International Franchising: Why UK Brands Are Going Global – And The Legal Structures Needed To Support Sustainable Expansion

Jonathan Lea November 25, 2025

The Global Appeal of British Brands

As global demand for British concepts continues to surge, international franchising for UK brands has become one of the most powerful routes to sustainable overseas growth. From the Middle East to North America, UK-originated concepts are being licensed, scaled and operated by local partners who recognise the strength of British brand creation, training methodologies and operational standards.

While the media often focuses on traditional goods-based exports, the UK is now fundamentally a services-led economy. Franchising allows British businesses to export expertise, identity and systems, rather than factories or machinery. This shift has created a significant pipeline of UK brands in discussions with potential overseas partners across multiple jurisdictions.

However, international franchising is a highly technical legal exercise. The opportunity is compelling, but the risks escalate rapidly without the correct structures, agreements and protections in place. Below we outline the core issues UK brands must address when preparing for overseas franchising – and how The Jonathan Lea Network frequently advises clients on franchise agreements, structures and disputes that arise in this area.

Choosing the Right Market and Local Counterparty

Selecting the appropriate jurisdiction and partner is the foundation of any sustainable international franchise strategy. Businesses must not only consider consumer demand and cultural fit but also the regulatory environment, local commercial norms and the reliability of prospective operators.

A strong master franchisee should have the capital, infrastructure and sector knowledge to develop the brand through multiple locations over several years. A robust franchise agreement therefore needs to set out clear development milestones, reporting obligations and performance indicators to ensure momentum. If these standards are not met, the franchisor must have contractual mechanisms to intervene or reallocate rights to preserve the brand’s viability in that territory.

Master Franchise Rights: Scope, Control and Limitations

International expansion typically uses a master franchise model, under which a single local partner obtains the exclusive right to develop and sub-license the brand within a defined territory. The scope of these rights must be drafted with precision, as they determine the long-term growth and value of the brand outside the UK.

A well-prepared master franchise agreement will define:

The territory – whether the rights apply to a whole country, a region, or a grouping of countries. In high-growth jurisdictions, too broad a territory can stifle development; too narrow a territory can limit commercial opportunity.

Exclusivity conditions – exclusivity is usually granted only where the master franchisee meets minimum performance and development obligations. Failure to do so should allow the franchisor to reduce or remove exclusivity.

Sub-franchising rights – the agreement must set clear parameters around when and how the master franchisee can appoint sub-franchisees, what recruitment standards must be met, and what training or approval processes the franchisor can impose.

Operational controls – even where day-to-day management is delegated, the franchisor must retain ultimate control over brand standards, manuals, marketing, supply chain sources and system changes.

These provisions ensure that local autonomy does not dilute the brand or compromise consistency.

Development Schedules and Performance Obligations

Development schedules are critical in international franchising because they ensure the brand expands at the right pace and remains visible in the local market.

A well-constructed schedule should specify:

Minimum number of openings per year – this may increase over time as the master franchisee gains experience.

Mandatory milestones – such as opening the first flagship outlet within a particular timeframe, securing suitable locations, or completing staff training.

Consequences of underperformance – which may include loss of exclusivity, the right for the franchisor to open corporate stores, the ability to appoint additional franchisees, or even termination in severe cases.

These obligations provide a commercial incentive for the master franchisee while protecting the franchisor from prolonged inactivity.

Initial and Ongoing Fee Structures

A franchise’s financial framework must align incentives between both parties. International agreements typically involve a combination of upfront and recurring fees, all of which must be structured carefully to comply with local tax and commercial laws.

Common fee components include:

Initial master licence fee – a one-off fee paid for the grant of territorial development rights. This should reflect the size and commercial value of the territory, adjusted for expected development schedules.

Ongoing royalties – royalties may be a percentage of gross revenue, a fixed monthly amount, or a blended model. Percentage royalties incentivise operational scale, whereas fixed fees create predictability for the franchisor.

