Franchising in the UK for International Brands

What you need to know about UK franchising laws

• The UK legal system has no mandatory disclosure requirements for franchising
• There are no statutory registration requirements

This makes the UK a fairly “friendly” jurisdiction for businesses looking to expand through franchising.  But there are a number of statutory provisions in the UK that have important impacts on franchising, so be sure to obtain expert advice before you plan your expansion into the UK.

How can Goldstein Legal help  you?

• Will you be appointing individual franchisees in the UK, or setting up a UK “master” franchisee, who will in turn grant sub-franchises to UK operators?
• Is franchising the best model for your business, or would another model, such as brand licensing, agency or distribution work better for you?
• What sort of legal and tax structure should you create?

Goldstein Legal will help you understand what your options are and enable you to make the right decisions.

Trade marks and brand protection

Before expanding into any overseas market, you will want to consider how well your intellectual property is protected in your new territory. Unfortunately, your own local trade mark registration may well be of little or no value overseas.

Trade Marks used in the UK need to be registered in order to maximise their strength.  A trade mark can be obtained either specifically for the UK, or as a Community Trade Mark (CTM). CTMs are considerably more expensive than UK registrations, but they will cover you for a number of European territories in addition to the UK.

Anti-Trust/competition law

Both the UK Competition Act 1998 and Articles 101 and 102of an important EU Treaty regulate agreements that “have an effect on trade and restrict competition”, either in the UK or between EU countries. These can have a significant impact on franchising.

It is not possible to “contract out” of these rules, and making your franchise agreement subject to a non-EU jurisdiction will not make any difference.  It is therefore important to obtain specialist legal advice from a franchise lawyer before you embark on franchising the UK.

Further UK legal issues

• Post-termination non-compete clauses – under English law these will be unenforceable if they go any further than necessary to protect the franchisor’s intellectual property.  Careful drafting is required

• Take advice on other UK statutory rules which may affect you, including the Unfair Contract Terms Act 1977; the Bribery Act 2010 and the Data Protection Act 1988

The British Franchise Association (BFA) – is membership important?

Membership of the BFA is not essential, but it brings a number of benefits, so it may be worth consideration if you are entering the UK franchising market

If you plan to exhibit at a BFA-sponsored franchise show, the BFA will expect to you demonstrate:

• that you have successfully run a pilot in the UK for 1 year
• that you have the right to use the brand in the UK, eg by having a valid UK trade mark.

If you want to become a full member of the BFA, the BFA will:

• do a more rigorous review of your business
• require you to comply with its Code of Ethics

And finally … consider your “jurisdiction”

When expanding overseas, you have an important decision whether to make your franchise agreement subject to the laws of your own native jurisdiction, or whether to opt for the laws of your relevant overseas market.  There are significant advantages and disadvantages of each approach.  So talk to Goldstein Legal to ensure that you can make an informed decision.