A recent franchising dispute heard in the English Courts has shown that compliance with privacy laws cannot be used as an excuse to refuse compliance with a contractual obligation.

Grow With Us was the franchisee of Green Thumb (UK) Ltd, a lawn treatment business. Renewal of the franchise agreement could be refused if the franchisee had failed to properly observe and perform its contractual obligations. As part of these obligations, the franchisee was required to maintain a customer list. The Franchisor was entitled to monthly copies of that list.

At the time of renewal, the franchisor refused to extend the agreement and claimed that the franchisee had failed to provide the customer list. The franchisee argued that data protection law prevented it from passing the customer information. This was correct. Since the customers had not been informed that their data would be passed to the franchisor, any disclosure would have been in breach of the Data Protection Act.

However, this did not excuse the breach. The court held that the franchisee should have taken steps to ensure that it was able to provide the customer list to the Franchisor for example by seeking customer consent.