A spotlight on franchising in the UK — the recent UK Parliament debate on franchising regulation

Franchising is highly regulated in other markets, like the US, Canada and Australia, but franchising in UK is self-regulated; an approach which is advocated by the British Franchise Association. In a separate article, we have set out an overview of the arguments for and against whether franchising should be regulated in the UK: Should franchising be regulated?

On 2 July 2025, the UK Parliament debated this issue and a summary of the arguments in favour and against further regulation is set out below.

Arguments in favour of regulation

Several MPs, led by Sir John Hayes, argued for increased regulation of franchising. The key arguments put forward were:

1. Power imbalance

• Franchisees are often small business owners with limited resources, while franchisors are large corporations with legal and financial power.
• This imbalance can lead to “corporate bullying”, where franchisees are subject to unfair contract changes, fines, or sudden termination.

2. Lack of effective oversight

• The British Franchise Association (BFA) and Quality Franchise Association (QFA) were described as toothless and ineffective in protecting franchisees.
• Vodafone was specifically mentioned for allegedly leaving the BFA and mistreating its franchisees.

3. Economic and social impact

• Franchisees contribute significantly to local economies and communities.
• MPs argued that the Government has a duty to protect these entrepreneurs, especially when they invest personal savings and take on debt.

4. Covid relief misuse

• Concerns were raised about how large corporations may have misused Covid business rates relief intended for small businesses (this is a particular issue which has been raised in the Vodafone case).
• MPs called for an investigation into whether such funds were diverted away from franchisees.

5. Calls for legislative reform

Suggestions included:

• Stronger contractual protections
• Mandatory dispute resolution mechanisms
• Oversight of mergers with national interest in mind

Arguments against regulation (i.e. defence of the current status quo)

The Government, represented by MP Gareth Thomas, acknowledged the concerns but offered a more cautious stance:

1. Support for self-regulation

• The franchising industry currently self-regulates through the BFA and QFA.
• The Government has not previously received widespread complaints about this model.

2. Existing legal protections

• Franchisees are protected under general contract law (e.g., Misrepresentation Act 1967, Unfair Contract Terms Act 1977).
• The Government encourages franchisees to seek independent legal advice before signing agreements.

3. Monitoring ongoing legal cases

• They refrained from commenting on specific allegations due to ongoing litigation involving Vodafone, but committed to monitoring the outcome of the case and considering its implications.

4. Regulatory reform agenda

• The Government is pursuing a broader regulatory reform strategy aimed at reducing burdens on businesses while improving accountability.
• A small business strategy is forthcoming, which may address some of the concerns raised.

Conclusion

The debate revealed cross-party concern about the potential vulnerability of franchisees and need to uphold ethical standards. No commitment was made to introduce new regulation and, for now, the current unregulated system remains unchanged.

There has been reaction to the debate in the franchising community — some with frustration that there has been a lack of expert consultation. Pip Wilkins QFP, CEO of the BFA, wrote to MPs following the debate and said that they hope the Government would come to the BFA to seek advice in the future if they wanted to discuss regulation (their view being that regulation would not benefit the franchising sector at this time).

Overall, it remains to be seen whether there will be any change in the regulatory legal landscape for franchising in the UK. Although no changes are currently being introduced, this could well be raised again depending on the outcome of some of the high-profile cases, such as Vodafone, and both franchisors and franchisees will likely be following the updates with interest.