Unsustainable' gaps in policing of franchise businesses must end, MPs say

"The UK government needs to eradicate unsustainable gaps in the policing of franchise businesses after a series of scandals to hit the sector, a parliamentary committee has found. The conclusion forms part of the business and trade committee's small business strategy report and follows a Guardian investigation in December which revealed claims that Adrian Howe, a former Vodafone employee who had agreed to become a franchisee in 2018, drowned after becoming convinced his deal with the multinational company would prove financially disastrous."

"The cross-party committee highlighted further allegations from Vodafone franchisees of an imbalance of power in their agreements, which prompted them to launch a high court claim in December 2024. Vodafone is contesting the claim. The MPs also raised separate allegations of widespread sexual harassment and abuse in McDonald's restaurants and how franchisors could fail to maintain adequate oversight of their franchisees' employment practices."

"Gaps in the oversight of franchise agreements allow serious employment abuses to go unaddressed and leave franchisees exposed to unfair contractual practices, the committee concluded. The absence of a dedicated regulatory framework or clear accountability for employment standards within franchise networks is no longer sustainable. The committee added to calls for new legislation in the sector by recommending that the government consider the introduction of a statutory code of conduct, alongside stronger independent enforcement mechanisms."

The parliamentary committee found that policing gaps in franchise businesses have enabled scandals and serious harms. Claims include that former Vodafone employee Adrian Howe drowned after fearing a financially disastrous franchise deal, and Vodafone franchisees launched a high court claim in December 2024 which Vodafone contests. MPs reported allegations of widespread sexual harassment and abuse at McDonald's and noted franchisors failing to oversee franchisee employment practices. The committee concluded that lack of a dedicated regulatory framework and clear accountability allows employment abuses and unfair contracts to persist, and recommended considering a statutory code of conduct with stronger independent enforcement. The report also noted pressures on small businesses including high street closures and £112bn in unpaid invoices.

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