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Franchisor Failure

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Franchisees as Consumers

Abstract

Franchisor insolvency attracts increasing attention as the Global Financial Crisis rumbles on. It transpires that the law does not accommodate the franchisees’ interests in a neat or predictable way if its franchisor’s business fails. In this chapter, the concept of insolvency (administration followed by winding up) and the roles of the key players are explained. A case study of the failed REDgroup and its franchisor Angus & Robertson is presented, and some consequences of franchisor failure for franchisees are set out. This chapter also presents statistics on franchisor failure and identifies examples of strategic insolvency in the franchise context. International dimensions of franchisor insolvency and trademark issues are explored. The inability of ex ante measures, such as pre-contractual disclosure and the standard form franchise agreement to protect franchisees are addressed.

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Notes

  1. 1.

    Jason Gherke, 10 April 2012, Why franchisors fail: Lessons from the Titanic. Smartcompany.com Accessed 12 April 2012

  2. 2.

    Wayne Jenvey, ‘Rocky Roads and Rollercoasters – Turnaround Strategies for Distressed Franchise Systems’ (Paper presented at the Legal Symposium at the Franchise Australia Annual Conference, Gold Coast, 24 October 2006) 2

  3. 3.

    Bickerdyke I, Lattimore R, and Madge A, ‘Business Failure and Change: An Australian Perspective’ (Productivity Commission Staff Research Paper, 2000) 3

  4. 4.

    Justice Owen, The failure of HIH Insurance: The HIH Royal Commission Report (Commonwealth of Australia, 2003)

  5. 5.

    http://www.asic.gov.au/asic/ASIC.NSF/byHeadline/Resources#4

  6. 6.

    In Australia, the Corporations Act 2001 (Cth) sets out administrators’ powers in ss 437A, 442A–442F, additional powers in s 442A and fiduciary obligations in s 437A. The administrators’ powers in relation to the insolvent company’s property are contained in ss 437D and 442D

  7. 7.

    Jenny Buchan, ‘Challenges that Franchisees of Insolvent Franchisors Pose for Liquidators’ (2008) 16:1 Insolvency Law Journal 26, 38

  8. 8.

    See Corporations Act Part 5.6, Division 7A – ‘Disclaimer of Onerous Property’ and Michael Murray, Keay’s Insolvency: Personal and Corporate Law and Practice (5th ed, 2005) 340. ‘In some cases liquidators do not wish to retain property because it is too onerous, worth little or is unsalable. In such circumstances, liquidators wish to get rid of the property in order to avoid responsibilities and costs in relation to it. In disclaiming, the liquidator gives notice to others that he or she wishes to be rid of any interest in the property. If a person suffers loss as a consequence, those persons to whom notice has been given are required to try to mitigate their loss. They may lodge a proof of debt in the liquidation in respect of the amount of that loss. The liquidator may disclaim property referred to in Section 568(1) Corporations Act 2001 (Cth) (including) land burdened with onerous covenants (for example a lease of retail space in the franchisor’s name that is licensed to a franchisee as occupier with no status on the title and no privity of contact with the landlord) and contracts (including franchise agreements).’ This procedure is also explained in Enviro Systems Renewable Resources v. Australian Securities & Investments Commission (2001) 80 SASR 1; 36 ACSR 762; 2001 WL 115336; [2001] SASC 11 by Martin J. ‘In essence, the documentation provides that Enviro (franchisor) offers participants (franchisees) the right to use identified (property). Participants do not have a registrable interest in any of the land. One parcel is leased by Enviro. The lease provides that if the lease is terminated as a consequence of default by Enviro, the lessors are entitled to take possession of the land and trees planted on the land become the absolute property of the lessors’. The same applies to a lease of a shop

  9. 9.

    Corporations Act 2001 (Cth) Part 5.6 Div 7A. For example, Sue Mitchell, ‘Signature Out of Pulp But Not Out of Juice’, The Australian Financial Review (Sydney), 1–2 April 2006, 10. ‘After disclaiming 17 leases on the loss-making bars [i.e. the leases of premises occupied by Pulp franchisees], the only assets the liquidators had available to sell were ‘fridges, blenders and mixers’

  10. 10.

    Corporations Act 2001 (Cth) s 568D(2)

  11. 11.

    For example, the Franchise Council of Australia’s annual conference legal day scheduled a ­session on franchisor failure every year from 2006 to 2009 inclusive

  12. 12.

