Franchise Agreement (UK)
This Franchise Agreement (the “Agreement”) is entered into on [Effective Date] (the “Effective Date”) by and between:
[Franchisor Name], [Franchisor Type], with its registered or principal address at [Franchisor Address], [Franchisor City], [Franchisor County], [Franchisor Postcode] (hereinafter referred to as the “Franchisor”); and
[Franchisee Name], [Franchisee Type], with its registered or principal address at [Franchisee Address], [Franchisee City], [Franchisee County], [Franchisee Postcode] (hereinafter referred to as the “Franchisee”).
The Franchisor and the Franchisee are referred to collectively as the “Parties” and individually as a “Party”.
BACKGROUND
The Franchisor has developed and owns the “[Brand Name]” franchise system, including associated trade marks, know-how, operating manuals, and business methods (the “Franchise System”).
The Franchisee wishes to obtain a licence to operate a business under the Franchise System within the Territory, and the Franchisor is willing to grant such a licence on the terms and conditions set out in this Agreement.
NOW, THEREFORE, in consideration of the mutual obligations herein and for good and valuable consideration, the receipt and adequacy of which the Parties acknowledge, the Parties agree as follows:
1. GRANT OF FRANCHISE LICENCE
1.1 Subject to the terms and conditions of this Agreement, the Franchisor hereby grants to the Franchisee an exclusive licence during the Term to operate a franchise business under the “[Brand Name]” brand and Franchise System within the following territory: [Franchise Territory] (the “Territory”).
1.2 The Franchisee may not operate the franchise business or solicit customers outside the Territory without the prior written consent of the Franchisor.
1.3 The licence granted under this Agreement is personal to the Franchisee and may not be sub-franchised, assigned, or transferred without the prior written consent of the Franchisor.
1.4 The Franchisee acknowledges that the Franchisor retains all rights not expressly granted under this Agreement, including ownership of all intellectual property rights in the Franchise System and the “[Brand Name]” trade marks.
2. TERM
2.1 This Agreement shall commence on the Effective Date and shall continue for [Franchise Term] (the “Term”), unless terminated earlier in accordance with clause 10.
3. FEES AND PAYMENTS
3.1 Initial Franchise Fee. The Franchisee shall pay to the Franchisor an initial franchise fee of £[Franchise Fee] (plus VAT where applicable) upon execution of this Agreement. This fee is non-refundable once paid.
3.2 Ongoing Royalty. During the Term, the Franchisee shall pay to the Franchisor: [Royalty Details].
3.3 All payments shall be made in pounds sterling (GBP) to the bank account nominated by the Franchisor in writing from time to time. Time of payment is of the essence.
3.4 If any payment is not received by the due date, interest shall accrue at the rate of 8% per annum above the Bank of England base rate pursuant to the Late Payment of Commercial Debts (Interest) Act 1998, from the due date until payment is made in full.
3.5 The Franchisee shall maintain accurate financial records and shall provide the Franchisor with monthly management accounts and such other financial information as the Franchisor may reasonably require.
4. FRANCHISEE’S OBLIGATIONS
4.1 The Franchisee shall operate the franchise business in strict accordance with the Franchise System, the Operations Manual, and any other guidelines issued by the Franchisor from time to time.
4.2 The Franchisee shall:
- use only approved suppliers and products specified by the Franchisor;
- maintain the premises, equipment, and vehicles used in the franchise business to the Franchisor’s required standards;
- comply with all applicable laws and regulations, including consumer protection legislation under the Consumer Rights Act 2015;
- attend all mandatory training programmes specified by the Franchisor;
- not make any material changes to the Franchise System without the Franchisor’s prior written consent;
- display the “[Brand Name]” trade marks and branding only in the manner approved by the Franchisor; and
- notify the Franchisor promptly of any complaints, legal claims, or regulatory investigations relating to the franchise business.
5. FRANCHISOR’S OBLIGATIONS
5.1 The Franchisor shall provide the Franchisee with: [Training Details].
5.2 The Franchisor shall provide the Franchisee with access to the Operations Manual and shall update it from time to time as the Franchise System develops.
5.3 The Franchisor shall use reasonable endeavours to protect and defend the “[Brand Name]” trade marks and the intellectual property rights in the Franchise System.
