Franchisor Insolvency in Australia: Profiles,Factors, and Impacts |
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Authors: | Jenny Buchan Lorelle Frazer Charles Zhen Qu Rob Nicholls |
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Affiliation: | 1. Taxation and Business Law, Business School, University of New South Wales, Sydney, Australiajm.buchan@unsw.edu.au;3. Department of Marketing, Griffith Business School, Griffith University, Brisbane, Australia;4. School of Law, City University of Hong Kong, Hong Kong SAR, People's Republic of China;5. Taxation and Business Law, Business School, University of New South Wales, Sydney, Australia |
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Abstract: | Franchisor failure is enduring and important in terms of cost, nationally and internationally. This article presents research into Australian franchisor firms that went into a form of bankruptcy protection known in Australia as “voluntary administration.” The research was driven by the commonality and divergence of the interests of franchisors and franchisees. The article provides an insight into franchisor failure and its effect on franchisees. It presents the substantial literature survey that was used to frame questions for franchisor administrators to understand issues associated with franchisors in administration. The limited data demonstrate diversity in the treatment of franchisees during the franchisor's administration. In Australia, franchisees remain a captive, financially committed counterparty during insolvency and potentially deliver a great financial benefit to the franchisor's creditors. The article concludes that administration of franchisors does not take into account the distinct relationship between franchisors and their franchisees and provides policy recommendations to address this matter. |
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Keywords: | Australia bankruptcy business format franchising franchise business processes franchisee insolvency franchisor failure franchisor insolvency |
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