    Benjamin Morris, Franchisor Insolvency (B Laws Honours Thesis, University of Technology Sydney, 2006) 3. An exploratory study was conducted by Jenny Buchan in 2004–2005 in Australia and reported in ‘When the Franchisor Fails’, CPA Australia. The report focussed on consequences of franchisor failure

  13. 13.

    Australian, British, French and United States franchising and franchise research are referred to throughout this book. In all four countries, the franchise sector thrives, and statistics exist on franchisor failure

  14. 14.

    In John Stanworth, David Purdy and Stuart Price, ‘Franchise Growth and Failure in the USA and the UK: A Troubled Dreamworld Revisited’ (1997) 2(2) Franchising Research: An International Journal 75, 78 citing Janes Cross, ‘Franchising Failures: Definitional and Measurement Issues’ (Paper presented at the International Society of Franchising Conference, Las Vegas, Nevada, 13–14 February 1994) 1

  15. 15.

    Roger D Blair and Francine Lafontaine, The Economics of Franchising (Cambridge University Press, 2005) 272

  16. 16.

    Harold Brown, Franchising: Realities and Remedies (1973) 40 cited in Shelby D Hunt, ‘Franchising: Promises, Problems, Prospects’ (1977) 53(3) Journal of Retailing 71, 75 citing a study in Urban B Ozanne and Shelby D Hunt, The Economic Effects of Franchising (1971) 93

  17. 17.

    Roger D Blair and Francine Lafontaine, The Economics of Franchising (Cambridge University Press, 2005) 272

  18. 18.

    Franchisor exits, whether it be a departure from franchising or a business failure, [have an impact] on the survival or growth of the franchised units that were tied to it. Roger D Blair and Francine Lafontaine, The Economics of Franchising (Cambridge University Press, 2005) 44

  19. 19.

    Francine Lafontaine and K L Shaw, ‘Franchising Growth and Franchisor Entry and Exit in the US Market: Myth and Reality’ (1998) 13(2) Journal of Business Venturing 95–112, in Frank Hoy and John Stanworth (eds), Franchising: An International Perspective (Routledge, 2003) 164

  20. 20.

    Rozenn Perrigot and Gérard Cliquet, ‘Survival of Franchising Networks in France from 1992 to 2002’ (Paper presented at the 18th Annual International Society of Franchising Conference, Las Vegas, Nevada, 6–7 March 2004)

  21. 21.

    Rozenn Perrigot, ‘Services vs Retail Chains: Are There Any Differences? Evidence from the French Franchising Industry’ (2006) 34(12) International Journal of Retail & Distribution Management 925

  22. 22.

    Francine Lafontaine and K L Shaw, ‘Franchising Growth and Franchisor Entry and Exit in the US Market: Myth and Reality’ (1998) 13(2) Journal of Business Venturing 95, in Frank Hoy and John Stanworth (eds), Franchising: An International Perspective (2003) 163

  23. 23.

    Emma Connors, ‘The Brave New World of Franchising’, The Weekend Australian Financial Review (Sydney), 6–7 February 2010, 39 quoting franchise consultant Gary Williamson

  24. 24.

    Buchan J, Qu C and Frazer L ‘Protecting Franchisees from Their Franchisor’s Impending Failure: A Way Forward for Consumer Protection Regulators Using Indicators?’ (Paper presented at the First International Conference on Comparative Law and Global Common Law ‘Exchange and Integration of the Contemporary Legal Systems’ College of Comparative Law, China University of Political Science and Law, 24–25 September 2011, Beijing)

  25. 25.

    Robert W Fitzgerald, Franchising Task Force Final Report to the Minister for Small Business and Customs (1991) 2.7–2.10

  26. 26.

    This conclusion can be questioned in the light of evidence since 1991

  27. 27.

    I have listed only the reasons that are within the control of the franchisor, omitting those that are a function of the broader economy

  28. 28.

    In John Stanworth, David Purdy and Stuart Price, ‘Franchise Growth and Failure in the USA and the UK: A Troubled Dreamworld Revisited’ (1997) 2(2) Franchising Research: An International Journal 75, 78 citing Janes Cross, ‘Franchising Failures: Definitional and Measurement Issues’ (paper presented at the International Society of Franchising Conference, Las Vegas, Nevada, 13–14 February 1994) 1

  29. 29.

