Franchising and distribution are both ways to get a product or service to market through another business, but they are structured very differently. Choosing the right model affects control, branding, risk and the rules that apply. Here is a plain-English guide for England and Wales.
Distribution, buying and reselling
In a distribution arrangement, a supplier appoints a distributor to buy its products and resell them, usually in a defined territory. Key features:
- the distributor trades on its own account under its own business name (not the supplier's brand system);
- it makes its profit on the margin and takes the stock and credit risk;
- the supplier controls product and supply terms, but not how the distributor runs its business; and
- it is governed by the distribution contract and general competition law.
Franchise, running a business under someone else's system
In a franchise, the franchisor licenses the franchisee to operate a whole business format under the franchisor's brand and system. It goes far beyond just selling products:
- the franchisee runs its own business but under the franchisor's brand, methods, systems and standards;
- the franchisor provides training, support, know-how and a proven model, and exercises significant control to protect brand consistency;
- the franchisee typically pays an initial fee plus ongoing royalties/management fees; and
- it usually involves a licence of trade marks, know-how and an operations manual, with strict quality controls.
So a franchise is a comprehensive, brand-led business format, whereas distribution is essentially a resale relationship.
Key differences at a glance
| Distribution | Franchise | |
|---|---|---|
| What's licensed | Right to resell products | The whole business format and brand |
| Branding | Distributor's own identity | Operates under the franchisor's brand |
| Control | Limited (product/supply) | Extensive (systems, standards) |
| Payments | Margin on resale | Fees + ongoing royalties |
| Support | Usually minimal | Training and ongoing support |
The legal framework
- There is no specific "franchise statute" in the UK, franchising is governed by contract and general law (IP, competition, misrepresentation), with voluntary standards from the British Franchise Association (BFA).
- Both models engage competition law (Competition Act 1998): you generally cannot fix resale prices (resale price maintenance is a hardcore restriction), and vertical restrictions may need to fit within the VABEO safe harbour.
- Trade mark licensing and quality control are central to franchising; IP and confidentiality matter to both.
Which should you choose?
- Choose distribution if you mainly want to sell more product through third parties without controlling how they operate.
- Choose franchising if you have a replicable business model and brand you want others to operate consistently, in return for fees, and you are willing to provide support and enforce standards.
Key takeaways
- Distribution = a distributor buys and resells your products on its own account and own brand, with limited supplier control.
- Franchise = a franchisee operates your whole business format under your brand, with extensive control, training and ongoing fees/royalties.
- There is no franchise-specific statute (contract + general law + the voluntary BFA code); both engage competition law (no resale price maintenance; use the VABEO safe harbour).
- Choose by how much control and brand consistency you need versus simply reselling product.
Sources
- General contract and intellectual property law (franchise agreements; trade mark licensing; know-how); British Franchise Association voluntary standards
- Competition Act 1998 and the Vertical Agreements Block Exemption Order 2022 (VABEO), resale price maintenance and vertical restraints
- Distribution vs agency/franchise distinctions in commercial practice in England & Wales
--- This article is general information about the law of England & Wales as at 2026, not legal advice. For advice on your circumstances, consult a qualified solicitor.