Zoe Evans & Ors. v Anytime Clubs UK Limited & Anor.

A master franchisor is not jointly liable for a franchisee’s trade mark infringement merely because the franchise agreement gives it an option to approve advertising. The contractual provisions must be construed to determine whether they concern the disputed advertisement and whether the franchisor exercised the relevant control.

Nor does a franchisee act as the franchisor’s agent without a proper contractual or factual basis showing authority to bind the franchisor. Where neither basis is arguably established, the claim against the franchisor may be struck out.

The claimants, proprietors of the “Xtreme Gyms” UK trade mark, brought trade mark infringement and passing off proceedings concerning a Google advertisement for a gym operated by Tribe Health Clubs Limited under an Anytime Fitness franchise.

The applications concerned removal of Ms Osbourne, Tribe’s general manager, and substitution of Tribe as defendant. The first defendant, Anytime Clubs UK Limited, also applied to strike out the claim against it or obtain summary judgment, arguing that it had no knowledge of or responsibility for the advertisement.

The central issue was whether the franchise arrangements provided an arguable basis for joint liability or agency-based liability on the part of Anytime UK.

1. Joinder and substitution. By consent, Ms Osbourne was removed as a defendant and Tribe was joined in her place. The court noted that Tribe was represented and consented to joinder.
2. Control over advertising. The franchise agreement distinguished between provisions governing how Tribe presented the “Anytime Fitness” marks and the separate advertising provisions in section 6C. Section 3C and D principally regulated presentation of the franchisor’s name and marks. Section 6C gave Anytime UK an option to require prior approval of advertising, but the evidence was that the option had not been exercised. The disputed advertisement did not use the words “Anytime Fitness” in the advertisement itself.
3. Joint liability. On that evidence, there was no arguable basis for alleging that Anytime UK was jointly liable for Tribe’s infringement by reason of the Google advertisement. Although the claimants’ arguments were not pleaded, the judge considered whether either could support an amendment because the claimants were unrepresented.
4. Agency and vicarious liability. Nothing in the franchise agreement suggested that Tribe had authority to enter advertising or other agreements binding Anytime UK, or that Tribe purported to do so. There was therefore no arguable ground for treating Tribe as Anytime UK’s agent in arranging the advertisement. The claim against Anytime UK was struck out.
5. Costs. No order for costs was made regarding Ms Osbourne, consistently with the arrangement recorded in correspondence. Anytime UK was awarded costs of £7,000.