    In John Stanworth, David Purdy and Stuart Price, ‘Franchise Growth and Failure in the USA and the UK: A Troubled Dreamworld Revisited’ (1997) 2(2) Franchising Research: An International Journal 75, 78–79

  30. 30.

    Kath Walters, ‘Fuel for Shareholders Anger’, Business Review Weekly (Sydney), 13 May 2004, 17

  31. 31.

    Australian Competition & Consumer Commission v. Trayling [1999] FCA 1133

  32. 32.

    Cut Price Deli Pty Limited, Cut Price Deli Franchising Pty Limited and Enzo Sgambellone v. Christian Roger Jacques, Catherine May Jacques and Pourquoi Pas Pty Limited [1994] FCA 1101; (1994) 49 FCR 397; Airberg Pty Ltd & Ors v. Cut Price Deli Pty Ltd & Ors [1998] FCA 893

  33. 33.

    Australian Competition & Consumer Commission v. Simply No-Knead (Franchising) Pty Ltd [2000] FCA 1365; Australian Competition and Consumer Commission v. Simply No-Knead (Franchising) Pty Ltd (2000) 104 FCR 25

  34. 34.

    Neale Prior, ‘Lingerie Firm’s Rescue Looks A Little Scanty’, The Australian Financial Review (Sydney), 22 May 2004, 6

  35. 35.

    Neale Prior, ‘Investors in Norwood’s NoRegrets Left with Plenty of Them’, The West Australian (Perth), 4 February 2005, 37

  36. 36.

    Neale Prior, ‘Investors in Norwood’s NoRegrets Left with Plenty of Them’, The West Australian (Perth), 4 February 2005, 37

  37. 37.

    Neale Prior, ‘Investors in Norwood’s NoRegrets Left with Plenty of Them’, The West Australian (Perth), 4 February 2005, 37

  38. 38.

    Greg Ray, ‘Fraud Fallout Action Settled’, The Newcastle Herald (Newcastle), 24 July 2004, 4

  39. 39.

    Neil Chenoweth, ‘CarLovers is All Washed Up’, The Australian Financial Review (Sydney), 19 July 2003

  40. 40.

    The Senate, Economics references Committee, The regulation, registration and remuneration of insolvency practitioners in Australia: The case for a new framework, September 2010, Commonwealth of Australia http://www.asic.gov.au/asic/asic.nsf/byheadline/09-150AD+Liquidator+%28Stuart+Ariff%29+banned+for+life?openDocument

  41. 41.

    Stephen Giles and Rod Young, ‘The Rise and Fall of Stockmans Australian Cafes’, FCA Visions Newsletter (Melbourne), August 2005

  42. 42.

    Sue Mitchell, ‘Signature Out of Pulp but Not Out of Juice’, The Australian Financial Review (Sydney), 1–2 April 2006, 10

  43. 43.

    Doug Frazey, ‘Case Note: When “Good Cause” Goes Bad: Minnesota Restricts Protection for Dealers under HUMEDA – River Valley Truck Ctr., Inc V. Interstate Cos’ (2006–2007) 33(2) William Mitchell Law Review 711, 728 quoting David Hess, ‘Comment, The Iowa Franchise Act: Towards Protecting Reasonable Expectations of Franchisees and Franchisors’ (1995) 80 Iowa Law Review 333, 355

  44. 44.

    Sarah B Foster and Carolyn Johnsen, ‘The War of the Worlds: Bankruptcy Versus…’ (Paper presented at the American Bar Association, 28th Annual Forum on Franchising, Florida, 19–21 October 2005) 1

  45. 45.

    Sarah B Foster and Carolyn Johnsen, ‘The War of the Worlds: Bankruptcy Versus…’ (Paper presented at the American Bar Association, 28th Annual Forum on Franchising, Florida, 19–21 October 2005) 1

  46. 46.

    Craig R Tractenberg, ‘What the Franchise Lawyer Needs to Know About Bankruptcy’ (2000–2001) (3)20 Franchise Law Journal 3

  47. 47.

    REDgroup Retail Pty Limited and Associated Companies (administrators appointed) report by administrators pursuant to Section 439A(4)(a) of the Corporations Act 2001 S Sherman, J Melluish and J Lindholm, Ferrier Hodgson, 25 July 2011, 6. Fig 8.1 based on diagram in this report

  48. 48.