Marketing fund contributions – overseas franchisees may be required to contribute to both global and local marketing funds. Agreements should set out how these funds are administered, audited and allocated.

Training and support fees – franchisors often charge for initial training programmes, on-site support, audits and brand development assistance.

These financial arrangements must be drafted clearly to avoid disputes and to ensure compliance with local tax withholding rules, currency controls and reporting requirements.

Brand Control and Protection Mechanisms

One of the biggest risks in international franchising is loss of brand integrity. Legal agreements therefore need strong mechanisms to maintain control over how the brand is presented and operated in each jurisdiction.

These typically include:

Mandatory operational standards – covering customer service, product sourcing, hygiene, aesthetics, staffing and financial reporting. Regular audits ensure ongoing compliance.

Use of trademarks and IP – the agreement must strictly regulate how the brand, logo and designs can be used. Trademark registrations should be secured in the territory before launching.

Approval rights – for premises, signage, marketing materials, uniforms and suppliers. Without these controls, brand drift becomes inevitable.

Digital presence – the franchisor should retain control of websites, social media accounts and online ordering systems to preserve global brand coherence.

A robust framework of controls allows the brand to scale while preserving the consistency that underpins its value.

Training, Support and Knowledge Transfer

Successful international franchises depend heavily on the quality of training and operational support provided to the master franchisee. The agreement should set out:

Initial training programmes – covering systems, operations, management, marketing and compliance. These may take place in the UK, in the target market, or both.

Ongoing training obligations – including refresher courses, updates when systems evolve, and training for new store openings or management teams.

Operational manuals – which must be kept confidential and updated regularly. The agreement should address confidentiality, ownership of know-how and restrictions on use after termination.

Support obligations – defining whether the franchisor will provide site selection guidance, marketing assistance, supply chain coordination, audit support or technology platforms.

These provisions ensure that the master franchisee receives the tools required to replicate the UK model effectively in a foreign market.

Termination Rights and Exit Mechanisms

Termination provisions are often the most contentious aspect of an international franchise agreement. They must strike a balance between giving the franchisor sufficient remedies for non-performance and providing the franchisee with clarity and stability.

Key termination considerations include:

Grounds for termination – such as breach of operational standards, non-payment of fees, failure to meet development targets, insolvency, or damage to the brand.

Cure periods – allowing the master franchisee time to remedy certain breaches before termination can take effect.

Post-termination restrictions – including non-compete obligations, non-solicitation provisions and requirements to cease use of trademarks, return manuals and de-brand premises.

Transition arrangements – which may involve the franchisor taking over sub-franchisees, acquiring local assets, or transferring operations to a new master franchisee.

Getting this framework right is essential to protecting the brand over the long-term and avoiding costly disputes.

How We Assist With International Franchise Agreements, Structures and Disputes

At The Jonathan Lea Network, our team regularly advises clients on franchise agreements, franchise structures, regulatory considerations and franchise-related disputes . Our work includes drafting and negotiating franchise agreements and handling disputes relating to breach, underperformance or brand misuse.

International franchising can be an exceptional opportunity for UK brands, but success requires careful legal planning and strong contractual foundations. By ensuring that agreements are well structured, risk-managed and future-proof, UK franchisors can expand globally with confidence.

We offer a no-cost, no-obligation 20-minute introductory call as a starting point or, in some cases, if you would like some initial advice and guidance, we will instead offer a one-hour fixed fee appointment (charged from £250 plus VAT to £350 plus VAT* depending on the complexity of the issues and seniority of the fee earner).

Please email wewillhelp@jonathanlea.net providing us with any relevant information ensuring that any call we have is as productive as possible or call us on 01444 708640. After this call, we can then email you a scope of work, fee estimate (or fixed fee quote if possible), and confirmation of any other points or information mentioned on the call.

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This article is intended for general information only, applies to the law at the time of publication, is not specific to the facts of your case and is not intended to be a replacement for legal advice. It is recommended that specific professional advice is sought before relying on any of the information given. © Jonathan Lea Limited.