Once Britain formally notifies the European Union that it is leaving pursuant to the June 23, 2016 British vote to leave the EU, the process of working through the changes in the relationship between Britain and the EU will take years. However, we know Brexit will impact franchising and now is the time for franchisors to begin communicating with franchisees about the potential impact and preparing for the changes to come — it is not too early to be aware of certain issues that might arise. An important first step a franchisor should consider is a close review of the existing agreements with its franchisees (i.e., franchise agreements, development agreements and noncompetition agreements). In addition, franchisors should evaluate their trademark portfolios and begin to develop strategies to maximize their trademark protection; cost increases may be expected due to a need to obtain separate trademark registrations in Britain and the EU. Among other issues important to consider are Brexit’s effects on territorial provisions and restrictions, the possible differences that may evolve as to relationships with franchisees in the EU versus Britain, and Brexit’s impact on the franchise supply chain.
A franchisor based in the EU will need to thoroughly examine the impact of Brexit on its company operations. For example, a franchisor should evaluate its ability to support its franchisees – Brexit may be the end of the free movement of the franchisor’s workers between Britain and the EU. Franchisors are well advised to keep close tabs on the upcoming Brexit negotiations and to be ready to take the necessary steps to protect their business and the franchise system. Ally Law member firms have attorneys and other professionals studying the negotiations, monitoring changes in laws and processes, and determining how they will impact companies doing business with Britain. Contact your Ally Law member firm to fully explore your franchise operations and consider possible changes to deal with Brexit developments. For more information about Ally Law member firm services in this area, contact us at yourally@ally-law.com.
Click here for the original article by Craig Knobbe of Ally Law member firm Moye White. LLP.
