Library

Franchising can be an effective way to run a business with the backing of an established brand, but disputes between franchisors and franchisees are not uncommon.

Franchise disagreements can be costly and time-consuming, and you may start to question if it is possible to recover your losses or even exit the franchise agreement.

Our Senior Associate, Gareth Brazier, explains what your legal rights are when a franchise relationship breaks down and how to reach a practical solution.

What are the common causes of a franchise dispute?

A franchise agreement sets out the terms and conditions of the relationship between the franchisor and franchisee.

This can include a franchisee’s rights to use the franchisor’s contract brand, business model, systems and trademarks to sell products or services.

It details all aspects of the franchise agreement, including initial training, ongoing support, royalties, territory rights, duration of the relationship and termination clauses.

The most common causes of a franchise dispute are due to misleading information, failure to meet performance expectations and disputes over territorial rights.

Other common causes include:

• Breach of contract – Where one party fails to comply with the terms set out in the franchise agreement
• Misrepresentation – This can include where a franchisee has relied on inaccurate or overstated claims about profits or turnover
• Intellectual Property (IP) disputes – These issues can arise where a franchisee uses the franchisor’s brand name or logo outside the permissions granted under the agreement
• Performance issues – This includes underperformance by the franchise or failure by the franchisor to provide the agreed level of training or support
• Territorial encroachment – These disputes are caused when franchisors or other franchisees operate too close to an agreed territory and potentially undermine exclusivity
• Termination issues – These can arise when a franchisee seeks to exit the agreement, often involving the enforceability of post-termination restrictors or covenants

What are a franchisee’s legal rights in a dispute?

A franchisee’s legal rights should be set out in the franchise agreement and franchisors are required to act in good faith.

Many franchise agreements include dispute resolution clauses that require the parties to attempt to resolve disagreements before starting court proceedings.

Any dispute that arises should begin with negotiation, in which you should try to reach a solution directly with your franchisor.If this does not resolve the issue, mediation may be required and an independent third party can help both sides discuss settlement options.

While mediation is not always binding (unless the parties decide upon a binding settlement), it often results in a practical comprise or at least a narrowing of issues in dispute, and can help avoid lengthy legal action.

Arbitration can be helpful if nothing else has previously worked and an arbitrator will consider all the evidence to make a binding decision.

If alternative dispute resolution fails, you may need to make a court claim. A court can award compensation, declare the agreement terminated or grant other legal remedies depending on your claim.

Can you get your money back or exit the agreement?

Recovering money from your franchise agreement can be possible, but refunds or repayment of franchise fees are only more likely when there has been a serious or fundamental breach of contract.

If you are dealing with a serious breach, you may seek to rescind the agreement and be restored to your original financial position.

The chance of exiting a franchise agreement depends on the wording of the contract and the facts of the dispute.

Most franchise agreements are drafted to discourage early termination, and walking away without proper legal advice can lead to claims for damages or enforcement of restrictive covenants.

However, with the right support, we can help you potentially negotiate an agreed exit or settlement that limits financial risks and allows both parties to move on.

How can we help?

Whether you are looking to resolve a franchise dispute or exit from an agreement, we can help you achieve the most practical and cost-effective outcome.

We can review your franchise agreement and any breaches and advise you on the best dispute resolution options.

Our team can help ensure compliance with post-termination obligations such as non-compete clauses and confidentiality requirements.

To learn more about how we can support commercial and business disputes, contact us today.

When your company is looking to split into two or more separate businesses, you may consider a demerger.

This allows each company to operate independently with its own assets, liabilities, management and strategy.

A demerger can be beneficial for the growth of your company, but you must understand the planning required and tax implications before you proceed.

Our Corporate Finance expert, Matthew Johnson, explains how to successfully plan for a demerger.

What types of demergers are there?

Companies often consider a demerger during periods of change or disagreement or when different parts of the business no longer work well together.

Demergers can be carried out in a tax-efficient way if structured accurately.

If it is not prepared correctly, shareholders may automatically face a tax charge simply because the business has been split.

In the UK, there are three main ways in which a tax-efficient merger can be achieved.

These include:

• Statutory demerger – This is often the simplest and most tax-efficient merger where legal and tax conditions are met. However, many companies do not qualify and clearance from HMRC is recommended.
• Capital reduction demerger – Where a company reduces its share capital and transfers assets or shares to a new or existing company owned by the same shareholders. This is commonly used ahead of a sale or where shareholders want to separate group companies.
• Demerging by liquidation – This involves a solvent liquidation and distribution of assets and may not be favoured due to reputational concerns and the loss of goodwill.

