In the wake of the COVID-19 pandemic, the franchise model will play an important role in economic recovery, helping individuals to take their first steps into business ownership, presenting opportunities to established operators to grow their portfolios and enabling brand owners to expand and regain or grow their market share. This podcast explores the key legal considerations for any business which is preparing to franchise.
The IP Enterprise Court recently considered the impact of the EU Trade Secrets Directive on the law of breach of confidence – in particular, in the context of ex-employees who sought to franchise their services. The case confirms the limited impact of the directive on the pre-existing law on breach of confidence. However, it also indicates that the directive can be useful in helping to tease out the distinctions between confidential and non-confidential information.
In response to the COVID-19 crisis, the government has stated that new tools will be added to the UK insolvency framework, including a moratorium for companies to give them "breathing space from creditors enforcing their debts while they seek a rescue or restructure". The government is also expected to introduce a moratorium provision, introduce an exclusion of ipso facto clauses and suspend temporarily wrongful trading provisions. This article considers what the changes would mean for franchisors.
In the wake of the economic turmoil caused by the COVID-19 crisis, a number of high-profile brands in the leisure and hospitality sectors have entered or will soon enter into formal insolvency processes. Although failure rates among franchises are typically lower than among non-franchised businesses, franchising will not be immune to this trend. It is therefore important that franchisors and suppliers ensure that they have the contractual rights to act quickly and effectively if the need arises.
In 2019 the new EU Trademarks Directive was implemented in the United Kingdom. As part of this implementation, numerous changes were made to the licensing provisions of the Trademarks Act. This article sets out the changes which are most significant for franchisors, including limited direct enforcement rights for non-exclusive licensees and enhanced direct enforcement rights for exclusive licensees.