5.4 The Franchisor shall not grant a franchise licence to any third party to operate the Franchise System within the Territory during the Term.
6. INTELLECTUAL PROPERTY
6.1 The Franchisee acknowledges that all intellectual property rights in the Franchise System, the “[Brand Name]” trade marks, and all associated materials are and shall remain the exclusive property of the Franchisor.
6.2 The Franchisee shall not register or attempt to register any trade mark, domain name, or company name that is the same as or confusingly similar to the “[Brand Name]” brand or any trade mark of the Franchisor.
6.3 On termination or expiry of this Agreement, the Franchisee shall immediately cease all use of the Franchisor’s trade marks and intellectual property.
7. CONFIDENTIALITY
7.1 The Franchisee undertakes to keep confidential all information relating to the Franchise System, the Operations Manual, trade secrets, and any other confidential information of the Franchisor, both during and after the Term.
7.2 The Franchisee shall not use any confidential information of the Franchisor except for the purpose of operating the franchise business in accordance with this Agreement.
8. NON-COMPETE RESTRICTION
8.1 During the Term, the Franchisee shall not, without the Franchisor’s prior written consent, directly or indirectly operate, own, or be involved in any business that competes with the Franchise System.
8.2 Following termination or expiry of this Agreement, the Franchisee shall not: [Non-Compete Details]. The Parties acknowledge that this restriction is reasonable and necessary to protect the Franchisor’s legitimate business interests, including the Franchise System and confidential information, and that it complies with the Competition Act 1998.
9. TERMINATION
9.1 The Franchisor may terminate this Agreement immediately by written notice if the Franchisee:
- fails to pay any sum due under this Agreement within 14 days of the due date;
- commits a material breach of this Agreement and fails to remedy such breach within 30 days of written notice from the Franchisor;
- becomes insolvent, enters administration, or is wound up;
- is convicted of any criminal offence that brings the Franchise System into disrepute; or
- purports to assign or transfer any right under this Agreement without the Franchisor’s prior written consent.
9.2 Either Party may terminate this Agreement by giving not less than 90 days’ written notice to the other Party, where expressly permitted by the terms of this Agreement.
9.3 On termination, the Franchisee shall: (a) immediately cease operating under the Franchise System and using the “[Brand Name]” trade marks; (b) return all confidential information and Operations Manual materials to the Franchisor; and (c) pay all outstanding sums due under this Agreement.
10. COMPLIANCE WITH LAW
10.1 The Franchisee shall at all times comply with all applicable laws and regulations in England and Wales, including but not limited to the Consumer Rights Act 2015, the Consumer Protection from Unfair Trading Regulations 2008, the Data Protection Act 2018 (UK GDPR), and health and safety legislation.
10.2 The Franchisee shall obtain and maintain all licences, permits, and consents required to operate the franchise business within the Territory.
11. GENERAL PROVISIONS
11.1 Entire Agreement. This Agreement constitutes the entire agreement between the Parties regarding the franchise and supersedes all prior agreements, representations, and negotiations.
11.2 Amendment. No amendment shall be effective unless made in writing and signed by authorised representatives of both Parties.
11.3 Severability. If any provision is held invalid or unenforceable, the remaining provisions shall continue in full force.
11.4 Third Party Rights. A person who is not a party to this Agreement shall have no rights under the Contracts (Rights of Third Parties) Act 1999 to enforce any of its terms.
11.5 Governing Law. This Agreement and any dispute or claim arising out of or in connection with it shall be governed by and construed in accordance with the laws of England and Wales. The courts of England and Wales shall have exclusive jurisdiction.
IN WITNESS WHEREOF, the Parties have executed this Franchise Agreement as of the Effective Date first written above.
THE FRANCHISOR
Full name: [Franchisor Name]
Address: [Franchisor Address], [Franchisor City], [Franchisor County], [Franchisor Postcode]
THE FRANCHISEE
Full name: [Franchisee Name]
Address: [Franchisee Address], [Franchisee City], [Franchisee County], [Franchisee Postcode]
Franchisor
________________
Signature
Date: ________________
Franchisee
________________
Signature
Date: ________________
What Is a Franchise Agreement (UK)?
A Franchise Agreement in the United Kingdom grants permission to use the owner's rights or brand and sets the scope, territory, fees, and duration of that licence, with its requirements set by the Competition Act 1998.
