Can Franchise Agreements Provide for Relief Against Franchisor Failure in the Context of the Common Law?

23rd Annual International Society of Franchising Conference

UNSW Australian School of Business Research Paper No. 2009 BLAT 05

35 Pages Posted: 22 Apr 2009 Last revised: 10 May 2009

See all articles by Jenny Buchan

Jenny Buchan

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

Abstract

Franchise arrangements are based on a contract between the franchisor and franchisee; the franchise agreement. This paper examines whether franchise agreements, as a genre, can be routinely drafted to provide for relief against franchisor failure for the network’s franchisees. The current regulation of franchise agreements under the common law in Australia is set out. The assumptions that underpin the current law are stated and examined. An investigation of the allocation of risk in franchise agreements, in particular the risk of franchisor failure is conducted. The desirability of certainty is acknowledged. This is followed by a short examination of the adequacy for the franchisee of the most common remedy for breach of contract - damages - in the light of franchisor's insolvency. Finally, I propose some tentative contract based solutions.

Keywords: franchise agreement, Franchising Code of Conduct, Australia, franchisor failure, franchisor bankruptcy, insolvent franchisor, franchisee protection, allocation of risks, certainty, remedy, damages

JEL Classification: D81, K00, M55, K12, K29

Suggested Citation

Buchan, Jennifer M., Can Franchise Agreements Provide for Relief Against Franchisor Failure in the Context of the Common Law?. 23rd Annual International Society of Franchising Conference; UNSW Australian School of Business Research Paper No. 2009 BLAT 05. Available at SSRN: https://ssrn.com/abstract=1391082

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)

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