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Moral Hazard, Path Dependency and Failing Franchisors: Mitigating Franchisee Risk Through Participation

Published online by Cambridge University Press:  01 January 2025

Jennifer L L Gant  and
Jenny Buchan
Jennifer L L Gant*
Affiliation:
University College Cork in Ireland
Jenny Buchan*
Affiliation:
UNSW Sydney
*
The author can be contacted at JenniferL.L.Gant@gmail.com.
The author can be contacted at jm.buchan@unsw.edu.au.
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Abstract

Employment relations are well understood. Business format franchising is a newer and rapidly evolving business expansion formula, also providing employment. This article compares the fates of employees and franchisees in their employer/franchisor insolvency. Whereas employees enjoy protection, franchisees continue to operate in conditions that have been described as Feudal. We identify the inherence of moral hazard, path dependency and optimism bias as reasons for the failure of policies and corporations laws, globally, to adapt to the franchise relationship. This failure comes into sharp focus during a franchisor’s insolvency. We demonstrate that the models of participation available to employees in the United States, Australia and the United Kingdom could be used to inform a re-balancing of the franchisees’ relationship with administrators and liquidators during the insolvency of their franchisor, providing franchisees with rights and restoring their dignity.

Type
Articles
Information
Federal Law Review , Volume 47 , Issue 2 , June 2019 , pp. 261 - 287
Copyright
Copyright © 2019 The Author(s)

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Footnotes

The authors thank the anonymous referees for their input and Jennifer L L Gant acknowledges the Tax and Business International Research Fellowship from the School of Taxation and Business Law, Business School, UNSW Sydney that facilitated the authors’ collaboration.

References

Notes

1. Sir Brian Langstaff, ‘Changing Times, Changing Relationships at Work…Changing Law?’ (2016) 45(2) Industrial Law Journal 131.

2. Veronica L Taylor, ‘Contracts with the Lot: Franchises, Good Faith and Contract Regulation’ (1997) New Zealand Law Review 459, 460.

3. Franchising in Australia broke free of corporations law oversight after a Western Australian franchisee won the right to be provided with a prospectus that complied with the then Companies Act 1981 (Cth), finding that the franchise fell within the definition of ‘prescribed interest’: Commissioner for Corporate Affairs v Casnot Pty Ltd (1981) CLC 40–704 (‘Casnot’). The regulatory response was to exempt franchisors. See Michael T Schaper and Jenny Buchan, ‘Franchising in Australia: A History’ (2014) 12(4) International Journal of Franchising Law 3, 9 for more details.

4. John W Meyer and Brian Rowan, ‘Institutionalised Organisations: Formal Structure as Myth and Ceremony’ (1977) 83 American Journal of Sociology 340, 341.

5. Gillian K Hadfield, ‘Problematic Relations: Franchising and the Law of Incomplete Contracts’ (1990) 42(4) Stanford Law Review 927, 991.

6. Mark J Roe, ‘Chaos and Evolution in Law and Economics’ (1996) 109 Harvard Law Review 641, 646–7. Roe provides an analogy to explain the profound effect of path dependency: describing the winding walking path that detoured to avoid a wolves’ den, eventually becoming a winding road that led to cars being designed to deal with high-speed cornering capacity. A better solution would have been to build a straight road as people in modern vehicles do not risk being attacked by wolves.

7. Penny Ward, ‘Legal and Legislative Directions Relating to Franchising’ in B Bell (ed), Franchising Down Under in the Lands of Oz and of the Long White Cloud: An Historical, Educative and Biographic Review 1983–2003 of Franchising in Australia and New Zealand (Wilberforce, 2003) 187–92: ‘The Western Australian Supreme Court held in Commissioner for Corporate Affairs v Casnot Pty Ltd (1981) CLC 40–704 that a franchise needed to provide franchisees with a prospectus because the offering fell within the description of a “prescribed interest” form of securities in the-then Companies Act 1981. Following the Casnot decision the (then) corporate regulator, the National Companies and Securities Commission, recognized that the franchise relationship of the early 1980s differed from the relationship between offerors of most prescribed interests and investors in important respects. As a result, it exempted franchisors from the requirement to enter into a trust deed, appoint a trustee and register a statement of their “securities” offering. However, they were required to apply for the exemption and were required to include prescribed provisions in their franchise agreement, provide a prior disclosure document to franchisees and obtain a securities dealer’s licence. This regime was repealed by an amendment in 1987.’

8. By 2016, 39 of the 195 countries in the world had enacted specific franchise laws: DLA Piper, Countries with Specific Franchise Laws (January 2016) International Franchise Association <https://www.franchise.org/sites/default/files/uploaded_images/DLAINTLFRANLAWS2016.JPG>.