Franchising is one of the most significant forms of commercial expansion in the United Kingdom. The British Franchise Association (BFA), the principal industry body, promotes ethical franchising in line with the European Franchise Federation's Code of Ethics. Successful franchise brands span retail, food and beverage, hospitality, professional services, healthcare, education, and many other sectors. A franchise agreement governs every franchise relationship: it defines the rights and obligations of both parties and provides the legal framework for the entire commercial relationship.
In England and Wales, franchise agreements are governed primarily by general contract law and equity. Unlike some jurisdictions, there is no specific franchise legislation in England and Wales. However, several statutes are relevant, including the Competition Act 1998 (which regulates anti-competitive provisions such as exclusive purchasing obligations and resale price maintenance), the Consumer Rights Act 2015 (which applies where the franchisee deals as a consumer), the Trade Marks Act 1994 (governing protection and use of the franchisor's trade marks), and the Misrepresentation Act 1967 (which addresses pre-contractual representations).
The United Kingdom Franchise Agreement (UK) Franchise Agreement template is suitable for both franchisors granting a new franchise and prospective franchisees seeking to formalise their appointment. It covers the grant of an exclusive franchise licence, territory definition, initial fee, ongoing royalties, training and support obligations, franchisee operating standards, intellectual property protection, confidentiality, non-compete restrictions, renewal options, termination rights, and governing law.
The legal framework governing the Franchise Agreement (UK) in United Kingdom draws on several key statutes and regulatory bodies. Under the Companies Act 2006, Companies House maintains the register of UK companies. Section 386 of the Companies Act 2006 sets accounting record obligations. The Competition and Markets Authority (CMA) enforces the Consumer Rights Act 2015. The Financial Conduct Authority (FCA) regulates financial services under the Financial Services and Markets Act 2000. The High Court of Justice has jurisdiction under the Senior Courts Act 1981. Parties executing a Franchise Agreement (UK) in United Kingdom should confirm the document reflects current law, including any amendments enacted since the original drafting date. The Companies Act 2006 sets the foundational requirements.
When Do You Need a Franchise Agreement (UK)?
A Franchise Agreement is required whenever a business owner (the franchisor) wishes to grant another party (the franchisee) the right to operate a business using the franchisor's brand, system, and know-how in exchange for a fee. The agreement is the primary legal document governing the franchise relationship and should be executed before the franchisee commences operations or pays any fee to the franchisor.
Common situations in which a UK Franchise Agreement is required include: a restaurant brand expanding through franchising, granting territorial licences to individual franchisees in exchange for an initial fee and ongoing royalties; a professional services firm licensing its operating system, trade mark, and client management processes to regional franchisees; a retail brand granting exclusive territorial rights to franchisees who invest in fit-out, stock, and staffing; and a cleaning, gardening, or home services company expanding its brand through owner-operator franchisees.
A Franchise Agreement should be executed at the outset of the franchise relationship, before the franchisee makes any significant financial commitment or commences operating under the brand. Franchisors should confirm that prospective franchisees have received adequate pre-contractual information and have had the opportunity to take independent legal advice from a solicitor experienced in franchising. The BFA Code of Ethics recommends that prospective franchisees be given a minimum of 14 days to review the franchise agreement before signing.
The agreement is also important when the franchise system is being renewed, transferred, or assigned to a new franchisee. A renewal should be documented in a new franchise agreement or a formal renewal letter, and any assignment or transfer should require the franchisor's prior written consent, as the identity and capability of the franchisee is fundamental to the franchise relationship.
Parties in United Kingdom should prepare a Franchise Agreement (UK) proactively rather than waiting for a dispute to arise. Courts interpret agreements based on the written terms rather than oral representations. Under the Companies Act 2006, Companies House maintains the register of UK companies. Section 386 of the Companies Act 2006 sets accounting record obligations. The Competition and Markets Authority (CMA) enforces the Consumer Rights Act 2015. The Financial Conduct Authority (FCA) regulates financial services under the Financial Services and Markets Act 2000. The High Court of Justice has jurisdiction under the Senior Courts Act 1981. Where the transaction involves regulated activities, prior approval from the relevant authority may be required before execution.
What to Include in Your Franchise Agreement (UK)
A well-drafted Franchise Agreement for use in England and Wales should contain a number of essential provisions, each of which serves a specific commercial and legal purpose.
