Corporate Businesses and Franchisees: Regulatory Environment

Navendu Mishra Excerpts

Wednesday 2nd July 2025 Commons Chamber

[Navendu Mishra (Stockport) (Lab)]

I congratulate the right hon. Gentleman on securing this debate. I refer to my entry in the Register of Members’ Financial Interests, in particular my trade union membership. I wonder whether he shares my view that the merger between Vodafone and Three will have real consequences for both pricing for customers and job losses in Britain.

[Sir John Hayes]

That is certainly the risk. I think mergers more generally need to be looked at closely. It is why we have the Competition and Markets Authority, and why these things are indeed considered in the terms I have described.

More recently, of course, as my right hon. Friend the Member for New Forest East (Sir Julian Lewis) will know—as a former member of the Intelligence and Security Committee, of which I remain a member—the Government introduced other legislation in respect of security, large businesses, mergers and all kinds of similar and related matters. It is important to gauge the national interest in all kinds of ways when one considers business activity.

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[Sir John Hayes]

I am grateful to my right hon. Friend, who takes a great interest in these matters, and that is precisely why I posed the earlier question to the Minister about how closely he and others had looked at that merger. I will say no more about it than that, but it does seem to me to be a legitimate question to ask: were those things considered in this particular case, and how are they generally considered? If my right hon. Friend is right that there are threats that result from this, under existing legislation and regulation it is perfectly possible for the Government to become involved in these kinds of commercial affairs.

[Navendu Mishra]

Will the right hon. Gentleman give way?

[Sir John Hayes]

I will give way once more and then will make a little more progress.

[Navendu Mishra]

May I put on record that I did not use the term “right hon.” in my earlier intervention on the right hon. Gentleman and wish to correct that? Also, the right hon. Member for Chingford and Woodford Green (Sir Iain Duncan Smith) made a very important point about bigger businesses that operate outside the UK perhaps in some cases abusing their position. On a lighter note, may I encourage him to join a trade union? I would be happy to supply him with a membership form.

[Sir John Hayes]

I am again grateful to the hon. Gentleman. It seems to me that there is a mood across the House tonight that more must be done. This Minister, as an experienced Member of the House, will have gathered that that mood could easily, from this small beginning, become a crescendo that might endanger the very safety of his office and the Government as a whole, so let us hope that this is the beginning of a journey, for both the Government and the Minister, towards a regime that counters the very things that have been described by Members across the House.

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[Gareth Thomas]

My hon. Friend will forgive me, but I will not comment on the particular circumstances of Vodafone and its relationship with franchisees in general, or those former franchisees who are bringing court action. However, I note his comment.

[Navendu Mishra]

I have worked with the Minister on a number of issues relating to his ministerial role, and he has always been helpful and proactive. As he is representing His Majesty’s Government, does he feel that there is a need to legislate on this issue, and that the code of conduct simply does not go far enough? Also, as my hon. Friend the Member for North Durham (Luke Akehurst) has just said, there might be cases of larger corporations opting in and out as and when it suits them.

[Gareth Thomas]

As I said, I recognise that this case has raised concerns across the House about the quality and effectiveness of the legislation that governs franchisees and, indeed, other businesses, and about the arrangements around franchisees, and their relationships. As I say, up to now, we have not had significant representations that the quality of regulation of franchises is not adequate. However, I recognise the concerns across the House that this case has brought up, and as a result, I will track very carefully how the court case unfolds.

I was noting the advantages that, on occasion, self-regulation brings. They include freedom when it comes to contracting. Individuals and businesses have the right to enter into agreements and set their own terms, free from unnecessary Government interference. That freedom allows franchise agreements to be tailored to individual needs. People can set up shop more easily on the high street or elsewhere with the power of a big brand behind them. On the whole, self-regulation also allows the franchise industry to set standards and guidelines based on deep, industry-specific expertise. It allows the industry to adapt more quickly to market changes, too.

It is my understanding that the franchise agreements are the main instruments governing the relationship between franchisors and franchisees. Those agreements normally cover key issues such as fees, territory rights, contract duration and dispute resolution mechanisms. The Government of course encourage anyone entering a business contract such as a franchise to seek independent legal advice before agreeing to the terms and conditions laid out in those agreements.

I have talked a little bit about self-regulation and its benefits, and I alluded earlier to the fact that there are existing protections in law that cover all businesses, including franchises. For example, under the Misrepresentation Act 1967, anyone who has entered into a contract as a result of misrepresentation may be able to rescind the contract and claim damages. Misrepresentation is a false statement by one party to another that induces that person to enter the contract. Ultimately, it would be for the courts to decide whether a misrepresentation had occurred and what the remedy would be. There are other forms of legislation, too, including the Unfair Contract Terms Act 1977, which may apply to business-to-business contracts. That references the application of a reasonableness test, but that again is a matter for dedicated legal advice.