- Post-termination restrictive covenants in franchising agreements may not be as enforceable as once thought.
- Practitioners acting for franchise clients (both franchisors and franchisees) should consider the impact of this judgment and how it might change the advice given in light of it.
On 30 June 2022 the Court of Appeal laid down its judgment in Dwyer (UK Franchising) Ltd v Fredbar Ltd and Shaun Bartlett [2022] EWCA Civ 889, [2022] All ER (D) 11 (Jul) in which they dismissed Dwyer’s appeal against an earlier High Court decision which ruled that the post-termination restrictive covenants in its franchise agreement were unenforceable.
This ruling is of crucial importance for franchisors using standard form agreements with its franchisees, but particularly so where the franchisee is an inexperienced individual. The judgment has dismissed the widely-held belief that a 12-month restrictive covenant will generally be enforceable upon a franchisee provided that the restricted activities and geographic area covered were suitably limited. Practitioners should consider advising
