the holder of the permit has failed to comply with a condition attached to the permit

• that the public would be endangered by the service continuing to run

A franchising authority may not suspend or revoke a service permit unless at least one of these grounds is satisfied.

Where a franchising authority decides to revoke or suspend a service permit, they must issue a notice to the relevant operator, in writing, setting out:

• the grounds on which the service permit is being suspended or revoked

• the date on which the suspension or revocation will take effect

• the effect of the revocation or suspension

If a service permit is suspended, the authority must also include, as part of the notice, the measures that the operator must take to have the suspension lifted, the date on which the suspension will be lifted, should the operator take the relevant steps, and any arrangements the authority plans to put in place to review the suspension.

Franchising authorities are able to suspend or revoke service permits with immediate effect where there is a danger to the public if the service continued to run. In all other cases, suspensions and revocations are not to take effect earlier than the statutory notice period for registration changes after the authority issues the notice. The standard statutory notice period for registration changes is 56 days from the date the notice is issued, unless varied by the relevant authority.

Where an operator is unhappy with the decision of a franchising authority in either refusing to grant a service permit, attaching certain conditions to a permit, or in suspending or revoking a service permit, they are able to appeal to the traffic commissioner and from there to the upper tribunal.

Further details of the process to be followed by operators when appealing is set out in supplementary regulations – the Franchising Schemes (Service Permits) (England) Regulations 2018.

 Role of the traffic commissioner

Traffic commissioners are responsible for the licensing of bus operators and the registration of local bus services – except in EP areas where the registration function has been delegated to the LTA. They also have powers to take action against bus operators where they consider that they are not running punctual or reliable services, or where operators pose a risk to road safety.

The introduction of a franchising scheme will change the role that the traffic commissioners play to an extent. The paragraphs below explain the changes in roles and responsibilities.

Where franchising is introduced, services no longer need to be registered with the traffic commissioner if, for example, they are operated as part of a local service contract, or through a service permit. However, enforcement is still the responsibility of the traffic commissioner as they remain the body responsible for licensing and regulation of the industry. Traffic commissioners are able to take action against operators, including attaching conditions to licenses and issuing fines, where operators are running services in the franchising scheme area, for example, when prohibited from doing so or where they fail to provide information when requested by an authority under the act.

However, enforcement of local service contracts themselves, and the standards imposed by those contracts, is a matter for the franchising authority.

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Franchising authorities should ensure they build in the necessary contractual mechanisms to local service contracts to ensure that relevant better bus service outcomes are being delivered (where applicable) and to deal with poor performance.

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An authority is able to take action against operators that are not complying with the conditions of their service permit, by revoking or suspending such a permit. However, the traffic commissioner will act as the appeal body. Any issues in relation to safety or which could impact on the good repute of an operator should be reported to the relevant traffic commissioner. 

Franchising authorities can exempt certain services from regulation arising because of their franchising scheme. In addition, all services operated under section 22 Transport Act 1985 permits are automatically exempted by the 2000 act.

These services should continue to be registered with the traffic commissioner as now. 

Varying a franchising scheme 

Variation is a change to the franchising scheme as it has been legally specified. To make such a change, the authority must follow the relevant procedure set out in 123M of the 2000 act (for adding to the scheme area) and Parts 2 and 3 of Schedule 9A of the Bus Services Act 2025 (for reducing the scheme area and other variations respectively).

At any point after a franchising scheme has been made, the authority that made the scheme can vary it.

Changes introduced by the Bus Services Act 2025 relating to variations that add to a scheme area – specifically those in Part 1 of Schedule 9A – will not take effect until the relevant provisions are formally commenced, which will require laying of a statutory instrument.

There are 3 main types of procedure, depending on the nature of the variation.

1) Adding to a scheme area – where the authority plans to make a variation which adds a new area to the scheme they must follow the same process used when making the scheme. This includes preparing an assessment, obtaining independent assurance on the assessment, and consulting on the variation. This type of variation would require incumbent operators to cease operating their registered services. The authority must also specify the date and minimum period for local service contracts in the new area, in addition to the usual scheme information.

2) Reducing the scheme area – for example if an outlying rural area was no longer to be included in the scheme due to low passenger demand or prohibitive costs – would require the authority to formally consult on the proposed change, setting out the reasons, the potential impact on services, and any mitigating measures.

3) Other variations – including typical changes to franchised services that do not alter the scheme area, such as alterations to facilities like depots. This procedure includes bespoke consultation requirements, designed to balance the need for public input with the authority’s ability to make timely adjustments to meet evolving local transport needs. The authority may, at its discretion, consult more widely if considered appropriate.