    Brown H, Franchising: Realities and Remedies (1973) 40 cited in Hunt SD, ‘Franchising: Promises, Problems, Prospects’ (1977) 53(3) Journal of Retailing 71, 77

  49. 49.

    Michael C Jensen and William H Meckling, ‘Theory of the Firm: Managerial Behavior, Agency Costs and Ownership Structure’ (1976) 3(4) Journal of Financial Economics 305, 341 notes that ‘[a]s the probability of bankruptcy increases both the operating costs and the revenues of the firm are adversely affected’

  50. 50.

    Craig Robin Colraine, ‘Franchises: Insolvency and Restructuring’ (Paper presented at the Distribution Law: Catch the Wave, Avoid the Rocks, Ontario Bar Association Continuing Legal Education, Toronto, Canada, 26 May 2003) 3

  51. 51.

    Poor financial performance, including the accumulation of significant debt when the franchise system is not expanding, growing operating losses, the writing down of assets and refinancings, is an obvious indication [to the financially literate] that a franchise is in difficulty. In Craig Robin Colraine, ‘Franchises: Insolvency and Restructuring’ (Paper presented at the Distribution Law: Catch the Wave, Avoid the Rocks, Ontario Bar Association Continuing Legal Education, Toronto, Canada, 26 May 2003) 3

  52. 52.

    Craig Robin Colraine, ‘Franchises: Insolvency and Restructuring’ (Paper presented at the Distribution Law: Catch the Wave, Avoid the Rocks, Ontario Bar Association Continuing Legal Education, Toronto, Canada, 26 May 2003) 3

  53. 53.

    ‘Warning Signs of Failure’, The Australian Financial Review (Sydney), 2 May 2006

  54. 54.

    Francine Lafontaine and K L Shaw, ‘Franchising Growth and Franchisor Entry and Exit in the US Market: Myth and Reality’ (1998) 13(2) Journal of Business Venturing 95, in Frank Hoy and John Stanworth (eds), Franchising: An International Perspective (2003) 163

  55. 55.

    Sunshine Coast Daily ‘Good staff and family support see stores write another chapter: Light at end of the tunnel’, 13 September 2011, 20

  56. 56.

    48 franchisee owned and 137 franchisor owned and operated

  57. 57.

    Chris Zappone, Booksellers’ woes worsen as franchisees seek to defect, Sydney Morning Herald, 5 April 2011

  58. 58.

    http://www.franchiseadvice.com.au/index.php?option=com_content&task=view&id=247&Itemid=1 Accessed 2011

  59. 59.

    Ferrier Hodgson press release ‘REDgroup redundancies’ 30 May 2011

  60. 60.

    Meeting on potential sale of Angus & Robertson underway, Smartcompany, 17 June 2011

  61. 61.

    Australia: Corporations Regulations 5.6.12, the first creditors meeting must be held within 5 business days of the administrator’s appointment. The second creditors meeting is generally required to be held within 21 days of the appointment of the administrator, but the court has discretion to delay this meeting if the administrators provide compelling reasons

  62. 62.

    Ferrier Hodgson Press Release, ‘Negotiations underway for sale of Angus & Robertson bookstores’ 15 June 2011

  63. 63.

    Ferrier Hodgson press release ‘Second Meeting of REDgroup creditors’, 27 July 2011

  64. 64.

    D. Binning, Code Wars – a liquidator’s worst fears, Australian Financial Review, 29 June 2006. Special Report, at 13, quoting David Cowling, insolvency partner with law firm Clayton Utz

  65. 65.

    Gloria Jean’s storm brews, 8 April 2011, News Ltd

  66. 66.

    Deloitte, The Kleenmaid Group (Administrators Appointed) Administrators’ Report to Creditors Pursuant to Section 439A Corporations Act 2001, 14 May, 2009

  67. 67.

    Michael C Jensen and William H Meckling, ‘Theory of the Firm: Managerial Behavior, Agency Costs and Ownership Structure’ (1976) 3(4) Journal of Financial Economics 305, 341

  68. 68.

    Julia Adler, Fury as Beach House gym at Northland shuts down, Preston leader, 3 March 2009

  69. 69.

    Craig R Tractenberg, ‘What the Franchise Lawyer Needs to Know About Bankruptcy’ (2000–2001) (3)20 Franchise Law Journal 3, end note 22–5

  70. 70.

