Practice Guide 18 – Franchises

Updated: October 2011

Update

This edition of the guide replaces the November 2008 edition. Amendments have been made as a result of the Land Registration (Amendment) Rules 2011, which change the definition of ‘conveyancer’ to make it consistent with the Legal Services Act 2007.

Scope of this guide

This guide gives advice on aspects of the registration of franchises under the Land Registration Act 2002. It is aimed at conveyancers and you should interpret references to ‘you’ accordingly. Land Registry staff will also refer to it.

1 Abbreviations and terms used

In this guide:

‘conveyancer’ means an authorised person within the meaning of s.18, Legal Services Act 2007 who is entitled to provide the conveyancing services referred to in paragraphs 5(1)(a) and (b) of Schedule 2 to that Act, or a person carrying out those activities in the course of their duties as a public officer. It also includes an individual or body who employs or has among their managers such an authorised person who will undertake or supervise those conveyancing activities (r.217A, LRR 2003)

‘LRA 2002’ means the Land Registration Act 2002

‘LRR 2003’ means the Land Registration Rules 2003.

2 Introduction

One form of franchise is a right granted by the Crown or, to use the classic definition, “a royal privilege or branch of the royal prerogative subsisting in the hands of a subject, by grant from the King”¹.

¹ See, for example, Spook Erection Ltd v Secretary of State for the Environment [1989] QB 300, 305.

It is this form of franchise that is the subject of this guide, rather than the modern concept of a commercial franchise.

3 Nature of franchise

A franchise requires a grant from the Crown in the form of a charter or letters patent. It may also be claimed by prescription (which presupposes a grant that has been lost).

A franchise does not carry with it ownership of the physical land and is distinct from the freehold or leasehold estates in land.

The most common franchise is the right to hold a market or fair. A right of market confers on the owner a monopoly right, that is to say the exclusive right to hold markets within a radius of 62/3 miles². A fair is a market held at rarer intervals³.

² Birmingham City Council v Anvil Fairs [1989] 1 WLR 312, 313.

³ Wyld v Silver [1963] Ch 243, 261.

A market franchise can be confiscated by the Crown or abolished by Act of Parliament⁴. A statute may abolish a market franchise by granting similar rights⁵.

⁴ Wyld v Silver [1963] Ch 243, 255 & 263.

⁵ Manchester Corpn v Lyons (1882) 22 Ch D 287.

4 Registration of franchises

Formerly, a franchise was not capable of separate registration, but from 13 October 2003 it has been possible to register title to certain franchises.

Registration of franchises is voluntary and the triggers to compulsory first registration listed in s.4, LRA 2002 do not apply.

To be capable of registration, a franchise must constitute a legal estate and be either:

• perpetual

• for a term of years absolute with more than seven years unexpired.

Registration of a franchise does not prejudice a right of the Crown to forfeit the franchise⁶.

⁶ R.196B, LRR 2003.

5 Affecting franchises and relating franchises

5.1 Types of franchise recognised by the LRA 2002

The LRR 2003 distinguish between two types of franchise.

A franchise can be either:

• an ‘affecting franchise’ – “a franchise which relates to a defined area of land and is an adverse right affecting, or capable of affecting, the title to an estate or charge”

• a ‘relating franchise’ – “a franchise which is not an affecting franchise”⁷.

⁷ R.217(1), LRR 2003.

5.2 Relating franchises more common

We believe that most franchises are relating franchises.

In particular, there is strong authority for the view that a market franchise will be a relating franchise. Even if the market franchise relates to an area that can still be defined, it does not appear to give the franchise-holder the right to enter the land without the landowner’s consent⁸, and so does not confer property rights adversely affecting the title to any estate or charge.

⁸ Attorney-General v Horner (1884) 14 QBD 245, 254 – 255, 260. (Affirmed (1885) 11 App Cas 66 HL).

5.3 Registration of a relating franchise

The LRR 2003 allow for the registration of a relating franchise without a title plan⁹.

⁹ R.5, LRR 2003.

As a result such a franchise:

• will be described verbally in the property register

• will not be shown on the index map but will instead be recorded in the index of relating franchises and manors, which is a verbal index¹⁰.

¹⁰ R.10, LRR 2003.

We can only enter a notice in respect of the burden of an adverse right affecting the title to an estate or charge¹¹. It follows that relating franchises cannot be noted in the titles of those registered estates falling within the area of the franchise.

¹¹ Ss.32(1) & 132(3)(b), LRA 2002.

5.4 Registration of an affecting franchise

If you have grounds for believing that the franchise you seek to register is an affecting franchise, and you wish us to register it as such, you must make this clear in the application for registration.

If we believe it to be more likely than not, on the evidence supplied, that the franchise is an affecting franchise, we will:

• serve notice on all the registered proprietors of estates in land, charges and relevant franchises within the defined area of the franchise

• seek to give notice to the unregistered owners, chargees and relevant franchise-holders.

Exactly how we do this and what information we require for it to be done will depend on the circumstances of the particular case.

Only if there are no objections, or all the objections are groundless or disposed of (by agreement or proceedings), can the registration proceed and notice of the affecting franchise be entered in all the registered titles affected.

A registered affecting franchise will:

• have a title plan

• be shown on the index map.

6 Documents to be lodged

When applying for the first registration of a franchise, you must provide the following.

• Form FR1.

• Original charter or letters patent granting the franchise. We will return these to you following registration. If the document is in Latin, we will also require a translation.

