Against the backdrop of a number of high-profile business failures in the UK retail sector, the government has issued a report on the insolvency regime, which will affect the operation of termination rights in supply agreements. This article considers the proposals and provides a best practice recommendation for recovering goods in the possession of a franchisee once they have entered some form of insolvency protection.
In a recent Court of Appeal case, a landlord was unsuccessful in its appeal against a first-instance decision that a 'non-reliance' clause in a lease had attempted to exclude liability for misrepresentation. The decision, which will have ramifications for franchise agreements, demonstrates that such clauses must be fair and reasonable and have regard to the circumstances which were or ought reasonably to have been known to or contemplated by the parties when the contract was made.
Franchisors expanding into the United Kingdom need a thorough knowledge of any UK rules and regulations which may affect them, particularly in a post-Brexit Britain. Understanding the risks and issues and managing those risks through effective structuring and enforceable legal contracts will enable international franchisors to reap the rewards of doing business in one of Europe's largest and most dynamic markets.
Four former Vision Express franchisees were recently successful in their claim against their franchisor, in which they alleged that they had been induced to enter into their franchise agreements on the basis of false information provided by a Vision Express employee. The case highlights the importance of ensuring that a franchisor's employees stay on message during the sales process and information which is provided to prospective franchisees is scrutinised to ensure its accuracy and relevance to the investment.
Franchise relationships are rarely life-long commitments; most will be for a fixed term with a right to renew. The renewal process provides an opportunity for both parties to re-assess and recalibrate the relationship, as well as to settle any issues before either renewing their vows or deciding to go their separate ways. This all makes good commercial and legal sense; however, it is surprisingly common that the renewal process is not always followed.