    Although this refusal would constitute a breach of the warranties provisions of the Competition and Consumer Act 2010 (Cth), no claimant could take action while the moratorium permitted under ss 444D and 444E of the Corporations Act was effective

  71. 71.

    Light at end of the tunnel: Good staff and family support see stores write another chapter, 13 September 2011, Sunshine Coast Daily, 20

  72. 72.

    Light at end of the tunnel: Good staff and family support see stores write another chapter, 13 September 2011, Sunshine Coast Daily, 20

  73. 73.

    Ferrier Hodgson, REDgroup Retail Pty Limited and Associated Companies (Administrators Appointed) –Report by Administrators Pursuant to Section 439A(4)(a) of the Corporations Act 2001, 25 July 2011, 13–14

  74. 74.

    Ferrier Hodgson, REDgroup Retail Pty Limited and Associated Companies (Administrators Appointed) –Report by Administrators Pursuant to Section 439A(4)(a) of the Corporations Act 2001, 25 July 2011, 13–14

  75. 75.

    Jamie Gray, 4 August 2011, The New Zealand Herald

  76. 76.

    Patrick Stafford, Borders Australia and Angus & Robertson Chains Collapse, Thursday, 17 February 2011 15:47 http://Www.Smartcompany.Com.Au/Retail/20110217-Borders-Australia-And-Angus-Robertson-Chains-Collapse.Html viewed 6 October, 2011

  77. 77.

    J Spurling Ltd v. Bradshaw, 2 ALL ER 121, 125 (PC) 1956 referred to in Steinberg, Paul and Lescatre, Gerald, ‘Beguiling Heresy: Regulating the Franchise Relationship’ (2004) 109(1) Pennsylvania State Law Review 1, 299

  78. 78.

    Lesley Parker, Do the numbers stack up? Sydney Morning Herald November 2, 2011 quoting Rode Sims, chair of the Australian Competition and Consumer Commission

    http://www.smh.com.au/small-business/franchising/do-the-numbers-stack-up-20111102-1muio.html#ixzz1flnN2HE5 viewed 7 December 2011

  79. 79.

    https://www.pep.com.au/pages/default.asp Accessed 3 November 2011

  80. 80.

    Ferrier Hodgson, REDgroup Retail Pty Limited and Associated Companies (Administrators Appointed) –Report by Administrators Pursuant to Section 439A(4)(a) of the Corporations Act 2001, 25 July 2011, 7

  81. 81.

    Sunshine Coast Daily ‘Good staff and family support see stores write another chapter: Light at end of the tunnel’, 13 September 2011, 20

  82. 82.

    Nicole Jackson Patrons stunned by gym closure, La Trobe Valley Express 17 April 2008

  83. 83.

    Michael Fung and Melissa Humann ‘Practical issues for controllers when dealing with occupied premises’ 24(1) Australian Insolvency Journal 2012, 16, 17

  84. 84.

    Michael Fung and Melissa Humann ‘Practical issues for controllers when dealing with occupied premises’ 24(1) Australian Insolvency Journal 2012, 16,18

  85. 85.

    See Paul McGuinness, Intellectual Property Commercialisation: a Business Manager’s Companion (LexisNexis Butterworths, 2003) 328

  86. 86.

    AAP, ‘Compass Deal a Fresh Start for Kleenmaid’, The Australian Financial Review (Sydney), 7 January 2010, 7

  87. 87.

    The Athlete’s Foot Australia P/L; Coldwell Banker Corporation (USA); Rams Home Loans P/L

  88. 88.

    See Paul McGuinness, Intellectual Property Commercialisation: a Business Manager’s Companion (LexisNexis Butterworths, 2003) 328

  89. 89.

    See Paul McGuinness, Intellectual Property Commercialisation: a Business Manager’s Companion (LexisNexis Butterworths, 2003) 328

  90. 90.

    L Frazer, S Weaven and K Bodey, Franchising Australia 2010, Griffith University

  91. 91.

    Enquette Annuelle sur la franchise, Résultats 2010 Francais, 37

  92. 92.

    11 April 2005, ASIC Form 535 formal proof of debt or claim filed by the administrators pursuant to s 439A Corporations Act 2001 re Jatora Pty Ltd, formerly trading as Kernels Extraordinary Popcorn

  93. 93.

    Craig R Tractenberg, ‘What the Franchise Lawyer Needs to Know About Bankruptcy’ (2000–2001) (3)20 Franchise Law Journal 3, end note 22–5

  94. 94.

