As the dust continues to settle following the UK’s
unprecedented vote to leave the European Union, UK franchisors and
franchisees are increasingly asking what impact Brexit will have on
their businesses and the UK economy?
Immediately following the referendum, Pip Wilkins, CEO of the
British Franchise Association provided the voice of calm and
“We want to be clear that for us, and for franchising, it is
very much ‘business as usual’. We will continue to work closely
with the European Franchise Federation and reap the opportunities
that it affords to guide and inform on franchising across
Indeed, as developments unfold on a daily basis, it is
important to stay grounded. Let’s look at the facts so far.
No immediate change on the horizon
At the time of writing, the now-famous Article 50, which will
trigger the UK’s exit from the EU, has yet to be invoked. And even
when Article 50 is triggered, the negotiations are predicted to
take at least two years, giving franchisors and franchisees time to
anticipate the changes in the commercial, economic and legal
UK franchise law
One argument that ran through the Brexit campaign related to
the UK’s need to regain control of English domestic law. But
unless and until Article 50 is triggered, nothing in our legal
landscape will change. Even then, there may be no, or very
little, impact on franchising laws in the UK.
UK domestic franchise agreements are largely governed by
English law or Scottish law. Brexit will not change that, and
thus there is no need for changes to our franchise agreements on
the visible horizon.
It is quite true that franchising in the UK is affected by EU
laws, but only in limited and specific respects. And where
these EU laws do affect us – for example in the fields of
competition law, consumer law and data protection – they are, in
any event, enshrined in UK domestic legislation. Even in a
post-Brexit world, we will continue to be bound by the UK
Competition Act 1998 (mirroring EU anti-competition principles),
unless and until our Parliament repeals it and replaces it with
When it comes to UK master franchises, because the UK does not
have franchise-specific laws, or franchise registration and
disclosure obligations that are applicable across the EU, the
typical governing law, jurisdiction and arbitration provisions in
master franchise agreements are less likely to be disrupted by
Last year was a bumper year for the franchising industry.
The bfa/Natwest Franchise Survey 2015 revealed an annual
industry turnover of £15.1 billion – a 46% rise on 2006 figures.
The number of brands now operating in the UK has hit 901 and
franchisee profitability levels are the highest ever recorded:
over half of franchisee businesses reported an annual
turnover of more than £250,000.
Research indicates that it is the Business to Consumer (B2C)
systems that account for the majority franchises. This may be
where Brexit has its most notable impact. As in all consumer
sectors, the success of a franchised businesses is linked to
But from the outset the Bank of England has made every effort
to assure businesses and consumers alike, that it has measures in
place to support the UK economy during times of uncertainty.
While there is talk of reducing interest rates, to help
stimulate the economy, and the introduction of quantitative easing,
so far early evidence shows that banks’ appetite to lend has not
decreased since the referendum.
As things stand presently, it is a waiting game. But
while we are waiting, it is important to keep informed and to stay
vigilant, particularly when it comes to monitoring the financial
markets and potential impact on exchange rates, changes in interest
rates and the prices of products.
And although no immediate action is required, if you are
currently making long term business plans, it is sensible to
consider the potential implications of a UK exit on future
arrangements and when talking to prospective franchisees.
Roz Goldstein, managing director, Goldstein Legal, says:
“Nobody enjoys times of uncertainty. But whilst the future of the
UK’s relationship with Europe is yet to be determined, it is
important to ensure that you, your business and your network are
prepared to make changes and to adapt when required. Give
your business a Legal Health Check and be sure that you have a
trusted solicitor to call upon, so that you can respond to future
developments in the law, in a timely manner.”
Goldstein Legal’s commercial and legal insight can help you
build a legal framework that protects your business and promotes
For an initial free
with one of our expect franchise lawyers, get in touch by emailing