What restrictions will I face as a franchisee?

Buying a franchise means buying into a system – and that system comes with rules. Franchise agreements impose a wide range of restrictions designed to protect consistency, brand value and long-term success.

For many first-time franchisees, the scale of these restrictions can come as a surprise. Drawing on insights from experienced franchise consultants and specialist lawyers, we explore the types of restrictions franchisees are likely to face, why they exist, and how they affect everything from daily operations to multi-brand ownership…

Why do franchise agreements contain so many restrictions?

Restrictions are fundamental to franchising. John Pratt, senior partner at specialist law firm Hamilton Pratt, explains: “There are a huge number of restrictions because franchising is about the franchisor developing systems and requiring franchisees to work strictly to those systems.” Franchisors will set these out in the franchise agreement and operations manual.

The purpose is consistency and success. Pratt continues: “Franchisors know, or should know, that if you operate your business in accordance with their system you will be successful. From a franchisor’s perspective, it is trying to create a brand whose reputation is based on a consistent approach.”

In short, restrictions are not arbitrary – they exist to ensure customers receive a uniform experience and that franchisees benefit from a proven business model.

Pratt adds: “Franchisees cannot simply pick and choose which sections of the system they wish to comply with. The franchise agreement will impose very draconian remedies for the franchisor if you fail to comply strictly with all aspects of the system.”

Essentially, the operations manual is the blueprint for compliance, covering day-to-day operations, brand standards and customer service.

What day-to-day restrictions should I expect?

In practice, restrictions affect almost every aspect of running the business. Pratt explains that you will have to:

● keep your accounting records in the way the franchisor stipulates

● maintain your van or premises in accordance with the franchisor’s requirements

● accept restrictions on maximum prices

● fully train your staff

● make efforts to promote and extend your franchise business

Vicky Wilkes, head of legal at Aston Villa Football Club, highlights additional controls on branding and knowledge: “Franchisors will usually license you to use the trade marks on very restricted terms… [and] there will be a restriction relating to your use of the franchisor’s confidential information and know-how, including the systems that will enable you to effectively operate the business.”

You may also have to purchase from approved suppliers and meet minimum operational standards to maintain quality and consistency.

Are non-compete clauses standard in franchising?

Yes. Wilkes explains that franchisees must comply with “non-compete provisions,” which restrict them from running competing businesses without consent.

After the franchise ends, restrictions often continue. “A franchisor may restrict you from setting up a business similar or identical to the franchise business after the franchise agreement has come to an end,” usually for up to 12 months.

Pratt adds that these clauses are designed to make sure franchisees “devote your whole time and attention to making a success of the franchise business.”

Can I buy a franchise from two different, non-competing brands?

Franchise agreements generally prevent this without approval. Alan Wilkinson, head of franchise development at The Franchising Centre, says: “All properly constructed franchise agreements will have a clause that will prevent a franchisee from operating any other business without prior approval.”

That means you cannot simply take on multiple businesses – even if they do not compete – without consent from the franchisor(s).

Wilkinson adds: “For owner-operator or owner-managed franchises, I would question why a franchisee may want to operate two different brands. Diluting the time and effort anybody can put into building the business may have a detrimental effect. Giving 100 per cent to one business may yield a higher reward than giving 50 per cent each to two different brands.”

Are there limits to how far restrictions can go?

While extensive, restrictions are not unlimited. Wilkes points out: “The franchisee cannot be unfairly restricted from earning a living or lawfully competing with the franchise.”

She adds: “Particular restrictions, especially exclusivity terms and post-termination restrictions, need to be considered in the light of UK and European competition law and justified.”

This is why professional advice is critical before signing: “It is important that a franchisee reads the franchise agreement and operating manual carefully and, where necessary, obtains professional advice.”

What should franchisees take away from all this?

Restrictions are not optional in franchising – they are central to the system. Understanding them early, and being realistic about the level of control involved, is essential.

As our experts make clear, success in franchising depends not on freedom, but on committing fully to a proven model and operating it exactly as intended.