Jurisdiction(s):
United Kingdom

Related legal acts

Key definition

Franchise definition

What does Franchise mean? In legal practice, a franchise most commonly means a commercial arrangement in which a franchisor licences a franchisee to run a business using the franchisor’s brand, system and know‑how under a franchise agreement. Typical legal features include an intellectual property licence, quality control and operational standards, fees (initial fee, continuing royalties and marketing contributions), territorial exclusivity or protection, non‑compete and non‑solicitation covenants, reporting obligations, and detailed provisions on term, renewal and termination. Across England & Wales, Scotland, Northern Ireland and Ireland there is no dedicated franchising statute; issues are governed by contract, IP and competition law (including rules on vertical...

Franchise restraints: confidentiality, non-compete, non-solicitation/no-poach, drafting, enforceability, severance, competition law and cross-border issues

Published by a LexisNexis Commercial expert

Practice notes

General

This Practice Note summarises the restraints a franchisor will usually require of a franchisee to protect the franchisor’s business, including treatment of the franchisor’s confidential information, non-compete obligations (restrictive covenants), no-poaching clauses, severability and the enforceability of restraints, together with practical guidance on drafting restrictive covenants. It does not specifically address competition law issues—see the Practice Notes mentioned below for further detail.

Granting a franchise typically involves the franchisor sharing confidential material with:

actual and prospective franchisees (including unit franchisees, master franchisees and developers), and
employees and agents of the franchisees

Such confidential information includes the methods underpinning the franchised concept and associated know-how. Misuse by any recipient—especially where it is employed in competition with the franchisor—can be highly detrimental to the franchisor’s business. The franchisor should therefore aim to prevent recipients from disclosing the information for unauthorised purposes, including using it to compete with the franchisor’s business. These restrictions must bind franchisees and their employees both during the term of the franchise agreement and after it ends...

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Web page updated on 21/05/2026

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