Franchise law uk

There are no laws specifically regulating franchise agreements in the UK. Parties are generally free to agree all the terms of contracts, save to the extent that laws affecting commercial contracts may apply. By contrast, many jurisdictions outside the UK specifically regulate franchise relationships. In Franchising law you will study how and why the rules governing franchise agreements work.

The course primarily looks at the law of England and Wales, the United Kingdom and the European Union, although it also looks to laws in other countries as these might be relevant when franchises expand.

What is the UK franchising law? Are there franchise agreements in the UK? Is a franchise accredited in the UK? How does the UK regulate franchise relationships? Article 101(1) Treaty on the Functioning of the European Union (TFEU) both prohibit agreements that prevent, restrict or distort competition.

Many agreements in force in the UK will need to be considered under both. In addition, directors involved (or who should have known about) competition law infringements can be disqualified and anyone who has suffered loss as a result of an infringement may bring an acti.

See full list on burges-salmon. Confusingly, some restrictions on competition in franchise agreements are not considered anti-competitive. At the same time, such a system allows traders without the necessary experience, access to business methods which they would not have developed without considerable effort.

It also allows them to benefit from the reputation of the franchisor’s name and its trademarks. A franchise has to be distinguishe firstly from an agency agreement where the agent does not take ownership of products or risk in the business and competition law concerns generally do not arise. Secondly, it can be distinguished from a selective distribution system where the product manufacturer exercises a degree of control over its di. The key franchise restriction that is generally likely to be considered potentially anti-competitive but which may be permitted on efficiency grounds, is the granting of exclusive territories to franchisees for active sales (and the accompanying restriction to only operate from an agreed location).

This means that while it will normally be permissible to restrict franchisees from advertising or actively marketing to customers outside their exclusive territories, if they are contacted by such customers then they must be allowed to sell to them. This is a form of ‘market sharing’ that would normally be prohibited if it did not benefit from an exemption on efficiency grounds. The European Commission has recognised in a number of decisions that the provision of territorial exclusivity as regards active sales is essential for the working of the franchise system. A potential franchisee would not be willing to make the necessary start up investments in the franchised business if they were. Competition law provides scope for a number of seemingly competition constraining provisions to be included in franchise agreements.

However, there are limits as to the restrictions that may be included. Precisely what these limits are will always depend on the specific circumstances: including the benefits conferred on the franchisee through the agreement, the scope of the restrictions themselves and the strength of competition on the relevant market(s). Our competition team has considerable experience advising on restrictive clauses in all types of distribution agreements, including franchise agreements and selective distribution systems and would be happy to discuss any questions you might have.

There is no official definition of the term franchise in the English common law system, given the absence of franchise-specific legislation and of a civil code.

This is an advantage that enables flexible drafting and the use of hybrid structures including provisions typical in business format franchise agreements. Franchising in the UK is subject to self-regulation by the BFA in accordance with its code of ethics (BFA Code) (based on the European Code of Ethics for franchising promulgated by the European Franchise Federation ). The BFA is a standards-based organization that requires its members to comply with its standards as set out in the BFA Code and technical bulletins. Franchising is a common business arrangement by which the ‘franchisee’ is authorised to use a firm’s business model and brand for a specific period of time, in return for an initial fee and royalties. Franchises are usually in the form or a licence granted by the franchisor to the franchisee.

Directory of UK BFA approved franchise solicitors. The biggest mistake that prospective franchisees can make when buying a franchise is to not seek legal advice. The lack of legal advice is cited as one of the major reasons for franchisees failing. Cutting corners when it comes to using a lawyer when buying a franchise can be extremely costly in the long run. Our work for franchisors and franchisees includes: 1. Reviewing and drafting franchise agreements, deposit agreements, lease and sub-lease agreements, “buy-back” and disclosure packs 2. Advising on the scope of operations manuals 3. Assisting clients in establishing a franchise network and developing an appropriate group structure 5. Representing franchisees in franchise re-sales 6. Resolving disputes between franchisors and franchisees 7. Managing trade markportfolios, including filing and prosecuting trade marks around the world 8. Drafting employment contracts and advising on employment matters, including when franchises are brought back “in-house” by franchisors 9. Our specialist team of franchising solicitors can assist both franchisors and franchisees in a wide range of fields, including health and fitness, education, fashion, travel and food and drink.

We also work alongside other third parties such as accountants, franchise consultants and property management agents to ensure that our clients obtain a complete franchising service. One particular area of concern we help with relates to the legal limits on sharing data. The ability to market to a former franchisee’s customers once the franchise has come to an en or the ability to promote effectively across the franchise network are crucial to a franchisor’s success. We give specialist advice on this and members of our specialist team present regularly on this topic, including at BFA events. Another area often in issue is social media, and the control of social media use by franchisees to ensure consistent branding.

We can draft provisions dealing with social media in franchise agreements a. The primary franchise disclosure law relates to the federal mandate that a franchisor must disclose and provide to a prospective franchisee the franchisor’s current and compliant franchise disclosure document no less than days prior to signing any franchise agreement or accepting any funds from the franchisee. A general purpose franchise agreement, which may be adapted according to whether non-exclusive or exclusive rights in a particular territory are to be granted. However, it is advisable to seek a franchise company which has been accredited by the British Franchise Association, a regulatory body that helps potential franchisees recognise good franchises. Competition law affects franchise agreements both in the UK (where the regulator is the Competition and Markets Authority) and between Member States (in which case it is the European Commission). Unlike the “rule of reason” approach in the US, competition law does disadvantage franchise systems against corporately owned businesses.

While there are no UK laws relating to franchises, the British Franchise Association acts as a governing body by identifying the most profitable and trustworthy franchises. Contact a franchising solicitor today. However, franchisors that are members of the BFA must ensure that their agreements are compliant with the BFA Code of Ethics.

Order your FREE information package today! US Commercial Service Report: The Franchising Market in the United Kingdom. Real Estate, Landlord Tenant, Estate Planning, Power of Attorney, Affidavits and More!

All Major Categories Covered.