Company entitled to cancel franchise agreement over late accounts

In a recent ruling by the Commercial Court, a franchisor, Winkworth Franchising Ltd, was deemed justified in cancelling a contract due to the franchisee's failure to provide accounts within the agreed timeframe. Despite multiple requests from Winkworth, Goble's accounts were not provided until April 2022—13 months past the stipulated deadline.

The Commercial Court has ruled that a franchisor was entitled to cancel a contract because the franchisee had failed to provide accounts within the agreed time frame. The case involved Winkworth Franchising Ltd and Goble. In 2002 the two parties had entered into five 20-year franchise agreements in respect of the sale and letting of property in London. Goble had a right under the agreements to twice extend them by ten years. Winkworth could refuse to extend on specific grounds and/or if Goble breached any contractual obligations.

Under the agreement, Goble’s 2020 accounts should have been provided by May 2021. They were not, and when Winkworth requested them in June, Goble asked for more time. Winkworth then asked to see draft accounts, but Goble said they had not been compiled. There were further requests, but the required accounts were not provided until April 2022.

In October 2022 Winkworth sent a letter of summary termination of the franchises based on the delay in producing the accounts. Goble opposed the move, but the termination was upheld as valid by the Commercial Court. It held that the agreement contained express provisions about the provision of accounts. Winkworth’s requests had been legitimate and sufficiently clear, and several had been made. The accounts had been provided 13 months late and so Winkworth was entitled to refuse to extend the franchises.

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