A franchise agreement provision requiring the franchise business to be under the direct supervision of a person with a substantial interest in the corporate franchisee does not constitute a restraint of trade, and is reasonable for the protection of the franchisor's legitimate interests. A franchisor does not unreasonably withhold consent to a franchise transfer where no person with a substantial interest in the proposed transferee will supervise the business, even where an experienced employed manager is available. A nominal shareholding arrangement designed to circumvent the owner-operator requirement may reasonably be rejected by the franchisor. Whether a franchisor's selection criteria must themselves be reasonable under cl 20(3)(c) of the Franchising Code of Conduct was left open.
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