All 3 procedures are set out in Schedule 9A of the Transport Act 2000, and the rules in section 123MA also clarify how existing provisions for making schemes apply to variations.

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If the authority decides to make a variation having followed the relevant procedure, it must publish a notice of the decision stating the date or dates on which the variation(s) will take effect. The period between the decision and its implementation, the ‘notification period’, can be of a length of the authority’s choosing.

In setting a notification period, the authority should consider the needs of operators and their staff, and the interests of local transport users. The authority must also inform the traffic commissioner of the decision. Both these steps must be taken within 14 days from the date on which the decision to vary the scheme was made.

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Revoking a franchising scheme 

We recognise that there may be good reasons which mean that it may be better for passengers for a franchising scheme to be revoked. 

The 2000 act sets out the circumstances in which an authority can revoke a franchising scheme. An authority may only revoke such a scheme if they are satisfied that:

• local services and/or BSIP and other longer term outcomes in the area to which the scheme relates are likely to be better if the scheme did not apply

• the continued operation of the scheme is likely to cause financial difficulties for the authority, or the burdens of continuing with the scheme are likely to outweigh the benefits of doing so

The revocation of a franchising scheme is subject to the same procedure as the making of a franchising scheme except that section 123G(3) does not apply. Should an authority satisfy itself that at least one of the situations above applies, then they must:

• publish a notice of their decision to revoke the scheme, setting out the date on which the revocation is to take effect
• give notice of their decision to the traffic commissioner, within 14 days of taking the decision

The franchising scheme cannot be revoked until at least 6 months after the authority publishes the notice setting out its decision. 

Where the authority is a mayoral combined authority, the mayor must take the decision to revoke the scheme.

Information provision

This section describes in more detail what information can or cannot be sought under the s143a 2000 act and The Franchising Schemes and enhanced partnership Plans and Schemes (Provision of Information) Regulations 2017 to support the franchising scheme assessment. Some of the information detailed in this section is already captured under the Bus Open Data Service or will be newly collected by the department using powers stemming from the Bus Services Act.

Passengers

Information about the total number of journeys undertaken by passengers on the local services operated by the operator in the area.

A breakdown of total journeys into individual routes or services, to periods (monthly, weekly, daily and also by peak and off-peak periods), or to ticket types etc. This would not include passenger survey data on all individual journeys undertaken at a transactional level.

Fares

Information about the structure of fares for journeys on local services.

A description of all period tickets (validity one day or longer), including prices, validity rules and geographical areas and/ or service list within which specific ticketing products are valid (for example, zones or corridors). It would not include, for example, all HOPS data on all individual journeys undertaken to a transactional level.

Rules governing the eligibility of groups of passengers to purchase and use ticket types other than the standard adult fare.

Point to point fares by ticket type (such as adult and child ticket) single and return tickets, based on fare stages (not individual bus stops), usually presented in a fare table.

If return fares are calculated by a set formula (e.g. 190% of single fare rounded to nearest 5p), a statement of the formula and parameters used, and the dates the formula and parameters were applicable.

Reference information linking fare stages in fare tables to the geographical location of specific bus stops

Revenue

Information about revenue received from those local services, including information about revenue attributable to particular types of fares or derived from journeys undertaken on particular parts of those local services.

Revenue collected by the operator for the sale of period tickets (i.e. tickets which are valid for one day or longer) through any channel including (but not limited to) on-bus, off-bus, travelshops, online or through mobile ticket apps.

The number of ‘standard fares’ or ‘penalty fares’ issued by the operator to passengers detected travelling with no ticket or an incorrect or invalid ticket.

The amount of fare revenue estimated to be lost to the operator due to fare evasion, where operators make such estimates. This could be a money amount (£) or a percentage of fare revenue (%).

Aggregated revenue derived from services – including fares (on-bus and off-bus sales), advertising and other sources by category in as far as these are associated with local operations – in the area proposed for franchising. Some suggested categories are:

• on-bus fares
• off-bus fares
• concessionary support
• tender subsidy
• advertising
• distribution of free newspapers

Costs

Information about the fixed and variable costs incurred by the operator in operating the local services in the franchising authority’s area.

Costs incurred (money) and time allocations for driver training.

Peak vehicle requirement (PVR) to operate each service/ route or service/route group, disregarding engineering spares. For some services/ routes this may be zero – e.g. where service/route is interworked with another.