What are the benefits of a demerger?

Businesses often demerge to streamline operations and reduce overheads, particularly where different parts of the business have different strategies.

Demergers are also commonly used to facilitate a sale where a buyer only wants part of a group or company.

They can also help solve shareholder disputes, protect valuable assets, attract new investment or satisfy lender requirements where funding is only available to one part of the business.

When done properly, a demerger can increase the value of a business and allow for more focused growth.

What are the risks of a demerger?

Moving assets and changing ownership during a demerger can result in additional Corporation Tax, Capital Gains Tax or Stamp Duty Tax liabilities.

Other risks include:

• The need for shareholder approvals
• Third-party consents from banks or landlords
• Solvency issues, especially in capital reduction demergers, where directors must confirm the company can still pay its debts

Poor planning can put your demerger at risk of being challenged by creditors or shareholders and early legal support can help you take the necessary steps to remain compliant.

How can you plan a successful demerger?

Successful demergers require early planning and must factor in timing for HMRC clearances.

With the right legal support, we can help review share capital and ensure all your legal documents are completed in the correct order.

We can advise you on the most suitable type of demerger for your company so that your business is in the best position for success.

For more tailored advice on your business demerger, contact our Corporate Finance team today.

A transfer of equity is used when you change the ownership of your property or the shares in which it is owned, without the property being sold.

These are commonly used during major life events, such as marriage, separation, inheritance planning and changes in financial arrangements.

Whether you’re adding a new co-owner or removing one, you must understand how an equity transfer works before you make any changes to your home’s ownership.

Our Supervising Department Director, Erin Cronin, investigates.

Why are equity transfers needed for residential properties?

Residential homeowners may choose to transfer equity for many reasons, but one of the most common is due to a relationship breakdown.

Following a divorce or separation, one party may buy out the other’s share or ownership may be adjusted as part of a financial settlement.

Equity transfers are also used when couples marry or enter a civil partnership and wish to add their spouse to the property title.

For parents who have helped their child purchase a property, they may later want to formalise their contribution and protect their investment by transferring equity.

Equity transfers can also be used for inheritance and estate planning, including gifting part of a property to family members.

How do you transfer equity?

When you want to transfer equity, a solicitor will prepare a transfer deed to reflect the change in ownership and ensure it is properly executed.

If the property has a mortgage, the lender’s consent is required and they may want to assess the affordability and risk for any new or remaining owners.

Once these documents are complete, the change must be registered with HM Land and Registry so that the legal title is updated to the new ownership structure.

Depending on the circumstances, Stamp Duty Land Tax (SDLT) may also be payable, particularly where a mortgage is involved.

If the property is not your main residence or you are transferring equity to someone other than a spouse or civil partner, Capital Gains Tax can arise.

What are your rights after equity is transferred?

Transferring equity does not automatically remove your right to live in the property.

Occupation rights can be protected through legal agreements such as a declaration of trust, a cohabitation agreement or a tenancy agreement.

If you give away a share of your home but continue to live there, you may still have practical rights of occupation.

However, your legal control over decisions such as selling or remortgaging the house may be reduced.

Gifting equity can reduce the value of your estate, but continuing to live in the property without paying market rent may mean the gift is still treated as part of your estate.

How can we help?

Equity transfers are not straightforward and they often involve property law, tax considerations, mortgage requirements and estate planning concerns.

When considering transferring equity, you must seek the support of a solicitor so that your transfer is prepared compliantly to avoid any unexpected tax liabilities and protect your rights.

If you are intending to transfer equity and need legal representation or advice, please contact us today.

Businesses often spend months choosing the right name and logo that reflects their brand and appeals to customers.

If a competitor starts using a similar name or logo, it can leave your customers confused or even damage your brand due to the associations.

One of the most effective ways to protect your business’s trademark is through enforcement.

Our Supervising Director, Luke Morgan, explains how to protect your trademark and why enforcement is needed.

What is a trademark?

A trademark is a form of IP that protects a unique sign used to distinguish your goods or services from those of others.

These can include business names, logos, slogans, sounds or a combination of them.

In the UK, trademarks do not arise automatically and must be registered with the UK Intellectual Property Office (UKIPO).

UK trademarks must also be registered within one or more of the 45 different categories of goods and services.

Why do I need a trademark?

Registering your business name or logo helps prevent others from using the same or a confusingly similar name in your sector.

Without a registered trademark, another business could form a similar brand and potentially damage your reputation.

A word mark can offer greater protection for a trademark as it is your business name in plain text and covers the use of the name in any style or format.

