Strong foundations with your documentation can make all the difference for franchisors.
Franchise agreements and operations manuals should be clear, measurable and practical in setting out standards, audit rights and reporting requirements in plain terms and explaining how changes will be introduced. Agreements should avoid oppressive terms which do not have an obvious commercial justification (as referred to by the Court in Ellis in our previous article).
Before a franchisee signs their agreement, franchisors should provide a genuine opportunity for franchisees to seek legal advice. this should not be time pressured in Ellis the Court suggested franchisor could even require franchisees to obtain independent legal advice, especially “if they lack business experience or are otherwise disadvantaged”.
Transparency builds trust
Clear explanations of royalty calculations and regular marketing fund statements can significantly reduce challenge. Supplier approval processes should be fair, documented and flexible enough to respond to genuine cost pressures without diluting brand standards.
Consistency is critical
A structured compliance process with clear notices, defined remedy periods, and proper records of training and support strengthens enforcement and protects against challenge. Before termination is considered, franchisors should ensure all contractual steps have been followed and explore proportionate alternatives, such as improvement plans.
Communication matters
Early engagement on significant changes can help prevent issues from escalating — and place franchisors in a far stronger position if disputes do arise.
Resolving disputes
For the majority of franchise disputes, discussion and negotiation is required and sensible before litigation and for good reason. Early, commercial resolution often preserves value on both sides.
Where court proceedings are unavoidable, procedural compliance and well‑organised evidence are essential. In our experience, the best outcomes are achieved where disputes are approached strategically, proportionately and with a clear focus on protecting the underlying business.
If you are a franchisor protecting your brand, early legal advice can make a significant difference. To discuss a franchising issue, contact Lynsey Smith or explore our franchising services page here.