The Legalities of Franchising in the UK - What International Franchisors Need to Know

For any successful international business, expansion into the United Kingdom ("UK") offers exciting new business opportunities and growth potential. Since the 1960s when the very first franchise networks, such as Dyno-Rod, were launched in the UK, franchising has taken root and flourished as an effective technique for expanding businesses.

According to the NatWest BFA Franchise Survey 2013, there are now approximately 930 franchisor brands operating in the UK across a variety of sectors, 39,000 franchised outlets, 561,000 people are employed in franchising and the "franchise industry" has annual turnover of £13.7 billion.

For international businesses based outside of the European Union ("EU"), the UK is often chosen as a base from which to establish a "beach head" before further expansion across the EU and, indeed, further afield. There are a number of factors which contribute to the UK’s popularity as a key market for international businesses, including the UK's reputation as a lightly regulated place in which to do business, the emergence of English as a truly global language, London's status as one of the leading capital cities in the world, access to London's capital markets and the perceived efficiency and fairness of the English court system in resolving international commercial disputes.

This article considers some of the key legal issues which international franchisors should bear in mind when expanding into the UK.