Totals of scheduled hours and actual hours operated by vehicles on local services (and which therefore relate to variable costs), both live (in service) and dead (positioning trips, start and end of shift etc.), reported at the service level (or for groups of services where they are interworked), not for individual vehicles. Operated hours may be lower than scheduled hours (e.g. trips lost due to mechanical failure) and may be higher than scheduled hours (e.g. due to traffic congestion).

Where operators run services crossing the area and already hold records for operated hours split into within the area and outside the area.

Information about the cost of maintaining, overhauling and replacing operators’ fleets through their normal life cycle. This may include for each vehicle the average maintenance cost per vehicle per year by vehicle type.

Information about the costs of participating in pension schemes, including any fixed and variable costs of participating in a pension scheme, in so far as that relates to staff employed by the operator.

Vehicle fleet information

Information about the vehicles used by the operator in operating those local services, including about the age of those vehicles, emissions and types of fuel or power.

Information for each vehicle used by operators to deliver or support local services in the area. This may include information about the age of those vehicles, emissions and types of fuel or power used and mean miles per breakdown by depot and by vehicle type.

Information about the frequency of maintaining, overhauling and replacing operators’ fleets through their normal life cycle.

The ratio of engineering spare vehicles to in-service vehicles by depot.

Vehicle distance

Information about the total distance covered by vehicles used by the operator in operating those local services.

The scheduled and operated mileage for each service, both live (in service) and dead (positioning trips, start and end of shift etc.), reported at the service level, not for individual vehicles.

Operated mileage is likely to be lower than scheduled mileage on some services, where trips have not run or have been turned back short for various reasons (mechanical, traffic etc.).

This can include data from operators running cross-boundary services if they already hold mileage records that split mileage into within the area and outside the area.

Staff

Information about persons employed by the operator in the provision of those local services.

Headcount and full-time equivalent (FTE) count of staff employed or contracted to deliver the operator’s bus services within the franchised area, including staff directly and indirectly delivering and supporting the delivery of those services, including front line, back office, management and head office staff (or as otherwise grouped by the operator). Separate categories/counts for drivers, customer service and revenue protection staff.

Wage structures and salary bands and scales used to pay staff involved in the delivery of local bus services in the franchised area, including hourly rates (standard, overtime etc) and annual salaries as appropriate to each relevant staff group.

Information about grade progression rules, including progression within or to different grades or information about closed grades, for drivers and engineering staff.

Details of any future wage structures agreed with the employees or their representatives.

Information about pension schemes which staff involved in the delivery of local bus services in the area. This includes pension schemes which are only for employees of the operator and multi-operator/ multi-company pension schemes, but does not include information about deferred members or pensioners.

Employment terms and conditions covering issues such as standard working week, minimum/ maximum rostered hours, holiday entitlement, overtime arrangements, sick pay, maximum unpaid breaks, minimum guaranteed paid week.

Forecasts

Information about journeys that the operator has forecast will be undertaken by passengers on those services and revenue that the operator has forecast will be received from those services.

Forecasts regarding expected or anticipated patronage and revenue including historic forecasts.

The 4 additional business cases

This section describes in more detail what should be included in the 4 business cases, other than the strategic case.

The financial case

Whether the authority would be able to afford to make and operate the scheme.

This is required under section 123B(3)(d) of the 2000 act and is the equivalent of the financial case.

An authority should consider the financial implications of franchising against the current EP, not only with respect to the initial introduction of the arrangements, but also factoring in the ongoing management and operation.

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It is important to confirm that the preferred option is affordable, so authorities should set out the capital and revenue requirements for the options over their lifespan, together with an assessment of how the options would impact upon the balance sheet, income and expenditure account of the franchising authority.

In developing the financial case, an authority should ensure they have considered the impacts of the options on both capital and revenue spending.

Capital spending

Such as for the purchase of depots, zero emission buses, charging infrastructure and battery replacements. This could also include introduction of new ticketing systems or other infrastructure – including measures to improve bus reliability/ journey times.

