Court of Appeal dismisses franchisor's appeal in dispute over enforceability of post-termination restrictive covenants (Dwyer (UK Franchising) Ltd v Fredbar Ltd)

Article summary

Commercial analysis: The Court of Appeal has dismissed a franchisor's appeal against a High Court decision that declared that the restrictive covenants in its franchise agreement were unenforceable. The appeal concerned the enforceability of post-termination restrictive covenants in a ten-year franchise agreement between the franchisor and one of its former franchisees, the first respondent. The second respondent was a director and shareholder of the first respondent and guarantor of its obligations under the franchise agreement. The court held, among other things, that (i) the High Court was right to conclude that, on the particular facts of the case, the 12-month restriction in the franchise agreement was unreasonable and unenforceable; and (ii) the High Court did not err in concluding that any unreasonable part of the restrictive covenant could not be severed. This case highlights that the enforceability of post-term restrictions in franchise agreements subject to English law depends on the specific...