TLT LLPTLT LLP

Franchising Industry Update

Iain Taylor, TLT LLP

TLT LLP

• New developments in the last four months

• Issues with franchise contracts

• Trade marks• Minimum performance obligations

What we will cover

New developments

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• No major new legal developments or cases

• Recent case on post-termination restrictive covenants

PSG Franchising Ltd v Lydia Darby Limited

Legal developments

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• More big companies including a franchise division

• O2• WHSmith

General franchise developments

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• Increase in IT services franchises (eg marketing, website design)

• In many of these, customer contracts directly with the franchisor

How does this fit with the franchise model?

IT franchises

Issues with franchise contracts

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• Franchisor has business (a) making and selling drinks and (b) offering bartending/waiting services (these are two different classes)

• Franchisor has a trade name "Bar Solution" and logo

• Franchisor has registered a word-only trade mark for "Bar Solution" to cover "manufacture of beverages"

How well protected is the franchisor?

Trade marks

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• Franchisor wants to improve network performance and profitability

• Franchisor seeks to impose new targets on existing franchisees

• Franchisor sets the targets as (a) increasing turnover by 10% each year; and (b) selling to a greater percentage of database each year

What are the problems with this?

Minimum performance requirements (1)

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• Franchisor requires franchisees to meet 70% of target each year

• Franchisor requires franchisees to meet 85% of target to get a renewal

How fair do you think this is?

Minimum performance requirements (2)

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For more information, contact:

Iain Taylor, Solicitor

TLT LLP

One Redcliff Street

BRISTOL

BS1 6TP

Tel: 0117 917 7694

Email: iain.taylor@tltsolicitors.com