Revenue spending

Including any revenue received (including fare box income, contractual payments, devolved BSOG and from enabling businesses or individuals to access electric charging infrastructure), any additional costs incurred (such as for implementation of the option, electricity costs, service enhancements and fares reductions) and – where relevant – the impacts on tender/contract prices of:

• staff costs, in particular considering the costs associated with the TUPE transfer of staff and their pension protection
• other operating costs – such as savings from reduced journey times achieved through bus priority, fuel costs, costs for leasing or purchasing assets, marketing and branding
• bidding and administration costs – to bid for, award and manage contracts and operate EP arrangements

Specifically, the financial case element of the assessment should set out:

• a year by year cost analysis, broken down by capital and resource expenditure, for the authority with an explanation of how these totals have been built up

• a year by year income forecast for the authority if relevant (for example if a gross cost franchise is proposed)

• whether the option requires additional borrowing by the authority and if so what interest assumptions and repayment arrangements have been used

• a summary of the key financial risks, particularly to any forecast income to the authority and including any quantified impacts and high-level mitigation plans

LTAs should carry out a quantified risk exercise or another similar exercise to help inform appropriate levels of contingency in any cost build up assumptions on funding which will need to be identified from within the authority in each of the relevant years and what funding will come from central government, for example, any assumptions about ongoing funding to support delivery, devolved BSOG and other existing and future government funding schemes. Particular consideration should be given to identifying ways to increase on-bus revenue by encouraging greater bus use by fare-paying passengers.

End of statutory guidance wording

The economic case

Whether the proposed scheme would represent value for money.

This is required under section 123B(3)(e) of the 2000 act and is the equivalent of the economic case.

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The authority should consider the options in terms of impacts on wider society. Authorities should assess the economic, social and environmental costs and benefits, rather than solely focussing on the transport impacts of the different options.

This section of the authority’s assessment should explain the impacts of the options on different groups in society. This should include new and existing passengers, the authority, wider society and bus operators – with both the potential impacts on incumbent operators and the potential benefits to new entrants considered.

Particular consideration should be given to small and medium sized operators, and the potential impacts of the options on that group. Similarly, particular consideration should be given to the impacts of the options on passengers in neighbouring areas that could be affected by the changes.

An authority should include in this section an assessment of local operators that they consider to be small and medium sized. An authority should also take account of the overall nature of their market, the operator’s fleet size and consider the turnover of the operators – where necessary including its parent structures – as a whole. 

In addition, the authority should also assess the likely impacts of the transition period of both options, particularly on the speed at which bus service improvements can be delivered for passengers.

In assessing the impacts of the options, the authority should consider the distribution of benefits, costs and risks between different groups in using a franchising model. With respect to franchising proposals, the authority should ensure they have considered:

• impact on bus users – and the speed at which they will receive benefits from the measure

• fare-box revenue – whether a gross cost or net cost franchising model is being proposed – this would need to take into account as far as possible any remaining impacts of the COVID-19 pandemic on farebox revenue

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Responsibility for payment of the Bus Service Operators Grant (BSOG) will be devolved to any authority at the point the authority decides to make a franchising area, and a share of the national BSOG budget will be transferred to the authority. The Bus Services Act 2025 has given local transport authorities the powers to design and pay grants to bus operators. Some authorities may already have the power to pay such grants through a devolution order or other statutory instrument, however they should use the powers in the act. Guidance on this power will be published separately.

Once funding has been transferred, operators will claim their BSOG, or locally designed bus operator grant, for services inside the authority boundary from the authority rather than from DfT.

The portion of BSOG devolved to an LTA will be based on certified claims within the authority boundary, calculated by DfT with the assistance of the local transport authority and operators.

DfT will provide sufficient notice of changes to authorities to calculate the funding impacts in their area. Franchising authorities must continue to pay BSOG (or locally-designed alternative grant) to eligible operators operating under a service permit within a franchising area. Any transferred BSOG not spent on supporting services, due to operators moving into franchise contracts, should be used to support the bus sector more generally, including, but not limited to franchising.

This amount transferred will remain proportional to the size of the national BSOG budget – if the national BSOG budget increases or decreases the amount transferred will rise or fall accordingly.

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• operating costs – such as costs for leasing assets, staff, training, marketing and branding

• capital costs – such as investments in depots or buses or bus priority schemes

• bidding and administration costs – cost to operators to bid for contracts, and authorities to manage the franchise bidding process, and any costs that the operation of partnership arrangements would incur for all parties

• implementation costs – including additional staff required, for authorities, operators and elsewhere in the system, or expert advice to put the scheme into practice

• operator margins – based on evidence from existing franchising and contractual arrangements – this would need to take into account any remaining effects from the COVID-19 pandemic (for example, on the farebox) and whether margins are likely to change for other reasons for example, between the first and subsequent franchise periods

• environmental impacts – such as changes in air quality due to changes in congestion, service levels or zero emission buses

With respect to the EP proposal in particular, the authority should ensure that it has considered:

• the costs of administering bus registrations
• ongoing management costs for the authority and for local bus operators

Under an EP with ‘route’ level requirements, LTAs are required to take on responsibility for registering bus services. LTAs can, even without route requirements, choose to take on the registration function if they wish.

