‘Unsustainable’ Gaps in Policing of Franchise Businesses Must End, MPs Say

Why It Matters

The recommendations could reshape franchise regulation, reducing abuse and contractual unfairness while stabilising the broader small‑business ecosystem. Failure to act risks further high‑street decline and reputational damage for major brands.

Key Takeaways

• MPs demand statutory code for franchise oversight.
• Vodafone and McDonald’s face abuse and contract disputes.
• Small businesses owe £112bn unpaid invoices, 38 stores close daily.
• Committee urges fair business rates and stronger late‑payment enforcement.
• Lack of regulation fuels employment abuse in franchise networks.

Pulse Analysis

Recent investigations have exposed serious shortcomings in how UK franchise networks are overseen, from a Vodafone franchisee’s tragic death to allegations of sexual harassment in McDonald’s outlets. These incidents underscore a systemic lack of a dedicated regulatory framework, leaving franchisees vulnerable to unfair contracts and employees exposed to abuse. By proposing a statutory code of conduct and independent enforcement mechanisms, lawmakers aim to close the oversight gap that has allowed such abuses to persist.

The committee’s findings also paint a bleak picture for the wider small‑business landscape. With £112 billion in unpaid invoices and an average of 38 high‑street stores shutting each day, cash‑flow pressures mirror the pandemic’s worst‑case scenario. Existing business rates are viewed as disproportionate, prompting calls for a fairer, ability‑to‑pay model. Strengthening late‑payment legislation, including mandatory transparency across supply chains, could alleviate the chronic liquidity crunch that threatens the viability of countless SMEs.

If the government adopts the suggested reforms, the franchise sector could see a marked improvement in corporate governance and employee protections, while the broader SME community benefits from a more predictable fiscal environment. A statutory code would provide clear standards, reducing litigation risk for franchisors and fostering consumer confidence. However, implementation will require coordination between regulators, industry bodies, and businesses to balance oversight with operational flexibility, ensuring that high streets remain vibrant contributors to the UK economy.

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

House of Commons business and trade committee calls for changes after series of scandals in sector · Simon Goodley · Tue 10 Feb 2026 19:01 EST

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 wide‑ranging report also identified “key pressures” on small businesses including an average of 38 stores closed each day on Great Britain’s high streets; evidence that UK small businesses were owed £112 bn in unpaid invoices by the end of 2024; and estimates by the British Retail Consortium that the autumn budget added £7 bn to the cumulative cost of policy and regulation affecting retail.

The committee concluded that business rates should be replaced with a fairer system that “reflects a firm’s ability to pay”, while the late‑payment crisis could be ended by introducing “stronger, enforceable measures … including mandatory transparency to change behaviour across supply chains”.

Committee chair Liam Byrne said:

“The evidence we heard during this inquiry was stark. Many small businesses are now operating under pressures comparable to those experienced during the Covid pandemic but this time without an emergency support framework in place.

“SMEs are facing late payments, rising energy costs, increasing crime, a complex tax system and barriers to growth that are compounding rather than easing.

“These pressures are not isolated; together they pose a real risk to business viability, high streets and economic growth.

“High streets do not die by accident. If the government is serious about growth, it must set out a more coherent and ambitious plan for the businesses that make up so much of the UK economy.”

A spokesperson for McDonald’s said franchisees were held to account on a regular basis through newly strengthened review processes. They added that the company “reserves the right to take appropriate action, including the termination of a relationship, if a franchisee fails to deliver on our standards and expectations”. The spokesperson also noted that “franchisees have a contractual obligation to comply with all applicable laws and regulations and comply with all additional standards set by McDonald’s.”

Vodafone has previously said that it did not push Howe into agreeing to take on any poorly performing stores.