    Free Franchise Docs <http://www.freefranchisedocs.com/index.html> Accessed 5 June 2008

  95. 95.

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  96. 96.

    Jenny Buchan and Lorelle Frazer, ‘The Domino Effect – How Ansett’s Failure Impacted on Traveland Academy of World Business’ (Paper presented at the Marketing & Management Development Conference, Paris, 10–13 July 2006) 1901, 1906

  97. 97.

    Lindy Willmott, Sharon Christensen, Des Butler, Bill Dixon, Contract Law (Oxford 3rd ed, 2009) 16

  98. 98.

    http://www.iuscomp.org/gla/statutes/BGB.htm

  99. 99.

    Lindy Willmott, Sharon Christensen, Des Butler, Bill Dixon, Contract Law (Oxford University Press 3rd ed, 2009) 677

  100. 100.

    Chris Zappone, Booksellers’ woes worsen as franchisees seek to defect, Sydney Morning Herald, 5 April 2011

  101. 101.

    D Khoury and YS Yamouni, Understanding Contract Law (LexisNexis Butterworths 7th ed, 2007) 419

  102. 102.

    BC9600163 NSWSC

  103. 103.

    Otrava Pty Ltd v. Mail Boxes Etc (Australia) Pty Ltd [2004] NSWSC 1066

  104. 104.

    Steven H Goldman, Tackling Troublesome Insolvency Issues for Franchisees (2003) Unpublished 3–6 <http://www.goldmanrosen.com/pdf/franchiseesinsolvency1.pdf> Accessed 29 April 2007. Goldman’s paper outlines 10 specific strategies franchisees may attempt to put in place, 11

  105. 105.

    Steven H Goldman, Tackling Troublesome Insolvency Issues for Franchisees (2003) Unpublished 3–6 <http://www.goldmanrosen.com/pdf/franchiseesinsolvency1.pdf> Accessed 29 April 2007. Goldman’s paper outlines 10 specific strategies franchisees may attempt to put in place, 12

  106. 106.

    Philip Davenport and Christina Harris, Unjust Enrichment (Federation Press, 1997) 34

  107. 107.

    Country Style Food Services Cases: Country Style Food Services Inc v. 1304271 Ontario Ltd Ontario Superior Court of Justice Chapnik J, Judgement: 11 February 2003; in the matter of the Companies Creditors Arrangement Act, RSC 1985 C c-36, as amended and in the matter of the Courts of Justice Act RSO 1990 c-43, as amended and in the matter of a plan of compromise or arrangement of Country Style Food Services Inc, Country Style Food Services Holdings Inc, Country Style Realty Limited, Melody Farms Specialty Foods and Equipment Limited, Buns Master Bakery Systems Inc. and Buns Master Bakery Realty Inc. 15 April 2002 Court of Appeal for Ontario Docket M28458 (unreported decision)

  108. 108.

    Gillian K Hadfield, ‘The Many Legal Institutions that Support Contractual Commitment’ in Claude Menard and Mary Shirley (eds), Handbook of New Institutional Economics (2004) 175, 194

  109. 109.

    Michael Murray, Keay’s Insolvency: Personal and Corporate Law and Practice, (Thomson Reuters 6th ed, 2008), 318

  110. 110.

    ‘Kleins collapse turns nasty’ available at http://www.smartcompany.com.au/retail/cleins-­collapse-turns-nasty.html. See also ‘What happens if a franchisor fails’ at http://www.birkettlong.co.uk/site/library/legalnews/what_happens_if_a_franchisor_fails.html.

  111. 111.

    Cor Cordis Liquidators Report (19 October 2009) 13. In the opinion of BHG’s liquidator, the franchisor was insolvent in 2005 and remained so from that time. BHG was still accepting franchise fees from new franchisees in the third quarter of 2006

  112. 112.

    Richard Hughes, Liquidator, Deloittes, verbal observation at Griffith University franchising seminar

  113. 113.

    Deloitte, Kleenmaid Group Report to Creditors pursuant to Section 508 of the Corporations Act 2001, 25 August 2010

  114. 114.

    [2010] FCA 1181

  115. 115.

    Moss v. Lowe Hunt & Partners [2010] FCA 1181, Katzmann J

  116. 116.

    (2005), 256 D.L.R. (4th) 466, [2005] O.J. No. 3043 (Ont. C.A.), at para. 28

  117. 117.