This aspect of the assessment should include sufficient detail so that the scale of the benefits and impacts on different groups can be understood. Much of this will require the authority to make assumptions about the likelihood of certain outcomes occurring based on the nature of their proposed options. For example, bus operators currently running services in the area will incur certain costs if they are unsuccessful in winning future contracts under a franchising model. The likelihood of this happening however will be dependent on the nature of the franchising scheme put forward by the authority. 

All significant assumptions used in the economic and financial cases should be documented as the assessment is developed – identifying the evidence on which they are based where possible. 

Since franchising is intended to be a long-term intervention, the authority should:

• think carefully about the most suitable appraisal period for assessing the impacts of the options
• explain its decision in the assessment documentation

The assessment should focus on a chosen appraisal period but should also indicate clearly whether there is anticipated to be any substantive change in outcomes in the years immediately following the end of that chosen appraisal period. 

The authority should then look to present the net present value of each option, derived from the present value of the costs and benefits of each option. The authority should also perform appropriate sensitivity tests, to provide a range of results around the options, to account for uncertainty and potential over-optimism.

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The cross-government guidance on appraisal and evaluation – the Green Book – is a useful reference point for authorities when preparing the economic case of their assessment in particular. It sets out advice and techniques to help assess which course of action is likely to achieve the desired outcomes and provide the best use of resources.

Similarly, cross-government guidance on producing robust analysis – the Aqua Book – provides useful advice for an authority to help ensure that the outputs from any analysis, as well as the supporting models, data and assumptions used, are fit for purpose.

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The Green and Aqua Books should only be used where they cover issues that are relevant to topics covered by the assessment. They should only be used as a reference source.

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The commercial case

The extent to which the authority is likely to be able to secure that local services are operated under local service contracts.

This is required under Section 123B(3)(f) of the 2000 act and is the commercial case. The purpose of this section is to demonstrate that the authority has a commercially viable approach to franchising and will be able to secure the franchised services in an affordable and cost-effective manner.

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This exercise does not need to be done for the currently available EP option. This section of the assessment only needs to cover the franchising option(s) being considered. In it the authority should describe:

• how the local service contracts will be structured commercially and work in practice to deliver the outcomes and outputs that the strategic case says that the franchising option(s) will achieve
• the approach planned to procuring the local service contracts
• the key commercial risks, their potential impacts and how they would be mitigated and managed

In particular, the authority should explain in this section of the assessment:

• the geographical area or areas the franchise will cover including whether sub-areas are proposed and how they will be phased in over time and whether the franchising scheme will exist alongside an EP or cover all of the authority’s geographical area
• whether any services or types of service will be exempted from the scheme
• how local service contracts and service permits will be implemented
• how the authority will facilitate the involvement of small and medium sized operators, bearing in mind the need to ensure competition for the first and subsequent rounds of procurement – this could be achieved through the structure of local service contracts such as letting of some smaller tenders consisting of small numbers of PVR alongside larger contracts or other models such as sub-contracting
• the number and scale of local service contracts planned – including whether they will be route by route, by sub-areas or one contract for all the services
• the intended length of local service contracts
• how the authority will facilitate cross-boundary services to deliver relevant outcomes and targets in both authorities’ areas
• how the service permit system will be used to enabled cross-boundary (and if relevant other) services to operate, including the conditions expected to be attached to permits
• how services will be integrated with other modes
• the financial and staffing provisions of local service contracts including:
  • how any operational cost savings from measures to improve bus reliability/ journey times are reflected in the contract and reinvested in the network
  • how revenue risk will be handled in local service contracts
  • what standards, outputs and outcomes (if any) will be incentivised through penalties or additional payments in local service contracts. Authorities should consider any approach to incentivisation across a wide range of outcomes including customer service, vehicle cleanliness, proportion of services operated, information, redress and punctuality. They should also consider the potential for their approach to create perverse incentives if they decide to focus heavily on one specific issue
  • how staff transfer arrangements and the provision of a broadly comparable pension scheme will be addressed, and any other significant staff-related provisions intended to be included – see also this section of this guidance on staff transfers
• how contractual mechanisms will allow for enhancement of services and other improvements for passengers over time in a cost-effective manner
• how vehicle provision will work including:
  • the commercial arrangements for the provision of vehicles and respective roles or the authority and service provider, including any arrangements for transfer of vehicles at the end of local service contracts
  • any vehicle standards that will be set in local service contracts for some or all services both initially and over time – including for type and size of vehicle, emissions (including if zero emission for new buses) and on-board facilities
  • any other key contractual arrangements that the authority envisages including in local service contracts
  • any commercial or other considerations relevant to the transition period (including existing or planned arrangements under an EP and before franchising is introduced) will seek to ensure that services to passengers are protected during that period
• how the LTA intends to ensure sufficient depots and charging infrastructure is available, including (if relevant) how they will be transferred at the end of local service contracts
• the approach to staff pay and conditions – as part of developing this, LTAs should engage with employer representatives, including the trade unions
• a summary of the extent to which existing local operators and/or new entrants are expected to bid for local services contracts;
• any actions (such as the provisions of permanent or temporary depot facilities) that the authority is taking or intends to take to increase market appetite
• the approach to procuring the initial service contracts, including the procurement route to be used, timescales involved and how the involvement of SMEs will be encouraged
• what market testing has been undertaken and the conclusions drawn from it – particularly in relation to the competitiveness of the procurement process
• the overall confidence the authority has in being able to secure initial local service contracts which deliver the outcomes and outputs intended within the financial and commercial terms envisaged in the assessment and why it has reached this conclusion
• how the authority will ensure that there is strong competition for the second and subsequent procurement of local service contracts

