Franchise market needs reform and accountability, warns new UK government report

The House of Commons Business and Trade Committee has published its Small Business Strategy report (pdf, 95 pages/951kb), which explicitly recommends that the UK government review the franchising landscape and consider introducing a statutory code of conduct.

It comes after the prime minister said in January that he would “look closely” at the need for franchise-sector reform amid concerns raised by operators, advisers and industry bodies.

Scott Oxley, a franchising expert with Pinsent Masons, said the report adds "meaningful weight" to the scrutiny already building around the UK franchising market.

“While the UK has traditionally relied on contract law and voluntary codes, recent disputes have exposed gaps in oversight that can leave franchisees vulnerable to sudden contractual changes, financial pressures and inconsistent operational standards,” he explained.

“The committee’s recommendation to examine whether a statutory code is needed reflects an increasing willingness in parliament to question whether the current framework provides adequate protection and transparency.”

The committee concluded that the current system “is no longer sustainable” and leaves franchisees exposed to unfair contractual practices and inconsistent employment standards.

It warns that gaps in oversight "allow serious employment abuses to go unaddressed" and create a lack of clear accountability within franchise networks. It recommends that the government review the current franchising landscape, that a statutory code of conduct be considered and that stronger, independent enforcement mechanisms be explored.

The committee also links improved franchising regulation to wider work on revitalising the UK’s high streets and retail economy, with the number of franchises in the UK increasing by around 8% since 2018.

It follows increased parliamentary scrutiny of the challenges of the sector, including a House of Commons debate in 2025 addressing concerns over power imbalances between franchisors and operators and the adequacy of existing regulatory oversight.

The sector is currently governed through self-regulation, most notably through the British Franchise Association’s Code of Ethics, which aligns with the European Code of Ethics for Franchising.

“For franchisors, this is a timely reminder to ensure their agreements, governance processes and day‑to‑day practices reflect fairness, clarity and good‑faith principles,” Oxley said.

Those who proactively enhance disclosure, strengthen support systems, and document how they exercise contractual discretion will be well‑positioned whatever the outcome of future policy discussions. For franchisees, this signals a shift towards closer scrutiny of power imbalances.

“Regardless of whether the government ultimately legislates, the direction of discussion points towards higher expectations of accountability across franchise networks.”