    Ibid at para 32 citing 2010 ONCA 673, [2010] O.J. No. 4336 (Ont. C.A.) at para 26

  118. 118.

    Trillium Motor World Ltd v. General Motors of Canada Ltd Trillium Motor World Ltd (plaintiff/moving party) and General Motors of Canada Limited and Cassels Brock & Blackwell LLP (defendants/respondents) Ontario Superior Court of Justice G.R. Strathy J. Heard: December 15–16, 2010, Judgement: March 1, 2011, Docket: CV-10-397096CP

  119. 119.

    Code, Part 1, 3(1), with specific identity details about both corporate and noncorporate ‘associates’ required to be disclosed under the disclosure document

  120. 120.

    Steinberg, Paul and Lescatre, Gerald, ‘Beguiling Heresy: Regulating the Franchise Relationship’ (2004) 109(1) Pennsylvania State Law Review 1, 298

  121. 121.

    REDgroup Retail Pty Limited and Associated Companies (Administrators Appointed) report by administrators pursuant to Section 439A(4)(a) of the Corporations Act 2001 S Sherman, J Melluish and J Lindholm, Ferrier Hodgson, 25 July 2011, 8.

  122. 122.

    REDgroup Retail Pty Limited and Associated Companies (Administrators Appointed) Report by Administrators Pursuant to Section 439A(4)(a) of the Corporations Act 2001 S Sherman, J Melluish and J Lindholm, Ferrier Hodgson, 25 July 2011, 9

  123. 123.

    Patrick Stafford, Borders Australia and Angus & Robertson Chains Collapse, Thursday, 17 February 2011 15:47 at http://Www.Smartcompany.Com.Au/Retail/20110217-Borders-Australia-And-Angus-Robertson-Chains-Collapse.Html Accessed 6 October, 2011

  124. 124.

    Australian Government, Best Practice Regulation Handbook (2007) Department of Finance and Deregulation A.2 <http://www.finance.gov.au/obpr/docs/handbook.pdf> Accessed 30 May 2010

  125. 125.

    Craig R Tractenberg, ‘What the Franchise Lawyer Needs to Know About Bankruptcy’ (2000–2001) (3)20 Franchise Law Journal 3, end note 8; See, for example, Moody v. Amoco Oil Company 734 F 2d 1200 (7th Cir) cert denied, 469 US 982 (1984). Tractenberg is writing for an audience of lawyers whose clients are franchisors whose franchisees are becoming bankrupt, but the same applies to franchisees.

  126. 126.

    Craig R Tractenberg, ‘What the Franchise Lawyer Needs to Know About Bankruptcy’ (2000–2001) (3)20 Franchise Law Journal 3, end note 9

  127. 127.

    Johanna Niemi, ‘Personal insolvency’ chapter 14 in Geraint Howells, Iain Ramsay and Thomas Wilhelmsson with David Kraft (eds) Handbook of Research on International Consumer Law Edward Elgar, 2010, 415

  128. 128.

    Jason Gherke, Why BOMAD funding is critical to franchisee and franchisor growth 27 March 2012, http://www.smartcompany.com.au/franchise-tips-and-trends/why-bomad-funding-is-critical-to-franchisee-and-franchisor-growth.html

  129. 129.

    Tim Martin and Catherine Hockley The Mercury (Hobart), 2 April 2004, 11

  130. 130.

    Re Richard Vincent Bateman and Georgina Gay Bateman v. Barbara Jean Slatyer; Harvey John Slatyer; Graham Walter Tiekle and Barbara’s House & Garden (Retail) Pty Limited [1987] FCA 58, para 3

  131. 131.

    Jacqui Walker, Franchising Under Pressure (2009) Smartcompany <http://www.smartcompany.com.au/franchising/20090505-will-franchising-survive-the-recession.html> Accessed 20 August 2009; and see James Thomson, Retail Chain Strathfield Collapses into Administration (2009) Smartcompany <http://www.smartcompany.com.au/retail/retail-chain-strathfield-collapses-into-administration.html> Accessed 31 May 2010

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  1. Australian School of Business, University of New South Wales, Kensington, New South Wales, Australia

    Jenny Buchan

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Buchan, J. (2013). Franchisor Failure. In: Franchisees as Consumers. Springer, New York, NY. https://doi.org/10.1007/978-1-4614-5614-8_8

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