The authority should set out what its strategy is for procuring new contracts and in particular should give careful consideration to the balance between cost and quality in franchise assessment.

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 The management case

How the authority would make and operate the proposed scheme.

This is required under Section 123B(3)(c) of the 2000 act and is the management case.

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If, following the production of the other elements of a proportionate business case, franchising is still a credible option, the authority should now consider how it would successfully deliver franchising and manage and mitigate risk. This exercise does not need to be done for the currently available EP option.

Firstly, this case focuses on the practicalities of moving from a deregulated to a franchised network and how the LTA will deliver on the responsibilities that come with being a franchising authority with full control of the bus offer to passengers. These include:

• the approach to staff pay and conditions – as part of developing this, LTAs should engage with employer representatives, including the trade unions
• how fares and ticketing will operate including anticipated changes to fares over the life of the contract
• what ticketing or fares systems are required and whether they will be procured or delivered through local service contracts and, if not, how they will be secured and provided
• whether, when and how multi-modal fares will be incorporated into contractual arrangements
• whether operators are currently compliant with the Bus Open Data Digital Service (BODDS) and if not, how the LTA will ensure that they become compliant
• how other bus service improvements will be achieved commercially including:
  • how network identity and branding requirements will be delivered consistently  - the respective roles of operator(s) and the authority in information provision including the requirements (on and off-bus) to be included in local service contracts
  • the respective roles of operator(s) and the authority in customer service (including redress arrangements)
  • any facilities that the holders of local service contracts are expected to provide or operate (such as depots or bus stations) and the terms
  • how timetables will be set and changed
  • what data operators of local service contracts will be expected to provide to the authority, including to monitor progress against BSIP and longer term objectives
  • what training bus drivers would be expected to complete including in relation to safety and disability awareness and how this will be implemented through local service contracts

The authority should also set out how it intends to manage the transition process from the current system to a franchised one. The authority should ensure they develop any contingency plans for providing replacement services should operators stop running their services before the introduction of the franchising scheme and any other plans they may have put in place to manage those risks.

In developing the management case of the assessment, an authority should ensure they have engaged with DfT to explore and set out for franchising:

How LTA staff will obtain, with DfT’s help, the skills to implement and then manage the franchised network – this is separate to the resources needed to deliver the transition, as set out below.

The resources needed for transition – this includes whether additional specialist staff or advice will be required. If additional staff are required, this should include the numbers and costs. The cost of procurement and contract management processes, if any, that are required for the successful introduction and ongoing management of franchising.

How the franchised network will be managed – this should include how the network will be reviewed and the strategy for implementing the outcomes set out in the LTA’s BSIP – with particular emphasis on traffic management and delivering reliability and journey time improvements for buses. This is separate to the skillset question raised above.

How success will be measured – mostly covered in the franchising scheme, but here should also include bus passenger surveys either commissioned by the LTA or by other bodies such as Transport Focus.

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The above bullets also closely link the management case with the commercial case and the delivery of outcomes ‘on the ground’.

