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Is my franchise legally protected?
There are no specific franchise or other laws in the UK that legally protect your franchise. There are certain laws (such as EU and UK competition laws) that do impact upon the relationship between the franchisor and franchisee, but for the most part the legal basis of that relationship is set out in the contract - the franchise agreement entered into by the parties.The franchise contract is a very important document. It is a legal commitment that is binding on both parties and it is essential that a franchisee takes advice on it from a franchise lawyer as to its meaning and effect. A prospective franchisee, in consultation with a solicitor, should check that the franchise reflects what the franchisee has been told by the franchisor regarding the franchise.If you have not been in business before, it is important to remember that, as a franchisee, you will not receive the kind of legal protection you enjoy as an employee or a consumer. As a franchisee, you are considered an independent business person entering into a commercial agreement with another party. A franchisee will be able to take legal action against a franchisor under general legal principles, as would any other person or entity if, for example, the franchisor is in breach of the franchise agreement or if a misrepresentation (a false statement of fact) was made by the franchisor during the recruitment process.Where the franchisor sells goods to a franchisee, the franchisee will be protected under legislation relating to the sale of goods. The restrictions the franchisor imposes on a franchisee in relation to the territory granted and the prices to be charged to consumers are controlled by UK and EU competition laws. In brief, a misrepresentation is a false statement of fact made by one party to another party, which induces that other party to enter into a contract.
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