Can my franchisor give customers in my territory to others?

I joined what was advertised as a franchise. I paid the the whole fee and attended a one-day training. I was given my territory which was three postcodes and I started my marketing campaigns within my postcodes. This involved whole days of door to door selling and passing leaflets to passers-by. I forwarded details to head office. But from all my marketing I later found out that the customers in my postcodes were being passed on to other franchisees despite those customers being in my territory, affecting my business. Would I have any chance of claiming back my fee, monthly fees and expenses from the franchise? This happened a few years ago.

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I am sorry to hear of your difficulties with your franchisor. It is unclear from what you say, whether or not you are still operating the franchise. If you are not and are referring to events several years ago, it is unfortunately unlikely that you will be able to take any action. In most circumstances claims for a breach of contract must be brought within six years of the breach. Most claims by franchisees against their franchisors relate to breaches of the franchise agreement by the franchisor and/or misrepresentations by the franchisor about what the franchisee has been “sold”.

If you have continued your involvement with the franchise and there have been more recent breaches and/or misrepresentations by the franchisor then you may be able to take action if they are within the above time limit. If you have a contract in place with your franchisor we would recommend that you review the contract to assess the obligations placed upon each party and particularly whether the franchisor was empowered to choose who it gave the prospective customers to. This might include an assessment of how your territory is defined and whether it is stated to be ‘exclusive’ to you.

*Emily Sadler is Partner, Commercial and Franchising at Paris Smith LLP.



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