The franchisor of a care home business has been granted an interim injunction against a franchisee for alleged breaches of their agreement.
The case involved Senior Care at Home Ltd (t/as Right at Home UK) and Adult Home Care Ltd.
Senior Care was the franchisor of the RIGHT AT HOME brand under which its franchisees provided domiciliary care in certain areas in the UK.
Adult Home had been granted a 10-year franchise in May 2017 for postcodes in the Swansea area of South Wales.
Concerns were raised in Spring 2021, relating to Adult Home’s poor performance following complaints by the local authority about compliance and standards of care and about the personal behaviour of one of the directors.
Whistleblowing allegations had been made, several complaints had been made by staff about the director, and there were alleged medication compliance issues.
Senior Care began investigations and found that the allegations were well-founded and terminated the contract on 5 July 2021.
It applied for interim relief seeking delivery up orders and restraint of trade orders. Their case was founded on breach of contract of the franchise agreement.
Under the agreement the franchisor had extensive termination provisions in cl.18 for material breaches. Clause 11 was a restrictive covenant clause, and cl.19 dealt with the consequences of termination of the contract.
Senior Care submitted that the matter was a straightforward case of breach of obligations under the franchise agreement.
Adult Home argued that an injunction would be inappropriate given the dispute of fact between the parties. They maintained that the restrictive covenants were not binding as Senior Care was in repudiatory breach of contract.
It argued that the balance of convenience favoured the continuation of care for the service users, and that the local authority now had a considerable degree of confidence in the provision of care that they provided.
The court granted the application. It held there was a serious issue to be tried as to whether the Adult Home were in breach of the agreement signed in May 2017 to be a franchisee. There was no real dispute, on the evidence, that it had breached several of the provisions in cl.19.
The point of a franchise was to enable the business to be conducted in the franchisor’s name, so it was important for that interest, their name and modus operandi to be protected. Damages would not be an adequate remedy for the franchise model, and it would be seen as a green light to other franchisees to break their contracts.
It was important for a franchisor to be seen to be able to effectively police their brand and their franchise. The balance of convenience was in favour of granting an injunction.
Please contact us if you would like more information about contract law and protecting your business.