Moving to an LTA controlled franchised network will also have impacts on LTA resources. This part of the assessment will also need to set out what administrative resource it will need (for example, in FTE terms – whether from LTA staff or through outside help, such as consultants) to deliver and maintain a successful bus network – for example, letting and managing contracts, performance monitoring, network planning. This should include, but is not limited to delivering:

• the deliverables of the ‘made’ franchising scheme

• the transition arrangements, including consideration and issuing of service permits

• other measures that contribute to a successful bus network. For example, developing and delivering packages of reliability and journey time improvements on specific corridors

• developing and delivering multi-operator ticketing and how fare structures and levels will be determined and reviewed

• that bus services are perceived by local people in a positive way. This includes, for example, how the LTA will resource marketing strategies to encourage bus use (particularly modal shift from cars). This might include ensuring that comprehensive information is available, in one place, that gives motorists wishing to use the bus for the first time all the information they need – for example, the nearest stop to them to catch it, what the route is and how long it will take, the nearest stop to their final destination, what the fare will be and how to pay it etc – backed up with real-time information that tells them how far away their bus is when they are at the stop. This is a key requirement of a successful bus network.

• how all the above bullets will be informed by other ongoing strategies, BSIP and LTA objectives, such as wider action on modal shift from car and collection and analysis of monitoring data set out in the BSIP

Potential types of franchise

The department is keen to see franchising powers used in a wide variety of contexts. The powers in the 2000 act are very flexible and the best way to apply them will depend on individual circumstances. The department is keen to work with LTAs to pilot different approaches to franchising and will provide support to LTAs as they develop their thinking.

A franchising scheme does need to identify the local bus services that the franchising authority believes should be provided under local service contracts (and all such services must then be provided under local service contracts). However, franchised bus services do not have to be used exclusively across the whole of an authority’s geography.

The department is currently delivering a franchising pilot programme to support LTAs to explore different models of franchising that could be suited to their area, with a particular focus on rural franchise models.

Commercial services can continue to operate alongside franchised services if the authority wishes and operators are prepared to provide them. Such services can stop in the area covered by the franchising scheme through the use of the act’s provisions for service permits.

This section sets out some of the different ways in which franchising powers could be used, beyond the usual approach of one or more contracts covering all services within an authority’s area.

Further details and approaches are also set out in the Bus franchising manual. This list also reflects the models that the department is testing through its franchising pilots.

‘Grow it out’ model

A ‘grow it out’ model is an example of a partial franchise model, and could be a pragmatic route for authorities looking to build franchising capacity gradually, starting from a small base and expanding as capability and resources allow.

Under this approach, franchising would initially be applied only to a subset of services, such as existing tendered routes and existing or newly introduced demand responsive transport (DRT), and could then be progressively expanded to cover up to all local bus services over time.

This phased model would allow the authority to test and refine its franchising processes, manage risk, and demonstrate early service improvements without needing to take on the entire network at once. DRT could be introduced in harder-to-serve areas to complement the initial franchised network, helping to provide better connectivity and support BSIP outcomes. Over time, as confidence grows, the franchising scheme could be extended to include all services in the defined geography, with the potential for cross-subsidy between profitable and less-profitable routes.

Alongside this, a service permit regime could ensure that any remaining commercial services do not undermine the franchised network and can be aligned with broader authority objectives (for example, through conditions on frequency, vehicle standards, or integrated ticketing). This approach could also be designed to work in tandem with enhanced partnerships (EPs) in non-franchised areas, with clearly defined and non-overlapping geographies to maximise coverage and ensure consistent outcomes across the authority’s area.

Shared risk model

A variant on the above, and an example of a shared risk contract, which has the potential to be deliverable with lower levels of LTA resource would be to take an approach based on that adopted in Jersey. Here, in the first phase, a model network, based on the existing network, is tendered for, but with operators invited to bring forward proposals for profit share with the LTA and other shared incentives. In a second phase of the process, the final bidders would be invited to propose variations on the model network which deliver against the LTA’s strategic objectives for bus.

In this model, financial risk is shared between the LTA and operator(s), with the operator keeping fare revenue to incentivise the growing of the market, but a profit-share arrangement which encourages the LTA to introduce pro-bus interventions.  The LTA has full access to operator data and costs. 

The LTA and the operator(s) work together on an action plan to grow patronage that might involve the LTA installing new bus priorities along the route to improve punctuality and journey times or subsidising lower fares, and the operator re-investing the cost saving from new bus priorities back into the network.

Phased franchising model: a phased approach to franchising in the areas of most need

A phased franchising model (an example of a partial franchise model) could be a practical option for an authority that wishes to focus first on the areas of greatest need, before expanding coverage more widely across its geography.

