Is There a Basis for Equating Franchisees with Employees in Priority Ranking on the Insolvency of Franchisors?

20th Annual International Society of Franchising Conference, Palm Springs, USA, 2006

34 Pages Posted: 26 Mar 2008 Last revised: 20 Jun 2009

See all articles by Jenny Buchan

Jenny Buchan

UNSW Australia Business School, School of Taxation and Business Law; University of New South Wales

Date Written: February 25, 2006

Abstract

This paper presents the Australian courts' definitions of employee and independent contractor. It highlights where the franchisee fits, being indistinguishable at times from an employee and at other times from an independent contractor. If the franchisor becomes insolvent, the failure of the law to keep pace with the franchise business model is bought into sharp focus. Whereas the employee and the independent contractor have clearly understood rights, enshrined in statute, the franchisee has no specific rights if the franchisor becomes insolvent. At its most vulnerable time, the franchisee is categorized as an asset or a liability in the insolvent estate. The author queries whether it would be appropriate to accord franchisees specific status in the franchisor's insolvency; like that enjoyed by employees.

Keywords: franchisor, insolvency, franchisee rights, employee rights, bankrupt, asset, liability, comparison of employees, independent contractors and franchisees, Australia

JEL Classification: G33, K20, M55

Suggested Citation

Buchan, Jennifer M., Is There a Basis for Equating Franchisees with Employees in Priority Ranking on the Insolvency of Franchisors? (February 25, 2006). 20th Annual International Society of Franchising Conference, Palm Springs, USA, 2006. Available at SSRN: https://ssrn.com/abstract=1111951 or http://dx.doi.org/10.2139/ssrn.1111951

Jennifer M. Buchan (Contact Author)

UNSW Australia Business School, School of Taxation and Business Law ( email )

Room 2041
QUAD Building
Sydney, New South Wales
Australia
+61293851458 (Phone)

HOME PAGE: http://www.asb.unsw.edu.au/schools/Pages/JennyBuchan.aspx

University of New South Wales ( email )

Level 2, Quadrangle Building
Australian School of Business
Sydney, NSW 2052
Australia
+61 2 93851458 (Phone)

Register to save articles to
your library

Register

Paper statistics

Downloads
55
Abstract Views
1,027
rank
380,371
PlumX Metrics