Insights / News
Insights / News
Judgment was handed down in this franchise dispute on 11 May 2021. The First Defendant was a franchisee of the “Drain Doctor” brand licensed by the Claimant, Dwyer (UK Franchising) Ltd, which claimed to be the UK’s largest full-service network of emergency plumbing and drainage operations and part of the world’s largest home service franchise.
The case raised issues of misrepresentation, undue influence, repudiatory breach, affirmation and the reasonableness of the post-termination restrictive covenants. The Defendants purported to terminate the Franchise Agreement by reason of the Claimant’s conduct, including a decision not to exercise a force majeure clause in late March/early April following the intervention of covid.
Insolvency and Costs Judge Jones, sitting as a Judge of the Chancery Division, held that the Claimant was in repudiatory breach of the force majeure clause and a clause specifying how a marketing fund was to be applied. In the first, the Judge held that the Claimant did not take into account the need for the Second Defendant to isolate because of his infant son’s vulnerability. While the Judge held that each breach justified termination, he also concluded that the Defendants affirmed the Franchise Agreement. In consequence, the Defendants had no basis in seeking to terminate in July 2020 and the Franchise Agreement terminated when the Claimant accepted this breach in August 2020. The Judge held to be unenforceable the restrictive covenants preventing the Defendants from working in a competing or similar business within the exclusive market territory for a period of twelve months. In consequence, the Defendants were permitted to carry on their business for the remaining 3 ½ months.
The 310 paragraph judgment will be interesting to practitioners and those in the business community for several reasons including:
David first acted for the Defendants via the Chancery Litigants in Person Scheme on 17 September 2020 when Nugee J was persuaded not to grant an interim injunction but to list the matter for an expedited hearing.
David E Grant practises primarily in commercial law and particularly pensions and employment. He regularly appears in the Court of Appeal, High Court and specialist Tribunals. His clients have included many leading business including the Atos Group, British Airways, BT, ITV, the Royal Bank of Scotland, Lloyds Bank, Aegon and Transport for London. He has also acted for the Pensions Protection Fund, the Pensions Regulator and the Pensions Ombudsman as well as leading professional service companies such as Aon, Mercer and Barnett Waddingham as well as various high net worth individuals.