9. Family Law Act 1975 (Cth).

10. Partnership Act 1892 (NSW) div 4.

11. Competition and Consumer (Industry Codes—Franchising) Regulation 2014 (Cth) cl 29(1)(b).

12. Taylor, above n 2, 467.

13. Francine Lafontaine, ‘Agency Theory and Franchising: Some Empirical Results’ (1992) 23 RAND Journal of Economics 263; Kabir C Sen, ‘The Use of Initial Fees and Royalties in Business-Format Franchising’ (1993) 14 Managerial and Decision Economics 175; Frank A Scott Jr, ‘Franchising vs Company Ownership as a Decision Variable of the Firm’ (1995) 10 Review of Industrial Organization 69.

14. For problems newly created by Australia’s Treasury Laws Amendment (2017 Enterprise Incentives No. 2) Act 2017 (Cth), see Rob Nicholls and Jenny Buchan, ‘The Law of Unintended Consequences: The Effects of Voiding Ipso Facto Clauses in Business Format Franchise Agreements’ (2017) 45 Australian Business Law Review 433, 444–6.

15. Douglass C North, Institutions, Institutional Change and Economic Performance (Cambridge University Press, 1990).

16. Jenny Buchan et al, ‘Franchisor Insolvency in Australia: Profiles, Factors and Impacts’ (2015) 22 Journal of Marketing Channels 311, 323.

17. The term insolvency is used in Australia and the UK for the failure of a corporation. The term bankruptcy is used in the US.

18. Uri Benoliel, Jenny Buchan and Tony Gutentag, ‘Revisiting the Rationality Assumption of Disclosure Laws: An Empirical Analysis’ (2016) 46 Hofstra Law Review 469.

19. Alexander M Meiklejohn (ed), Franchising: Cases, Materials and Problems (American Bar Association, 2013) 9.

20. John F Love, McDonald’s: Behind the Arches (Bantam Books, 1986) 12.

21. Lorelle Frazer et al, ‘Franchising Australia 2016’ (Report, Franchising Australia, 2016).

22. Don Sniegowski, IFA Chairman Aziz Hashim Says Franchise Profits, Rates of Return are Key (28 June 2016) Blue Maumau <http://www.bluemaumau.org/15230/ifa_chairman_aziz_hashim_says_franchise_profits_rate_return_are_key#comments>.

23. Tracy Leggett, Submission No 199 to Parliamentary Joint Committee on Corporations and Financial Services, Operation and Effectiveness of the Franchising Code of Conduct, 2018, 1.

24. Hadfield, above n 5, 929.

25. Ibid.

26. Jenny Buchan, ‘Ex ante Information and ex post Reality for Franchisees: The Case of Franchisor Failure’ (2008) 36 Australian Business Law Review 407, 422–30.

27. Hadfield, above n 5, 928.

28. Explanatory Statement, Competition and Consumer Act 2010, Competition and Consumer (Industry Codes—Franchising) Regulation 2014 (Cth) 57.

29. Competition and Consumer (Industry Codes—Franchising) Regulation 2014 (Cth) sch 1 sub-cl 2.

30. Ark Code Ann § 4–72–201; California Corp Code § 31005 (2017); Hawaii Rev Stat § 482E (2017); Conn Gen Stat § 42–133e (2017); 6 Del Code Ann § 2551 (2017); Fla Stat § 817.416 (2017); Franchise Disclosure Act of 1987, Illinois 815 ILCS 705/1; Ind Code § 23–2–2.5–1 (2017); Iowa Code § 523 H.1, 537A.10 (2017); 14 Maryland Code Ann § 14–201 (2017); Michigan Comp Law § 445.1501 (2017); Minn Stat § 80C.01 (2017); Miss Code Ann § 75–24–51 (2017); Mo Rev Stat § 407.400 (2017); Neb Rev Stat § 87–401 (2017); NJ Stat Ann § 56:10–1 (2017); NY Gen Bus Laws § 681 (2017); ND Cent Code § 51–19–01 (2017); Or Rev Stat § 650.005(4) (2017); RI Gen Laws § 19–28–3(c) (2017); SD Codified Laws § 37–5B (2017); Va Code Ann § 13.1–559(b) (2017); Wash Rev Code § 19.100.010(4) (2017); Wis Stat § 553.03(4) (2017); see Babette Märzheuser-Wood and Brian Baggott, Franchise Law in the United States (2015) Dentons <https://www.dentons.com/en/insights/articles/2015/june/12/franchise-law-in-the-united-states>.

