Claim No: IP-2022-000066 - [2024] EWHC 1369 (IPEC)

It is not disputed that the Franchisee Defendants are not parties to the 2018 Agreement;

The 2018 Agreement provides at clause 11 that its terms are not enforceable by any third party, which includes the Franchisee Defendants, under the Contracts (Rights of Third Parties) Act 1989;

The 2018 Agreement does provide in clause 5.6 that KK will use reasonable efforts within 14 days of the effective date to procure any third party using “Mowley’s” or similar signs in the course of trade to cease such use and use the Settlement Sign instead, but the evidence shows that none of the Franchisee Defendants were using “Mowley’s” or similar signs in the course of trade at the date of the Settlement Agreement, only becoming franchisees of KK at later dates, and so that does not provide them with consent;

SS’s evidence, which I accept, is that KK told him only one other person was using “Mowley’s” or “Metro’s” and that was a man called Ameen, who is not one of the Defendants and is no longer a franchisee of KK, that at the time he signed the 2018 Agreement SS did so in the belief and intention that it would allow only KK and Ameen to use the Settlement Sign, and no one else, and that he would not have signed the 2018 Agreement if he believed it allowed KK to franchise the Metro’s brand;

Conversely, I reject as incorrect KK’s evidence that the parties entered into the 2018 Agreement in the mutual understanding that he intended to and would be permitted to franchise the Metro’s brand under the Settlement Sign or any reasonable modification thereto;

In any event, the 2018 Agreement has an entire agreement clause at clause 9 (“9.1 This agreement constitutes the entire understanding and agreement between the parties in relation to the subject matter of this agreement. 9.2 Each party acknowledges that it has not entered into this agreement in reliance wholly or partly on any representation or warranty made by or on behalf of the other party (whether orally or in writing) other than as expressly set out in this agreement.”). If I am wrong and there was such a mutual understanding, it should have been dealt with expressly in the agreement.

In addition, the Franchisee Defendants did not fall within the definition of Related Parties in the 2018 Agreement (“a party’s parent, subsidiaries, assigns, transferees, representatives, principals, agents, officers or directors excluding for the avoidance of doubt any third party using in the course of trade the Signs”) either when it was executed or at the time this claim was issued, and indeed appear to be specifically excluded from the definition by the reference to a third party using the Signs in the course of trade;

In addition, clause 3.2 of the 2018 Agreement provides that “this settlement and release does not waive, release, settle or in any other way compromise any claim [the Claimant] may have against any other third party (or release them thereof) in respect of third party’s dealings in the course of trade under and by reference to the Signs”. The implied term the Defendants seek would be inconsistent with this express term of the agreement and in those circumstances will not be implied (see Yoo Design Services Limited at [51](v));

For all those reasons I am satisfied there is no ambiguity in the 2018 Agreement which requires to be resolved by implication of a term such as the Defendants seek. The 2018 Agreement makes clear on its face that it is intended to provide full and final settlement of the dispute relating to use of the Signs in the UK by: KK; his Related Parties, as they are closely defined not to include licensees and to specifically exclude third parties: and only such third parties which fall within the provision of clause 5.6 which the Franchisee Defendants, and any future third party franchisee, do not. It has business efficacy without requiring any such term to be implied and the implication of such a term would be inconsistent with express terms of the 2018 Agreement and undermine its purpose, in my judgment. I decline to imply such a term.