• A certified copy of the charter or letters patent.

• Where the application is for first registration of an affecting franchise, a plan showing the extent of the land affected and sufficient detail to allow us to identify the land clearly on the Ordnance Survey map.

• If the application is for first registration of a relating franchise, details of the current administrative area (the county or unitary authority) in which the franchise operates.

• All documents proving devolution of title to the applicant.

• All other deeds and documents relating to the title to the franchise and in the applicant’s control¹².

• If the applicant is unable to produce a full documentary title, evidence to account for the absence.

• If the claim is based on prescription, evidence in one or more statutory declarations or statements of truth of at least 20 years’ enjoyment.

• Form DL in duplicate listing all the documents lodged.

• The appropriate fee.

¹² ‘Control’ means “physical possession, or the right to possession, or the right to take copies of the document”, r.217(1), LRR 2003.

7 Application for a restriction in Form A

Where a person or persons apply to be registered as proprietor(s) of a franchise and a sole proprietor or survivor of joint proprietors will not be able to give a valid receipt for capital money, application must be made for entry of a restriction in Form A¹³. The application should be made in form RX1 or where a Land Registry form of transfer has been used for the disposition to the applicant, in that form.

¹³ Rr.94(2) and (3), LRR 2003.

8 Service of notice on the Crown

We will normally want to serve notice of an application for registration of a franchise on a representative of the Crown.

You should lodge any relevant correspondence with the Crown as part of the application.

9 Loss of overriding interest status

At the moment, franchise property rights adversely affecting land (perhaps a right of entry) are overriding interests¹⁴, which means that they automatically bind the owners of the land involved¹⁵.

¹⁴ Paragraph 10 to Schedule 1 and Paragraph 10 to Schedule 3, LRA 2002.

¹⁵ Ss.11, 12, 29, 30, LRA 2002.

At midnight on 12 October 2013 they will lose their automatic overriding status and need to be protected on the register. Applicants for registration have a duty on all first registrations, or upon a disposition of registered land, to disclose such franchise property rights of which they have knowledge and which affect their property. For further information see Practice Guide 15 – Overriding interests and their disclosure.

Additionally those with the benefit of franchise property rights that have not been protected in the register can apply for them to be noted in the register of a title that is subject to them. Where the land is not registered, franchise property rights can be protected by a caution against first registration. For further information see Practice Guide 66 – Overriding interests losing automatic protection in 2013.

10 Objections and disputes

10.1 Possibility of objection

Disputes involving franchises are most likely to occur where an application has been made for registration of a franchise as an affecting franchise, or to note franchise property rights, and one of the people served with notice objects to the application.

10.2 Requirements for objection

Any person wishing to object to an application must deliver to the registrar a written statement signed by them or their conveyancer.

It must state that the objector objects to the application, state the grounds for the objection and give the objector’s name and address to which communications may be sent¹⁶.

¹⁶ R.19, LRR 2003.

10.3 Consideration of objection by Land Registry

If we receive an objection, then it will not be possible to determine the application until the objection is disposed of, unless the registrar is satisfied that the objection is groundless¹⁷.

¹⁷ S.73, LRA 2002.

If the objection is not groundless, we must give notice of the objection to the applicant¹⁸. We will then ask both parties:

• whether they wish to negotiate

• whether they consider that it may be possible to reach an agreement.

¹⁸ S.73(5), LRA 2002.

If all parties respond positively, we will allow them time to settle the matter by agreement. However, as soon as it becomes clear that the two sides are unable to reach an agreement we must refer the matter to the adjudicator¹⁹. We will do this immediately if the parties do not wish to negotiate.

¹⁹ S.73(7), LRA 2002.

The adjudicator will then either:

• set a date to hear and determine the matter

• direct one of the parties to start proceedings in court. If the adjudicator decides to hear the matter, further details of the procedure to be followed and of the position as to costs will be supplied by the adjudicator’s office.

11 Subsequent dealings with a registered franchise

The owner of a franchise may deal with it in much the same way as other registered estates. For example, the owner may sell or lease the franchise.

The sale or grant of a lease of a registered franchise must be registered²⁰ and will not operate at law until the registration requirements have been met²¹.

²⁰ S.27(2)(c), LRA 2002.

²¹ S.27(1), LRA 2002.

If the term of the lease is for more than seven years, registration will take the usual form of opening a new title and entering notice in the register of the lessor’s title²². If the term does not exceed seven years, the registration requirement is simply that notice be entered in the lessor’s title²³.

²² Paragraph 4 to Schedule 2, LRA 2002.

²³ Paragraph 5 to Schedule 2, LRA 2002.

The effect of the rule of priority on dispositions of registered estates under s.29, LRA 2002 is altered in relation to franchises, so that a right of the Crown to forfeit the franchise is a ‘protected interest’ for the purposes of s.29(2)(a)²⁴.

²⁴ R.196(2), LRR 2003.

12 Enquiries and comments

Land Registry will not be able to approve your application in advance, but if you have a particular franchise problem not covered by this guide please contact Customer Support (see Contact details). If the problem is particularly complex, it will be better to make your enquiry in writing.

If you have any comments or suggestions about our guides, please send them to:

Central Operations Group
Land Registry
Trafalgar House
1 Bedford Park
Croydon
CR0 2AQ

(DX 8888 Croydon 3)

You can obtain further copies of this and all our guides free from Customer Support or you can download them from our website in English and Welsh at www.landregistry.gov.uk