Jurisdiction(s):
United Kingdom

Good faith in franchise agreements: Ellis v John Benson Ltd—High Court implies duties of good faith and mutual trust; franchisor repudiatory breach (England and Wales)

Published on: 27 August 2025

Published by a LexisNexis Commercial expert

Legal News

Article summary

What are the practical implications of this case?

In this case, the franchise contracts were exceptionally burdensome and out of the ordinary; the court held that, given their particular characteristics and context, they carried implied obligations of good faith and of trust and confidence.

The franchisor’s actions broke those implied duties, permitting franchisees to validly regard their agreements as terminated, namely:

aggressive and intimidatory behaviour,
arbitrary decision-making,
a lack of transparency.

This does not mean that every franchise contract will receive the same treatment. The ruling emphasises the need for ethical franchise documentation that accords with the British Franchise Association Code of Ethics, which requires prospective franchisees to seek suitable independent legal advice before signing, and obliges franchisors to deal rationally and fairly with their network.

What was the background?

The central issue was whether the franchise agreements between the 20 claimants (driving-instructor franchisees) and the defendant (a driving-school franchisor) contained an implied duty of good faith and fair dealing...

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