Pregnancy and maternity leave as a franchisee: what to consider before signing an agreement

As a franchisee, you are in business on your own account and you are not automatically afforded the same rights you would have as an employee, such as the right to take maternity leave.

However, it has become more common for some franchises (usually those providing child-related services such as messy play classes) to be promoted to prospective franchisees as “family friendly” on the basis that they can be operated part time to work around family commitments.

This is of particular interest to mothers who are trying to get back into work and need to work child friendly hours or to those women who are planning to grow their family in the near future.

Prospective franchisees who are looking for part-time franchises with family friendly hours should always check:

• What the franchise agreement says about the minimum hours the business has to be operated;
• What the franchise agreement says about performance targets (will these be achievable on part-time hours?); and
• Whether there is a clause requiring the franchisee/individual to devote their full time and attention to the operation of the franchise.

If there is any doubt at all over the commitments in the franchise agreement you should take legal advice and ask for a side letter to the franchise agreement confirming what you have been told about the hours of operation, targets and that the business can be operated part time. You must not rely on what you have been told verbally if the written terms of the franchise agreement contradict this or are silent on it.

Maternity support

There has also been a shift in some of these franchises towards helping women who are or become pregnant during the course of their franchise term. We are aware that these franchises allow “maternity” leave to be taken and that this need not be to the detriment of the business.

In some cases, the other network members actively support one another through this leave and are encouraged to work on a fee split basis for covering work in the absent franchisee’s territory.

Although we have not seen whether there are any contractual terms in these franchise agreements which reflect these principles, recognising this as a real need in some franchises is a step in the right direction.

In most standard franchise agreements there would be no express contractual provisions which deal with what happens when a franchisee/the individual who operates the business day to day becomes pregnant during the term and needs to take leave from the business.

Under the standard terms of a franchise agreement, unless the franchisee was capable of falling within the “incapacity” provisions of the franchise agreement (and that would depend on how incapacity is defined) by virtue of being pregnant/taking leave, the franchisee would not be able to simply cease carrying on the business in order to take “maternity” leave as that would likely place them in breach of the terms and at risk of termination.

In that case, a franchisee would have to seek permission from the franchisor to take time out from the business and may be asked to find a “manager” to take over whilst they are away. This is only feasible in a franchise which is making enough money to pay a manager.

Where there are no contractual terms permitting a franchisee to cease operating the business/suspend operations whilst taking maternity leave care must be sought to avoid breaches of the franchise agreement terms. This is why it is so important to have these issues resolved and agreed before entering into the franchise agreement.

If you are told by a franchisor that they will assist you through “maternity” leave and that you can take “maternity” leave you should have this confirmed in a legally binding side letter along with how this is proposed to work. Without this, there may be little protection from a breach of contract claim if you cease operating the business.

Although the Equality Act 2010 is confirmed to apply to commercial contracts at least in part, the scope is limited and it remains to be seen how (if at all) the provisions would protect women from having their franchise agreements terminated because they have taken “maternity” leave and ceased to operate their franchise business.

The best advice is to check the agreement carefully, have it reviewed by a solicitor experienced in reviewing franchise agreements and have any clarifications/agreements dealing with maternity and family friendly hours set out in a legally binding side letter at the outset.

*Amy Leite is an Associate Solicitor specialising in franchising and employment law at Aquabridge Law. She is also one of the judges on the Workingmums.co.uk’s Top Franchise Awards.