Navigating the gig economy and the choppy channel across to franchising 

Businesses looking to expand may consider a franchise model as the solution to future growth without the demands of capital investment.  But getting franchising terms right is increasingly vital against the backdrop of the gig economy, with challenges as to whether individuals are truly self-employed contractors or could be classed as workers or employees and due to receive associated in-service benefits.

Franchising is a long-standing business model, with well-known examples such as fast-food outlets McDonald’s, KFC or Subway, through hotels, estate agents and cleaning companies to fitness centres.  It allows the original business, as franchisor, to grant a franchisee the rights to replicate the business in new territory and to trade under a brand’s well-established name.   The franchisee generally pays a fee to buy the rights in the first place, with a continuing commitment of fees or commissions to the franchisor.

Buying the franchise rights and getting the territory off the ground may involve creating a team, setting up premises and finding your own customers through direct marketing, but in the case of courier delivery service DPD, their franchise model allows self-employed owner-driver franchisees (ODFs) to act as delivery agents by tapping into the existing customer base and operational infrastructure of the nationwide business.

As part of the DPD franchise agreement, ODFs are required to have any substitute drivers approved by the company before handing over any responsibilities.  In the case of Stojsavljevic and another v DPD Group UK Ltd this process was challenged, with ODFs arguing that it undermined any self-employed status, making them workers or employees of DPD.  They said the reality of the franchise agreement was that they were contracted as individual drivers, solely responsible for undertaking the services.

But an employment tribunal ruled against the drivers, a decision later upheld by the Employment Appeal Tribunal (EAT), saying that a key element of worker status is that an individual personally undertakes to perform the work or services themselves.  In the case of DPD franchisees, there was no restriction on supplying a substitute driver, only that the company had to be satisfied that the substitutes met minimum requirements.

The case reflects shifts in the broader economy towards so-called ‘gig’ work – short term work commitments or freelance contracts, typically paid on a per job basis – and the associated challenges around whether those fulfilling the jobs are self-employed or are workers or employees, with rights such as holiday and sickness pay.

Notable cases in the UK include successful action by drivers seeking worker status and rights from Uber, Deliveroo and Addison Lee.  As a result, many such companies are reportedly considering franchise programmes as an alternative.

“Franchising may be seen as a get-out of jail card for this sector, but any employment tribunal will take a detailed look at both the clauses that constitute the agreement and how the relationship operates in practice,” explained company law specialist Name, Title of Town-based solicitors Firm.

“And it’s not just about substitution rights, as in the DPD case, as recent cases have focused on aspects such as the ability to determine pricing, the degree of integration into the franchisor business, and whether franchisees are subject to centralised policies or terms.”

To discuss this, or any other employment related matter, please contact Jane directly on 01483 887766, email or start a live chat today.

*This is not legal advice; it is intended to provide information of general interest about current legal issues.


Jane Crosby

Partner, Head of Dispute Resolution & Accredited Mediator

Jane is a Partner based in the Guildford office and she is also Head of the Dispute Resolution team here at Hart Brown. Jane specialises...

Jane Crosby -Head of Dispute Resolution

Partner, Head of Dispute Resolution & Accredited Mediator

Jane Crosby

Jane is a Partner based in the Guildford office and she is also Head of the Dispute Resolution team here at Hart Brown. Jane specialises in employment Law and commercial litigation and brings more than 15 years' experience to her role.

Prior to entering the legal profession, Jane was employed in the aviation industry. This experience is appreciated by many of Jane's clients who note that she is able to take a commercial and pragmatic approach to any legal issue that they face.

Jane acts for a wide range of individuals and businesses and her areas of specialism include aviation, property related industries and IT. Jane regularly advises on aspects of employment law, such as settlement agreements, employment contracts, policies and procedures, redundancies, equal pay, data protection, issues arising from TUPE and reorganisations, the calculation of holiday pay, bonus and commission payments, disciplinary and grievance issues, dismissal and termination issues, the protection of confidential information and the enforcement of restrictive covenants. Jane gets involved in GDPR training for her clients and she is able to deliver tailored employment law training sessions upon request.

As a commercial litigation lawyer, Jane also deals in shareholder and directors disputes, commercial contract disputes and the enforcement of restrictive covenants.

Jane has been involved in successful high value commercial litigation for clients in the High Courts, she is an accredited mediator and she is a member of the Employment Lawyers Association.

Jane is often asked to write for a number of well known publications, including The Daily Mail, The Telegraph and The Week and she has been interviewed on BBC Radio 4.

Here is small selection of the feedback that Jane has received:

“Jane, I cannot sincerely thank you enough for your wise counsel and am delighted to have made your acquaintance. If I am blessed with a new position somewhere I will hand over my contract in the first instance to you. Likewise, any of my friends, peers, romans and countrymen wanting advice, I will point them in your direction.”

“Jane, you have been most resilient on my behalf for which I sincerely thank you for all your endeavours. I have a tremendous working relationship with Hart Brown and you have undoubtedly compounded this further."

“I appreciated the clarity of advice given at a stressful time”.

“A sensitive and highly professional approach and efficient work in the interests of the client”.

“Your advice, conduct and assistance have been indeed outstanding and very professional but also – and most importantly – very humane”.