The grant of licence clause defines the scope of the franchise, identifying the brand, trade marks, and business system being licensed. It specifies whether the licence is exclusive within the defined territory and confirms that all intellectual property rights remain the property of the franchisor.
The territory clause defines the geographic area within which the franchisee has the exclusive right to operate. A clearly defined territory reduces the risk of disputes between franchisees and between the franchisee and the franchisor.
The fees and payments clause covers both the initial franchise fee (a one-off payment for the right to enter the franchise system) and the ongoing royalty or management fee (typically a percentage of gross or net revenue). It should specify VAT treatment, payment frequency, and the consequences of late payment, including interest under the Late Payment of Commercial Debts (Interest) Act 1998.
The franchisee's obligations clause sets out the operating standards the franchisee must maintain, including use of approved suppliers and products, compliance with the operations manual, attendance at training, and compliance with applicable law including the Consumer Rights Act 2015.
The franchisor's obligations clause describes the training and support the franchisor will provide, including initial training, ongoing operational support, marketing assistance, and updates to the operations manual.
The intellectual property clause confirms the franchisor's ownership of the brand, trade marks, and know-how, grants the franchisee a limited licence to use them, and prohibits the franchisee from registering any similar trade marks or domain names.
The non-compete clause restricts the franchisee from operating competing businesses during the term and (within reasonable limits) after termination. The restriction must be reasonable in scope and duration to be enforceable under English law and must comply with the Competition Act 1998.
The termination clause specifies the grounds for termination, including material breach, insolvency, and criminal conviction, and describes the franchisee's obligations on termination.
The governing law and jurisdiction clause confirms that the agreement is governed by the laws of England and Wales.
Additional compliance elements for a Franchise Agreement (UK) used in United Kingdom include: Under the Companies Act 2006, Companies House maintains the register of UK companies. Section 386 of the Companies Act 2006 sets accounting record obligations. The Competition and Markets Authority (CMA) enforces the Consumer Rights Act 2015. The Financial Conduct Authority (FCA) regulates financial services under the Financial Services and Markets Act 2000. The High Court of Justice has jurisdiction under the Senior Courts Act 1981. Forms-legal.com provides this template as a starting point for United Kingdom-compliant documentation.
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Reference this free template in an article, syllabus, or research note:
Forms Legal. (2026). Franchise Agreement (UK) (United Kingdom) [Legal document template]. Forms Legal. https://forms-legal.com/uk/business/contracts/franchise-agreement-uk
"Franchise Agreement (UK) (United Kingdom)." Forms Legal, 2026, https://forms-legal.com/uk/business/contracts/franchise-agreement-uk.
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title = {Franchise Agreement (UK) (United Kingdom)},
year = {2026},
howpublished = {\url{https://forms-legal.com/uk/business/contracts/franchise-agreement-uk}},
note = {Free legal document template. Based on Companies Act 2006}
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Frequently Asked Questions
Unlike some countries, England and Wales does not have dedicated franchise legislation. Franchise agreements are primarily governed by general English contract law, including the principles of offer and acceptance, consideration, and good faith as it applies in commercial contracts. However, several statutory regimes are relevant. The Consumer Rights Act 2015 applies where the franchisee deals as a consumer (which is uncommon in commercial franchise relationships but may be relevant in some models). The Competition Act 1998 regulates anti-competitive provisions in franchise agreements, such as exclusive purchasing obligations, resale price maintenance, and non-compete clauses, all of which must satisfy the Chapter I prohibition or benefit from an applicable block exemption. The British Franchise Association (BFA), the principal industry body in the UK, promotes the European Franchise Federation's Code of Ethics, which sets standards for disclosure, fairness, and the franchisee's right to receive adequate pre-contractual information. Although the BFA Code is not legally binding, it is widely regarded as best practice. Franchisors with BFA membership are required to comply with it.
