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 Sydney ; Condor Hitchcock & Associates Pty Ltd

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 Sydney ( email )

Australian School of Business
Sydney, NSW 2052
Australia
+61 432 87 99 88 (Phone)

HOME PAGE: http://https://www.business.unsw.edu.au/our-people/jennybuchan

Condor Hitchcock & Associates Pty Ltd ( email )

Birchgrove
NSW 2041
Australia

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