How to build a bus franchising business case that can withstand scrutiny
Since December 2025, every local transport Authority in England, outside London, has had access to franchising powers. A credible proposal still depends on evidence that the Authority can afford, procure and operate the network it offers.
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A franchising proposal comes under scrutiny when an Authority must explain the consequences of fare revenue falling below forecast, a procurement attracting few bids or a team not yet ready to manage the contracts.
The case an Authority needs to make
Department for Transport guidance frames the assessment around a strategic case and four further cases: economic, commercial, financial and management. The terminology will be familiar from HM Treasury's Five Case Model, but the work should be rooted in the Authority's network, market and budget.
| Case | The practical question | Evidence that bears weight |
|---|---|---|
| Strategic | What local problem is the scheme intended to solve and why is franchising the preferred response? | A clear baseline for services and passengers; the alternative options considered; alignment with local transport and bus objectives. |
| Economic | Does the preferred option offer value for money? | Forecast social, economic and environmental effects, including who gains, who carries costs and the effect on neighbouring passengers and Operators. |
| Commercial | Can the Authority secure services on workable terms? | Contract packaging, the proposed procurement approach, likely bidder interest and a candid account of risks such as revenue, depots, fleet and mobilisation. |
| Financial | Can the Authority afford the transition and the ongoing network? | Assumptions for fare revenue and costs, sensitivities, funding sources, cash-flow timing and the consequences of a weaker forecast. |
| Management | Can the Authority make the scheme, mobilise it and run it day to day? | Named responsibilities, staffing and specialist support, data and systems arrangements, transition plans, contingency arrangements and contract-management capacity. |
The required independent assurance report considers the quality of the information and analysis supporting the economic and financial cases, and whether the Authority has had due regard to the statutory guidance. It does not audit every page. Authorities should therefore scrutinise demand, cost and affordability assumptions early.
Where the hard work sits
Patronage forecasts are often treated as though they arrive fully formed from a model. They do not. An Authority needs to be able to explain the observed data, its assumptions about changes in fares and service levels and the range of outcomes if passenger behaviour differs. A result may still be uncertain; an unexplained assumption is the greater problem.
The same applies to revenue risk. The assessment should say who receives fare revenue and who bears the shortfall if it does not meet plan. That choice affects the price that Operators put into their bids, the financial exposure retained by the Authority and the data it needs once the network is live.
A whole-network view matters. Subsidy per passenger can be a useful diagnostic, but it is a poor substitute for understanding the role of individual services. A lightly used evening link, a hospital journey and a high-frequency urban corridor may each have a different rationale. The financial case must still bring these choices back to one affordable network and make the trade-offs visible to decision-makers.
The management case needs to identify the people who will let contracts, check performance data, resolve disputes, manage service changes and deal with a service failure. It also needs a realistic mobilisation plan. A contract award does not mean buses are ready to carry passengers on the first day.
A contract award does not mean buses are ready to carry passengers on the first day.
Use established material, then apply local judgement
All local transport Authorities in England can now consider franchising. Greater Manchester has operated franchised services since 2023. Authorities can draw on that experience, but each assessment needs local evidence on geography, demographics, the network, depot position, the Operator market, funding and political commitments.
Established documentation can save a programme team from recreating standard contractual material while it addresses those local questions. To date, that documentation has been designed around very large Combined Authorities. ITA's LiteFranchise™ includes 14 Agreement Schedules alongside procurement, policy and governance materials. Used carefully, it can provide a shared starting point for contract and procurement work. The Authority must still establish local patronage, prove affordability and meet its statutory assessment responsibilities.
Making that distinction early lets external support focus on the right work. Programme teams should test assumptions with finance, legal, procurement and operations colleagues before assurance exposes a gap.
Useful questions
Before committing further resources, an Authority should be able to answer the following questions.
- Which alternative options will the Franchising Assessment compare and is the current service baseline complete enough to make that comparison credible?
- Can the team trace its patronage and fare revenue assumptions to local evidence and show the consequence of a lower-demand case?
- Who carries each material risk in the proposed contracts, particularly revenue, fleet, depots, mobilisation and service continuity?
- Does the financial case cover both the cost of mobilisation and the recurring cost of the whole network, with clear funding assumptions?
- Which economic and financial evidence would be challenged first by an independent assurance reviewer and when will it be tested?
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