Dwyer (UK Franchising) Limited v Fredbar Limited & Anor.

Dwyer (UK Franchising) Limited v Fredbar Limited & Anor.

The restrictive covenants in the franchise agreement were unreasonable and unenforceable due to significant inequality of bargaining power, lack of negotiation, excessive scope, and failure to distinguish between early and late termination. The restrictions went further than necessary to protect the franchisor's legitimate interests and could not be remedied by severance.

Parties
Appellant/claimant: Dwyer (UK Franchising) Limited; Respondent/defendant: Fredbar Limited; Respondent/defendant: Shaun Rowland Bartlett
Jurisdiction
England and Wales
Judgment Date
30 June 2022
Procedural Posture
Civil Appeal / Judgment on Appeal
Outcome
appeal dismissed
Legal Topics
Restraint of Trade, Franchise Agreements, Restrictive Covenants, Inequality of Bargaining Power, Enforceability of Post Termination Restrictions
Contract Law Commercial Law Restraint of Trade Franchise Agreements Restrictive Covenants Inequality of Bargaining Power Enforceability of Post Termination Restrictions

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Parties

Dwyer (UK Franchising) Limited

Appellant/claimant

Fredbar Limited

Respondent/defendant

Shaun Rowland Bartlett

Respondent/defendant

Procedural Posture

Civil Appeal / Judgment on Appeal

Legal Issues

  1. 1 Are the post-termination restrictive covenants in the franchise agreement enforceable?
  2. 2 Is the 12-month restriction and 5-mile buffer zone reasonable and necessary to protect the franchisor's legitimate interests?
  3. 3 Does inequality of bargaining power affect the enforceability of the restrictive covenants?

Ratio Decidendi

The restrictive covenants in the franchise agreement were unreasonable and unenforceable due to significant inequality of bargaining power, lack of negotiation, excessive scope, and failure to distinguish between early and late termination. The restrictions went further than necessary to protect the franchisor's legitimate interests and could not be remedied by severance.

Court Disposition

appeal dismissed

Orders

  • Restrictive covenants in the franchise agreement declared unenforceable between Dwyer and Fredbar and Mr Bartlett.
  • No severance or blue pencilling permitted to render the covenants enforceable.