In the recent case of London Business House Limited, Faisal Rehman v Pitman Training Limited, Pitman Training Group Limited, the High Court considered the question of whether a provider of employee training courses (Pitman Training Limited) had granted territorial exclusivity to one of its franchisees (London Business House Limited).

The facts

Pitman and LBH entered into a franchise agreement in 2015 which permitted LBH to act as a franchisee for Pitman. Under the agreement, LBH was permitted to sell Pitman training courses relating to the upskilling of career developers, career changes, and parents re-entering the job market in the area of Nottingham. Simultaneously, Pitman also permitted a third party, Derby Business College Limited, to sell Pitman training courses in Nottingham, although Derby primarily sold government-funded, white-labelled training courses for generic basic level employment skills.

Ultimately, the franchise arrangement between Pitman and LBH was unsuccessful and the agreement was terminated in 2017. LBH alleged that the failure of this arrangement was due to the presence of Derby as an additional Pitman franchisee in the Nottingham area. LBH subsequently claimed against Pitman on the basis that:

  • before signing the franchise agreement, Pitman had fraudulently misrepresented to LBH that LBH would enjoy an exclusive territory from which to trade the Pitman brand (claim for misrepresentation); and
  • Pitman breached the terms of the franchise agreement, particularly those provisions which LBH believed to grant “an exclusive right” for LBH to “operate the System (as defined in the agreement) and provide the services (as defined in the agreement) for the purpose of operating its business in the Territory (as defined in the agreement) for at least a five year period, or in summary to exclusively operate the "Pitmans" brand and associated trade marks in the Territory” (claim for breach of contract).

The decision

The High Court dismissed both of LBH’s claims for the following reasons:

in relation to the claim for misrepresentation, the Court held that there was insufficient evidence to prove that Pitman had fraudulently misrepresented the position on exclusivity to LBH. Indeed, many of the documents presented to the Court by way of evidence reflected the terms of the franchise agreement and, where other evidence was submitted, it was generally based on pre-contractual conversations (memories of which were deemed to be unreliable). Further, the standard non-reliance and entire agreement clauses in the agreement itself operated to exclude any liability for any pre-contractual negligent or innocent misrepresentation; and

in relation to the claim for breach of contract, the Court held that whilst exclusivity was not expressly granted by Pitman to LBH in the franchise agreement, there “must be an element of exclusivity offered by this agreement”. However, the claim ultimately failed on causation and loss, because The Court was not satisfied that “Derby's activities had any measurable effect on LBC's turnover or profit”, in particular due to the differences in the nature of the training courses offered by LBH and Derby.


The case highlights the importance of ensuring that any agreement (whether franchise or otherwise) contains suitable non-reliance and entire agreement clauses to prevent the parties from alleging that pre-contractual statements may be relied on as terms of such an agreement. These can be particularly important for agreements drafted following extended periods of negotiation.

However, the findings on exclusivity are the most important takeaways from this case.

The Court seems to have been swayed by LBH’s argument that certain references in the agreement pointed towards there being some degree of exclusivity, such as a reference to the “dedicated and exclusive use of the Pitman Training brand and logo within the agreed Territory”.

Indeed, in his judgment, HHJ Worster commented that:

“The most attractive aspect of the Claimants' case is the point Mr Rehman put forward – that the idea of exclusivity lies at the heart of a franchise agreement. Without it, the idea doesn't work. If the franchisee had to face competition from the franchisor itself, or from some other party who was supplied by the franchisor, what would be the benefit of having a franchise?”

Exclusivity has always been one of the most crucial areas of negotiation in franchise agreements. Franchisees buying into a franchise network usually want some territorial protection in return for their often significant investment. Whether they get it is another matter. For franchisors, exclusivity can be a complex issue dictated by a number of factors, such as the nature of the business, whether it trades online or only in bricks and mortar premises (such as a restaurant), the current market conditions and the position of competitors.

The notion that there is always some degree of exclusivity inherent in a franchise arrangement is a concept that will make franchisors sit up and take note. Indeed, the case is a cautionary tale about the importance of ensuring that the extent of any exclusivity – and, of course, its limitations – are clearly agreed and delineated in a franchise agreement.