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| Food Court with Franchised Outlets at Meadowhall Shopping Centre Author Gregory Deryckère Licence CC BY-SA 3.0 Source Wikimedia Commons |
Uploaded: 18 May 2026
Business format franchising is an arrangement by which the owner of an established business ("the franchisor") allows another ("the franchisee") to market and supply the franchisor's goods or services under the franchisor's branding and business model. Franchises are available in many different industries, ranging from fast food to building maintenance.
Franchisors
Franchising enables franchisors to expand their branch network more cost-effectively than by acquiring their own premises and employing their own staff. Having said that, franchisors are heavily dependent on their franchisees' ability and commitment to their business.
Franchisees
Franchises provide franchisees with an established business, training and business support from the franchisor and often the other franchisees. The franchisee has to accept some restrictions and make regular payments to the franchisor. See Buy a franchise, advantages and disadvantages of franchising NI BusinessInfo.co.uk.
Franchise Agreement
The agreement by which a franchisor grants a franchise to a franchisee will be drafted by the franchisor's lawyers to protect the franchisor's business. There will be limited scope for amendment at the franchisee's request in pre-contract negotiations. Typical clauses will include a licence for the franchisee to carry on business under the franchisor's trade mark and other intellectual property rights, the franchisee's territory, provisions for the payment of the franchisee's initial investment and periodic fees and expenses, the franchisee's obligations, termination clauses, force majeure, choice of law and jurisdiction and dispute resolution. For an excellent introduction to the franchise agreement, see John Pratt Do I Need A Lawyer To Advise Me About A Franchise Agreement? Franchiseinfo.
Competition Law
Even though a franchise agreement will tend to favour a franchisor, s.2 (1) of the Competition Act 1998 imposes limits on the provisions that may be inserted. S.6 (2) of the Act enables the Secretary of State to make block exemption orders to exclude certain types of agreement from such limitations. Franchise agreements are "vertical agreements" within the meaning of art 3 (2) of The Competition Act 1998 (Vertical Agreements Block Exemption) Order 2022 SI 2022 No 516. Nathalie Dreyfus offers a good introduction to the Order in Franchise law in the European Union and the United Kingdom: 2026 complete guide, 16 Dec 2025.
Trade Association
The British Franchise Association
Updates
This resource page is very much a work in progress. Further articles and case notes will be added from time to time.
Statutes
Competition Act 1998 C 41
Secondary Legislation
The Competition Act 1998 (Vertical Agreements Block Exemption) Order 2022 SI 2022 No 516
Case Law
R-161/84 Pronuptia de Paris GmbH v Pronuptia de Paris Irmgard Schillgallis EU:C:1986:41, ECLI:EU:C:1986:41, [1986] 1 CMLR 414, [1986] EUECJ R-161/84, [1986] ECR 353Jane Lambert Taking a franchise may be the best thing you ever do. 2 Oct 2011 NIPC Law (Wordpress)
Jane Lambert Franchising - Hull Franchise Conference 16 Aug 2014 NIPC Yorkshire
