Overview

In a judgment published on 7 July, the High Court upheld a franchisor’s (Pirtek’s) ability to restrain its former franchisee from opening up a competing business for a period of one year following termination of the franchise agreement. The Court held that the restraint in question was necessary to protect the know-how provided to the franchisee during the currency of the agreement.
This ruling is an application of the classic Pronuptia judgment which provides the basis for the enforceability under EU and UK competition law of many common restrictions in franchise agreements. One of the key findings in Pronuptia is that non-compete obligations on the franchisee - even reasonably time-limited post-term non-competes - do not risk falling foul of competition law to the extent that they are necessary for protecting the franchisor’s know-how.


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