In recent years, a new trend has emerged in the UK franchise market; the rise of non-territorial franchises. These franchises differ sharply from the traditional business format franchise model, which has long been the foundation of the sector’s success and integrity.
For decades, British franchisees have built profitable and sustainable businesses within exclusive geographic territories, usually defined by postcode. That model offered protection, stability, and the potential for long-term growth. A franchise could be sold as a going concern or passed to the next generation.
But today, a growing number of franchisors are abandoning this established structure. They are embracing a non-territorial model, allowing franchisees to operate anywhere in the country. On the surface, it looks like an opportunity to reach more customers and scale faster. But beneath the glossy marketing and fast-growth headlines lies a model that many in the industry fear could undermine the credibility of the UK franchise sector and leave hundreds of inexperienced investors out of pocket.
From Exclusive Territories to Open Markets
The traditional franchise model has long relied on defined territories. A franchisee would purchase the rights to operate in a protected area, say, a group of postcodes in Manchester or Surrey. That exclusivity prevented other franchisees from competing within the same area, giving each operator the chance to develop a loyal local customer base and build a business with real asset value.
This territorial protection was central to the appeal of franchising. It allowed franchisees to plan, invest, and grow without fear of internal competition. When well-managed, such franchises could be sold at a premium, often forming part of a family’s wealth or succession planning.
In contrast, non-territorial franchises remove those boundaries altogether. Franchisees are free to operate anywhere, online, nationally, or even internationally. On paper, this sounds liberating. In practice, it allows franchisors to sell a far greater number of franchises, multiplying their upfront fees without necessarily expanding the market opportunity for each franchisee.
Technology and the Explosion of Mass Recruitment
This shift has been accelerated by technology, particularly video conferencing and video platforms such as You Tube, Zoom and Microsoft Teams. Training that once required in-person sessions and one-to-one mentoring can now be delivered virtually to large groups.
For franchisors, the economics are irresistible: lower training costs, faster onboarding, and the ability to sell hundreds or even thousands of franchises in a matter of months. For prospective franchisees, the appeal often lies in low entry costs, work-from-home flexibility, and the promise of being part of a “fast-growing national network”. The reality is inadequate ongoing support, the loss of exclusivity and a large number of ‘competitors’ as franchisees compete with each other for business.
Sectors like property sourcing, travel agency, recruitment, PA services and mental wellbeing coaching have been particularly active in adopting this new model. These are industries where digital tools make it easy to operate nationally and where perceived professional credibility can be leveraged quickly through branding and training packages.
The Mental Wellbeing Paradox
One of the most striking examples of this trend is a mental wellbeing coaching franchise that has rapidly become one of the UK’s fastest-growing franchise brands. Within months of launching, it reportedly recruited hundreds of franchisees; a feat that would be impossible under a traditional territorial model.
However, the speed of expansion has raised alarm bells across the franchise community. Seasoned franchisors and consultants question whether the business can possibly provide adequate support, supervision, or meaningful income opportunities to such a large pool of franchisees competing for the same clients.
The irony is painful. Many of these new recruits are drawn by the promise of helping others improve their mental health, yet they may face severe financial and emotional strain if their investment does not yield the anticipated profits.
Industry observers note that when franchisees fail, the blame is often placed on them for not following the system closely enough or not working hard enough, rather than on the limitations of the business model. To make matters worse, franchise agreements stipulate that monthly fees remain payable for the remainder of the agreement, even if the business is no longer trading. For individuals already struggling financially, this can be devastating and ironically, damaging to their own mental wellbeing.
Industry Concern and Credibility Risk
The situation has caused unease among long-established franchisors. The UK franchise industry has spent decades building a reputation for ethical conduct, transparency, and professionalism. Many fear that the aggressive recruitment of non-territorial franchisees risks eroding that trust.
One moment that particularly shocked industry veterans came when the founder of one of these non-territorial franchises was invited to speak as a guest of the International Franchise Association (IFA) at a major franchise exhibition at London’s ExCeL centre. For many, it symbolised the growing gap between the traditional franchise community, which values sustainable success, and the new wave of opportunistic franchisors, whose priority appears to be volume sales rather than franchisee prosperity.
As one experienced franchise consultant put it:
“If a franchisor can sell hundreds of licences without worrying about market overlap or territorial conflict, it’s not really franchising in the traditional sense; it’s just a licence sales machine.”
The Danger to Investors and to the Industry
The dangers of this model are twofold.
First, for individual investors, the financial risks are significant. Without a protected market, franchisees are effectively competing against one another, often for the same customers. That undermines their earning potential and increases the likelihood of business failure.
Second, for the franchise industry as a whole, widespread failure among these non-territorial operators threatens its reputation. Potential investors, seeing headlines about franchisees losing money, may wrongly assume that all franchises carry the same level of risk. This could damage the credibility of even the most established and ethical brands.
If left unchecked, this could lead to a situation similar to the “get-rich-quick” schemes that occasionally tarnish other business sectors , eroding confidence and prompting calls for external regulation.
What Should Be Done: Calls for Regulatory Curbs
The UK franchise industry has traditionally been self-regulated, relying on codes of conduct promoted by organisations such as the British Franchise Association (BFA). While this system has worked well for decades, the lack of control has encouraged a massive expansion of low-cost franchises that have little chance of success. The children’s activity sector being a prime example. Now the rapid rise of non-territorial franchises takes this deterioration to a new level.
Experts are calling for several key reforms:
- Mandatory disclosure requirements. Franchisors should be required to publish key performance data, including the number of franchisees who have ceased trading and actual income levels.
- Clearer definitions of “franchise.” Regulators should distinguish between traditional territorial franchises and non-territorial licence models to avoid investor confusion.
- Caps on franchisee recruitment. New franchisors should be restricted from recruiting beyond a manageable number of franchisees until they can demonstrate support capacity and proven profitability.
- Cooling-off periods and fee transparency. Franchisees should be given more time to review contracts and better understand ongoing fee obligations.
- Greater oversight by trade bodies. The BFA and IFA should review speaking invitations and exhibition participation to ensure only ethical and proven franchisors are promoted to the public.
Preserving the Future of Ethical Franchising
Franchising has long been one of the UK’s most successful business models, contributing billions to the economy and supporting thousands of small business owners. Its strength lies in mutual trust between franchisor and franchisee, and between the industry and the public.
The non-territorial franchise boom threatens to upset that balance. While innovation should be encouraged, business models that prioritise volume recruitment over sustainable success risk harming both individuals and the industry’s collective reputation.
For prospective franchisees, the lesson is clear: due diligence is essential. Ask where your customers will come from, how many other franchisees you’ll be competing against, and whether your agreement offers any form of exclusivity.
For franchisors, the challenge is to uphold the standards that have made franchising a respected and resilient business format. The future of the industry and the livelihoods of those who invest in it depend on maintaining that integrity.