Logos can also be registered, either on their own or alongside your name and this is beneficial if your design is distinctive.

Why is trademark enforcement needed?

When you spot any unauthorised use of your brand, trademark enforcement can help you protect your IP rights.

In the UK, enforcement usually relies on rights under the Trade Marks Act 1994 or the common law action of passing off if no registration exists.

A registered trademark gives you exclusive rights to use your sign for the goods and services covered and makes infringement easier to prove.

If you do not have registered rights, protection can often be enforced through passing off, but this requires more evidence.

You must prove that you have goodwill and that there has been misrepresentation or damage. However, this process can be time-consuming and often makes claims more difficult.

What should you do if you think infringement has occurred?

Under the Trade Marks Act 1994, infringement usually occurs when a sign identical or similar to your own has been used in the course of trade.

If this is used in relation to similar or identical goods or services to your own, it may leave your clients confused or even damage your brand or reputation.

If you think someone has infringed your trademark, you must gather sufficient evidence.

This can include dated screenshots of infringing websites, listings, adverts or social media posts or physical evidence such as packaging or products.

Businesses must know their rights so that they can identify the relevant registrations, filing dates, classes and any goodwill they have built.

If you are unsure of your rights or whether there is evidence of harm, you must seek legal support.

Once an infringement is clear, you must choose the right enforcement strategy. Some situations will call for early informal contact, but others will justify a formal cease and desist letter or platform takedown.

You must take care to avoid unjustified threats, as UK law places restrictions on infringement threats in certain circumstances, such as if no relevant IP right exists.

How can we help?

Many disputes are resolved through a cease-and-desist letter that clearly sets out your rights and proposes a solution, such as rebranding within a set timeframe or providing undertakings.

Online platforms and marketplaces are also more likely to act quickly where a registered trademark is involved.

If infringement continues, then negotiation or legal proceedings may be necessary and you should seek the right professional help.

Our expert team can help you protect your IP rights and trademark and take action on your behalf if a dispute arises.

To learn more about how to protect your brand or IP rights, contact our Intellectual Property team today.

The Autumn Budget 2025 has introduced further reforms to Agricultural Property Relief (APR) and Business Property Relief (BPR), which will affect many working individuals and business owners.

However, in a surprising announcement, Chancellor Rachel Reeves has now increased the proposed threshold to £2.5 million, with the changes due to take effect on 6 April.

Despite this welcome increase, there will still be additional tax liabilities, especially where assets have been passed down through generations.

Our Supervising Department Director, Donna Smy, explains how the Autumn Budget will affect your Will and estate planning.

What are the main reforms?

One of the most debated aspects of the recent Autumn Budget was the decision not to revise the thresholds that were originally announced in the 2024 Budget.

The 2024 Budget announced assets that currently qualify for 100 per cent APR or BPR relief would be reduced to 50 per cent relief on values that exceed a £1 million allowance.

Following the recent announcement, couples will now be able to pass on up to £5 million of agricultural or business assets between them, on top of the existing allowances such as the nil-rate and residence nil-rate band.

Farmers, business owners, investors and anyone relying on these reliefs are amongst those targeted and understanding how it affects your estate planning is important.

In addition, Alternative Investment Market (AIM) shares will see their BPR reduced from 100 per cent to 50 per cent, affecting long-term investments and succession planning.

How should you prepare your finances for the reforms?

Many existing estate plans may have not accounted for fiscal drag or the challenges faced by asset-rich, cash-poor estates, such as family farms and businesses.

While lifetime gifting has traditionally been an important part of succession planning, there is now alternate approaches on how to manage IHT liabilities.

Careful estate planning remains crucial with further IHT reforms expected, including the inclusion of unspent pension pots.

These changes may mean that:

• Existing Wills no longer reflect current policies
• Lifetime gifting plans need to be reviewed
• Families may require greater liquidity to fund future IHT bills
• Trusts needing to reassess the 10-year IHT charges and exit charges on distributions

Families dealing with incapacity or outdated Wills may have challenges updating their affairs in time before April 2026.

Seeking early professional advice can help assess what the new reforms and policies mean and how they will affect your estate and assets.

Why is financial planning needed?

With less than four months before the rules take effect, many individuals may struggle to review their Wills or consider lifetime gifting in time.

Protecting your family’s wealth is important and our specialist team can help assess how the new APR and BPR limits will affect you.

Taking early action is important to giving you the best chance of reducing inheritance tax and preserving your assets.

If you require advice on how to pass your estate on as efficiently as possible, contact our Wills, trusts and probate team.