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Reasonable-notice termination not implied where franchisee holds unilateral renewal right: The Burke Partnership v The Body Shop—drafting lessons for franchisors (England and Wales)

Published on: 10 January 2024

Published by a LexisNexis Commercial expert
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The Burke Partnership v The Body Shop International Ltd [2023] EWHC 2897 (Ch)

Franchise contracts are commonly set for the medium to long term, often include renewal provisions, and, at the outset of a new relationship, both sides frequently avoid hard bargaining over termination and exit mechanics. Yet a franchisor’s ability to disengage from a lengthy arrangement when a franchisee no longer aligns with its operating model warrants close consideration. The English High Court recently considered whether cosmetics retailer The Body Shop could, in the absence of express termination clauses, bring long-standing franchise agreements to an end on reasonable notice after roughly forty years. The judgment may make uncomfortable reading for franchisors, who could find their room for manoeuvre more limited than anticipated...

The background and the dispute

In 1980 and 1981, Body Shop International, acting as franchisor (Body Shop), and The Burke Partnership (the Franchisee) entered into two franchise agreements to run Body Shop retail outlets within two small territories in Norfolk and Cambridge (the Agreements)...

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