Under this approach, franchising would initially be applied to specific towns, corridors, or localities where the current network is underperforming, where market failure is evident, or where there is the greatest potential to deliver improved outcomes aligned with the BSIP. This targeted deployment allows the authority to concentrate resources, demonstrate early success, and build franchising capability incrementally without taking on the full scale of the bus network from the outset.

The initial franchised area might include, for example, urban centres with high demand but poor service quality, or rural areas where services are sparse and commercially unattractive but socially necessary. Within these areas, the authority could specify service frequencies, vehicle standards, ticketing integration and network design, using the franchising framework to drive improvements that a commercial market alone may not deliver. Over time, as the authority gains experience and demonstrates the benefits of the approach, the scheme could be extended to cover a wider geography, with new phases introduced as funding, resources and political priorities allow.

A service permit regime could operate in parallel for commercial services outside the initial franchised areas, with conditions applied to ensure they complement rather than undermine the franchised network. This flexibility allows the authority to balance local priorities, manage risk, and ensure a smooth transition to full franchising if that is the long-term objective. The phased model could also sit alongside enhanced partnerships (EPs) in non-franchised areas, provided there is no overlap in geographical scope.

Micro-franchise model: to tackle over-bussing or maximise bus priority/mass transit benefits

Although an EP can include provisions to set maximum frequencies on corridors, it may not always be the most effective way to tackle this issue. Franchising could be used across a very tightly defined area (such as a specific corridor or a key route network) to manage the flow of buses through an area, as a variant of a partial franchise model. Whilst we would expect some services to be provided under franchised local service contracts (perhaps at less commercially attractive times of day – such as evenings or weekends), these do not have to be all or the majority of services. Service permits could then be used to manage the flow of other buses through that network.

Similarly, franchising could be a mechanism to capture the operating cost savings that are available from the delivery of measures to improve bus reliability/ journey times, if it is proving difficult to do so through an EP. Local service contracts do not have to involve payments by the authority to an operator. They could have no financial aspect or involve payments by an operator to the authority. So the corridor on which bus priority is introduced could be included in a tightly defined franchising area where all services either have to operate under a local service contract or a service permit.

The same principle could be applied to a new guided busway corridor or other bus mass transit scheme (such as a Glider-style scheme) – bringing that network (and potentially parallel routes which the authority considered no longer needed to be served to the same extent) within the scope of a micro franchise. This would give the authority control over who used the infrastructure and for what services, either through local service contracts or service permits.

A micro-franchise would sit alongside the existing EP, which may require amending as a result of changes to operator profitability and ability to invest (with the franchised area excluded from the EP).

Hybrid model

A hybrid franchising model may be the most appropriate option where an authority wishes to draw together elements from different approaches in order to best meet local needs and circumstances.

Under this model, the authority would not be restricted to a single template – such as franchising only tendered services, phasing by geography, or pursuing a shared risk model – but could instead combine features of each to create a tailored framework. For example, franchising could initially apply to existing tendered services in rural areas, while in urban centres a phased franchising approach is taken to address identified service gaps. At the same time, a joint venture arrangement with an incumbent operator could be established for a specific corridor or town where collaboration is likely to deliver the best outcomes.

To give effect to this, the authority could design a franchising scheme that defines different geographical areas within its boundary, applying distinct approaches to each. These franchised areas could be complemented by EPs elsewhere, ensuring full coverage of the authority’s geography without overlap between EP and franchised zones. The flexibility of a hybrid approach allows for different levels of intervention to be applied depending on local priorities, operational risk, and funding availability.

As with other models, a service permit regime could be introduced alongside franchising to regulate any remaining commercial services. Permit conditions could be used to align those services with BSIP outcomes, specifying requirements such as ticketing integration, minimum frequencies, or vehicle standards. Alternatively, services that do not compete with franchised routes could be exempted from the scheme.

This hybrid approach allows authorities to test and refine franchising in targeted areas, maintain constructive relationships with existing operators where beneficial, and progressively expand their influence over the wider network. In doing so, they can combine the strengths of multiple models – from the protection and cross-subsidy potential of franchising tendered services, to the flexibility of phased deployment and the collaborative advantages of joint venture working – while tailoring the overall scheme to their unique local context.

1. A local transport authority, a London transport authority or a council in Scotland. ↩

2. The Franchising Schemes (Service Permits) (England) Regulations 2018 set out what conditions can imposed in relation to service permits ↩