Two major studies will examine how franchising is regulated in the UK and internationally, as ministers consider whether new protections for franchisees are needed, particularly in light of UK franchising regulation.

The UK Government has commissioned two major reviews into the franchising sector as it considers whether changes to the law are needed to strengthen protections for franchisees under UK franchising regulation.

The move follows growing scrutiny of the relationship between franchisors and franchisees, including allegations surrounding Vodafone’s former franchise network and the tragic death of former Vodafone employee and prospective franchisee Adrian Howe.

The Department for Business and Trade is understood to be working with the British Franchise Association (BFA) on a detailed study of the UK franchising market and UK franchising regulation. It has also commissioned the Centre for Economic Policy Research (CEPR) to examine how franchising is regulated in other countries.

The findings from both studies are expected to help shape the Government’s approach to the future legal framework for franchising, with the stated aim of ensuring franchisees are appropriately protected under UK franchising regulation without placing unnecessary regulatory burdens on small businesses.

Government Puts Franchising Under the Spotlight

Franchising has been added to the responsibilities of Lord Leong, who was appointed Minister for Small Business and Enterprise in July.

His appointment comes after Prime Minister Keir Starmer pledged in January to review the laws governing franchise agreements, following concerns raised in connection with the Vodafone case.

The Government’s review is likely to focus on the balance of power between franchisors and franchisees, particularly where agreements involve large multinational companies and smaller independently owned businesses.

Under the current UK system, franchisees generally operate through separate limited companies and are therefore treated as independent commercial entities when entering into franchise agreements.

Critics argue that this can overlook the significant difference in resources, bargaining power and commercial influence between a small franchisee and a large corporate franchisor.

Vodafone Franchise Dispute

The Government’s decision follows a high-profile dispute involving Vodafone franchisees.

A previous investigation highlighted allegations concerning Adrian Howe, a former Vodafone store manager who agreed to launch a franchise business in 2018. His family said he had become increasingly concerned that the financial commitments associated with the franchise would leave his new business in serious difficulty.

Howe died shortly before his planned franchise store was due to open.

The case subsequently became part of a wider debate about the protections available to franchisees operating under agreements with major corporations.

In 2024, a group of 62 former Vodafone franchisees launched a High Court claim against the company, alleging that Vodafone had unjustly enriched itself. The case attracted significant political attention, with some MPs drawing comparisons with the Post Office Horizon scandal.

Vodafone subsequently reached a confidential settlement with the claimants in July, without admitting liability.

Howe was not part of that legal action, which was launched after his death. His family has continued to campaign for stronger regulation of the franchising sector, including calls for legislation that has become known as “Adrian’s Law.”

Calls for Greater Franchisee Protection

Campaigners argue that franchisees can be particularly vulnerable because the UK does not currently have a comprehensive statutory framework specifically governing franchising agreements.

Instead, the relationship is largely governed by the terms of the individual franchise agreement, general contract law and other applicable legislation.

While franchise agreements are commercial contracts entered into by two separate businesses, critics say the negotiating position of the two parties can be very different.

A large franchisor may have substantial financial resources, legal expertise and established systems, while an individual franchisee may be investing their own money into a business based heavily on the franchisor’s brand, systems and commercial decisions.

Speaking during an adjournment debate on franchising in July 2025, former Conservative minister John Hayes argued that franchising could be used to increase the power of the franchisor while weakening the position of franchisees.

His comments highlighted the wider debate over whether existing protections provide an adequate balance between the interests of franchisors and franchise owners.

What Could New Franchise Legislation Mean?

The Government has not yet confirmed what any future legislation could look like.

However, the two commissioned studies could examine areas such as:

• Greater transparency around franchise agreements and financial obligations
• Disclosure requirements before a franchisee commits to an investment
• Greater scrutiny of significant changes to franchise agreements
• Protections around changes to commission structures or commercial terms
• Dispute resolution between franchisors and franchisees
• Greater clarity around the responsibilities of both parties
• Potential safeguards where a franchisee faces significant financial exposure

Any new rules would need to strike a balance between protecting franchisees and maintaining the flexibility that has helped franchising become an important part of the UK small business economy.

Vodafone Rejects Allegations of Undue Pressure

Vodafone has rejected suggestions that its franchisees were subjected to undue pressure.

The company has said that, while it is sorry if some partners had difficult experiences, it does not accept the allegations made against its franchise operation.

Vodafone also points to the continued success of its franchise network, which it says comprises more than 350 stores, with existing franchisees having expanded their businesses by taking on additional locations.

The company has also previously rejected suggestions that it knowingly, recklessly or negligently placed people involved in its franchise stores under unreasonable pressure.

Vodafone has described comparisons between its franchise dispute and the Post Office scandal as inappropriate.

A Significant Moment for UK Franchising

The Government’s decision to commission detailed research into franchising represents an important development for the UK franchise industry.

For franchisors, new legislation could introduce additional compliance requirements and potentially increase the level of information that must be provided to prospective franchisees.

For franchisees and prospective investors, however, greater transparency and clearer protections could provide additional confidence when entering into a franchise agreement.

The challenge for policymakers will be ensuring that any new framework protects genuine franchisees from unfair practices without undermining the commercial model or creating unnecessary costs for the thousands of small businesses operating successfully within franchise networks.

With the BFA study examining the UK market and the CEPR research looking at international approaches, the findings could provide the foundation for what could become the most significant change to UK franchise regulation in decades.

The UK franchising industry will now be watching closely to see what the two reviews recommend — and whether they ultimately lead to new legislation governing the relationship between franchisors and franchisees.

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