Good Faith in Franchising | 2025 in Review

I recently attended the BFA Conference and was thrilled to hear the countless success stories in franchising. Ethical franchisors, franchisees treated fairly, and both sides earning a good living. All underpinned by the BFA Standards and Code of Ethics.

It was a contrast to the increasing share of work we do at Weightmans advising and supporting franchisees in difficult situations. Whilst we regularly act for franchisors, we are increasingly involved on the franchisee side also. Often, when franchisees approach us, they are not getting the support they were promised or cannot make a profit. These franchisees seek to exit their networks, renegotiate their deal, and fight to sustain their livelihood. This is despite paying significant upfront fees, only to be met with indifference from franchisors. Many of the agreements signed by franchisees in these situations are unfairly weighted in favour of the franchisor.

But in 2025, the tide has begun to change. Case law is evolving to improve the bargain for franchisees, and rightly so.

The first major shift came with Dwyer (UK Franchising) Ltd v Fredbar Ltd in 2022. In that case, a “Drain Doctor” franchisee terminated his agreement after 15 months due to financial issues. He found alternative employment in the same region and with a similar business. The franchisor, Drain Doctor, sought to enforce the post termination restrictions, but failed.

The court noted the unequal nature of the franchise agreement, making it more willing to strike down the restrictive covenants. The “take it or leave it” dynamic pushed the relationship closer to an employer-employee model rather than a commercial deal. In this case, the franchisee posed no real threat, so the restrictions were unenforceable.

Then came Ellis and Ors v John Benson Ltd involving a driving school franchise. The franchisor had allegedly been abusive and intimidating. It prohibited control over fees, franchisees were subject to fixed fees regardless of income. They were restricted from independently marketing and could not devote time to any other business activity without permission of the franchisor. This may sound familiar to some franchisees.  

In this case the court held that the franchise agreements contained an implied duty of good faith and dealing. That means that the parties must avoid conduct that reasonable and honest people would regard as commercially unacceptable, or which would undermine the substance of the bargain. The franchisor/franchisee relationship, like in Dwyer, was treated as close to an employment relationship and therefore there was a need for good faith and fair dealing between the parties. The franchisor breached this implied duty of good faith in its conduct.

The court in both cases stressed that every case would turn on its own facts. However, it appears that these cases mark something of a breakthrough development for franchisees, moving the needle of power away from the franchisor. 

So, what, in our experience, has changed in 2025 in relation to good faith and the balance of power?

• Franchisors are experiencing shifts from “should we enforce this” to “can we enforce this”, given that enforceability may no longer be such a “given”. Commercially sensible behaviour, transparency, and consistency form part of the franchisor’s legal armour, in addition to the strict wording of the contract.
• Franchisees are grouping together to take on rogue franchisors, armed with recent good faith developments. They raise issues faster and act more strategically.
• Franchisors adopting balanced, transparent, and fair approaches will outperform those that do not, both legally and commercially.

Tips heading into 2026

Franchisors

• Get your franchise agreements reviewed. They are the backbone of your network. Whilst they should protect your position, are they as balanced as they could be? Do they comply with the BFA’s Code of and Ethics and Standards?
• Use your contractual powers with restraint. Enforcing the contract should be carefully managed. Be proportionate, consistent, and commercial.
• Communication, communication, communication! Silence breeds discontent, and discontent breeds franchisee groups that will make life difficult.

Franchisees

• Be constructive and commercial. If issues arise, avoid an aggressive approach. Communicate concerns clearly and robustly, but most importantly, delicately.
• Have your house in order. Refresh your understanding of your agreement and ensure you are complying with your obligations.
• Before you sign your agreement (including on renewal), take legal advice to benchmark against market standards, relevant case law and the BFA’s Standards and Code of Ethics.

The evolution of good faith in franchising benefits both sides. It reflects the reality that these agreements create long-term, close relationships. Good faith is not just a legal principle, it’s a commercial necessity.

Prosperous franchisees who feel supported, as opposed to controlled or exploited, make networks stronger. The developments of good faith in franchising in 2025 (and before) should be welcomed by all in this amazing industry. 2026 promises even more progress. We look forward to what’s next.