Are you involved in a dispute with your franchisor? Know your rights

26 February 2026

Many businesses turn to franchising to help them grow with the backing of an established brand.

Research from Franchise UK reported that 900 franchise systems and 48,000 franchise outlets operated in the UK and the sector contributed over £17 billion to the economy.

Despite this success, it is not guaranteed that franchisor and franchisee relationships will be smooth sailing and disputes can often arise.

When relationships break down, disagreements can become costly and time-consuming. You may even start to question if it is possible to recover your losses or even exit the franchise agreement.

If you find yourself in conflict with your franchisor, you must understand your legal rights and find an effective way to resolve the dispute.

What are the common causes of a franchise dispute?

A franchise agreement governs the relationship between the franchisor and franchisee.

It sets out your rights to use the franchisor’s contract brand, business model, systems and trademarks to sell products or services.

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

Disputes often arise where expectations differ or where one party believes the other has failed to meet its contractual obligations.

Some common causes for disputes include:

• Breach of contract – A failure to comply with the terms set out in the franchise agreement.
• Misrepresentation – Where a franchisee has relied on inaccurate or overstated claims about profits or turnover.
• Intellectual Property (IP) disputes – Where a franchisee uses the franchisor’s brand name or logo outside the permissions granted under the agreement.
• Performance issues – Alleged underperformance by the franchise or failure by the franchisor to provide the agreed level of training or support.
• Territorial encroachment – Where another franchisee or the franchisor operates too close to an agreed territory and potentially undermines exclusivity.
• Termination disputes – Disagreements about ending the agreement, including the enforceability of post-termination restrictions, such as non-compete clauses.

What are your legal rights in a franchise dispute?

Your legal rights and obligations should be set out in the franchise agreement and franchisors are required to act in good faith.

Many agreements include dispute resolution clauses that require the parties to attempt to resolve their disagreements before going to court.

The dispute resolution process may involve:

• Negotiation – Raising the issue directly with your franchisor in an attempt to reach a solution.
• Mediation – A neutral third party that helps 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 compromise.
• Arbitration – An independent arbitrator reviews the evidence and makes a binding decision.
• Court proceedings – If Alternative Dispute Resolution (ADR) fails, you may need to issue a court claim. A court can award compensation, declare the agreement terminated or grant other legal remedies depending on your claim.

Early legal advice is essential when managing the dispute resolution process and we can help assess your position before matters escalate.

Can you recover your money or exit from a franchise agreement?

Whether you can recover the losses or exit the franchise depends on the wording of the agreement and the seriousness of the alleged breach.

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 be entitled to rescind the agreement and restore your original financial position.

However, most franchise agreements are drafted to discourage early termination.

Walking away without proper legal advice can lead to claims for damages or enforcement of restrictive covenants.

With the right support, you may be able to negotiate an agreed exit or settlement that reduces the financial risks and allows both parties to move forward.

How can we help you with franchise disputes?

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 also help you remain compliant with post-termination obligations, such as non-compete clauses and confidentiality requirements.

If you need further advice or support with a franchise dispute, contact our dispute resolution team today.