Unlike the United States (where the FTC Franchise Rule requires a detailed Franchise Disclosure Document) or France (where the Loi Doubin mandates pre-contractual disclosure), England and Wales has no statutory pre-contractual disclosure requirement for franchise agreements. However, the general law of misrepresentation under the Misrepresentation Act 1967 applies: if a franchisor makes a false statement of fact that induces the franchisee to enter the agreement, the franchisee may have a claim for misrepresentation, which can lead to rescission of the agreement and/or damages. The BFA Code of Ethics requires member franchisors to provide prospective franchisees with a disclosure document containing sufficient information to allow an informed decision to be made. This disclosure document should include: details of the franchisor's business history and financial performance; the terms of the franchise agreement; estimated start-up costs and ongoing fees; the territory and any exclusivity arrangements; and references from existing franchisees. Even where the franchisor is not a BFA member, providing full and accurate pre-contractual information reduces the risk of misrepresentation claims.
Post-termination non-compete clauses in franchise agreements are subject to the English common law doctrine of restraint of trade and the Competition Act 1998. Under the restraint of trade doctrine, a restrictive covenant is only enforceable if it protects a legitimate business interest of the franchisor and goes no further than is reasonably necessary to protect that interest, having regard to the interests of the parties and the public. Legitimate interests in the franchise context include protecting confidential know-how, trade secrets, and the customer connection built up through use of the franchise system. A restriction will more readily be enforced if it is limited in geographic scope (e.g., the franchisee's territory), duration (typically no more than one to two years for post-term restrictions), and subject matter (restricted to competing businesses rather than all commercial activity). Under the Competition Act 1998, non-compete clauses in franchise agreements may also require assessment under the Chapter I prohibition. Block exemption regulations may apply if the franchisor's and franchisee's combined market share does not exceed specified thresholds. Overly broad restrictions that go beyond what is justified may be void and unenforceable.
Exclusive territory clauses in franchise agreements restrict the franchisee to operating within a defined geographic area and prevent the franchisor from appointing other franchisees within that territory. Such clauses are common in franchise agreements and are generally permissible under English competition law, subject to certain conditions. Under the Competition Act 1998 and the Vertical Agreements Block Exemption Order 2022 (which retained the EU Vertical Block Exemption in UK law after Brexit), vertical restraints including exclusive territories may benefit from block exemption if: (a) the market shares of both the supplier (franchisor) and buyer (franchisee) do not exceed 30% on their respective markets; and (b) the agreement does not contain any hardcore restrictions, such as absolute territorial protection (preventing franchisees from responding to unsolicited orders from outside their territory), resale price maintenance, or restrictions on online sales. Franchise agreements with market shares above 30% require individual assessment. In practice, most franchise systems with multiple franchisees will satisfy the block exemption conditions. Legal advice is recommended where the franchise network is large or where exclusive territory provisions are combined with other vertical restraints.
On termination or expiry of a franchise agreement in England and Wales, the franchisee must immediately cease operating under the franchise system and using the franchisor's trade marks, branding, and confidential know-how. The franchisee must also return all proprietary materials, including the operations manual, marketing materials, and any other materials provided by the franchisor. The franchisee will be bound by any post-termination non-compete restrictions, provided they are reasonable and enforceable (as discussed above). Outstanding royalties and other fees become immediately payable. The franchisee may retain its business premises, equipment, and staff (where not subject to any restrictive covenant), but cannot continue to trade under the franchise brand or system. Where the franchise was operated through a company incorporated specifically for that purpose, the franchisee may need to consider whether to dissolve the company or to convert it to trade under a new brand. Unlike commercial agency relationships, which are protected by the Commercial Agents (Council Directive) Regulations 1993, there is no statutory right to compensation on termination of a franchise agreement in England and Wales.
In the United Kingdom, franchise fees — including initial franchise fees and ongoing royalty payments — are generally subject to VAT at the standard rate (currently 20%) as a supply of services. The franchisor must be VAT registered (or required to register) if its taxable supplies exceed the VAT registration threshold (currently £85,000 per annum). VAT invoices must be issued for each payment in compliance with the Value Added Tax Act 1994 and HMRC requirements. The franchisee may be able to reclaim input VAT on franchise fees if it is VAT registered and the fees relate to taxable business activities. Franchise agreements should specify whether stated fees are inclusive or exclusive of VAT. It is advisable for both parties to take specialist tax advice from an accountant or tax adviser to understand the full VAT, corporation tax, and income tax implications of the franchise arrangement.
This template is provided for informational purposes only and does not constitute legal advice. Laws vary by jurisdiction and change over time. Consult a qualified attorney for advice specific to your situation.Full disclaimer
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