31. Meiklejohn, above n 19, ch 9.

32. Stanley Turkel, Are Franchisees Agents of Franchisors? (13 August 2013) Blue Maumau <http://www.bluemaumau.org/are_franchisees_agents_franchisors>; American law is split as to whether a fiduciary relationship exists between a franchisor and franchisee but most sources deny the existence of this relationship. However, cases are fact-specific and there is some state legislation. See Paul Steinberg and Gerald Lescatre, ‘Beguiling Heresy: Regulating the Franchise Relationship’ (2004–05) 109(1) Penn State Law Review 105; Meiklejohn, above n 19, 664–7, 704–6, 726–7.

33. Meiklejohn, above n 19, 726–7.

34. See, eg, the Australian view in Jax Franchising Systems Pty Limited v State Rail Authority (New South Wales); Jax Tyres Pty Limited v State Rail Authority (New South Wales) [2003] NSWLEC 397; Poulet Frais Pty Ltd v The Silver Fox Company Pty Ltd (2005) 220 ALR 211 (Branson, Nicholson and Jacobson JJ). The possibility of McDonald’s owing a fiduciary duty was pleaded by the franchisee but not argued in Far Horizons Pty Ltd v McDonald’s Australia Ltd [2000] VSC 310. In Diab Pty Ltd v YUM! Restaurants Australia Pty Ltd [2016] FCA 43, a case about good faith and unconscionable conduct, the parties agreed that ‘[t]he Franchisee is an independent contractor and no fiduciary relationship exists between the franchisor and the Franchisee’.

35. See, eg, Insolvency Act 1986 (UK) c 45, sch 6, category 5: Remuneration, etc. of employees; Australian Corporations Act s 556; and the United States Bankruptcy Code, 11 USC § 507(a)(4).

36. See, eg, EU Council Directive 80/987/EEC of 20 October 1980 on the approximation of the laws of the Member States relating to the protection of employees in the event of their employer’s insolvency [1980] OJ L 283/23, as implemented among the Member States of the EU and the Australian Air Passenger Ticket Levy (Collection) Act 2001 (Cth) enacted following Ansett’s failure to fund the government lifeline for its employees’ pay entitlements. The franchisees had to collect the levy as they watched takings slow in their own businesses.

37. See, eg, EU Council Directive 2001/23/EC of 12 March 2001 on the approximation of the laws of the Member States relating to the safeguarding of employees’ rights in the event of transfers of undertakings, businesses or parts of undertakings or businesses [2001] OJ L 82/16; Fair Work Act 2009 (Cth) pts 2–8.

38. See, eg, the United States Worker Adjustment and Retraining Notification Act of 1988, 29 USC §§ 2101–09; the Fair Work Act 2009 (Cth); and in the EU, pursuant to the Collective Redundancies Directive: Council Directive 98/59/EC of 20 July 1998 on the approximation of the laws of the Member States relating to collective redundancies [1998] OJ L 225/16, as implemented in each Member State.

39. Ansett Airlines had 15 000 employees when it failed in 2002; 4500 were represented by the Ansett Services union (ASU). The administrators of Ansett negotiated a Federal Government scheme (Special Employment Entitlements Scheme for Ansett) under which some employee entitlements could be advanced. The scheme advanced $382.4 million to Ansett and by 21 September 2011 $363 million had been reimbursed. See Korda Mentha, ‘Ansett administration makes final landing with 96 cents in the $ for employees’ (Media Release, 2 September 2011). Similarly, the Federal Government injected up to $22 million as a partial bailout to keep ABC Learning child care centres open until a buyer was found.

40. Frazer, above n 21, 20.

41. Jenny Buchan, Franchisor Failure: An Assessment of the Adequacy of Regulatory Response (PhD Thesis, Queensland University of Technology, 2010) 42. For example, Angus and Robertson failed as a franchisor after over 100 years of being an Australian bookseller.

42. G Frank Mathewson and Ralph A Winter, ‘The Economics of Franchise Contracts’ (1985) 28 Journal of Law and Economics 503, 507.

43. Robert Cooter and Thomas Ulen, Law & Economics (Berkeley Law Books, 6th ed, 2012) 38–41.

44. Richard A Posner, ‘Theories of Market Regulation’ (1974) 5(2) Bell Journal of Economics and Management Science 335.

45. Buchan, above n 26.

46. Jason Gherke, ‘Sizzler on Life Support as Stores Shut’, News.com.au (online), 28 June 2016 <http://www.news.com.au/finance/business/retail/sizzler-on-life-support-as-stores-shut/news-story/754dfaa661aa32479cbe2396dcd9909c>.

47. Sniegowski, above n 22.

48. Competition and Consumer (Industry Codes—Franchising) Regulation 2014 (Cth) Annexure 2.

49. Franchise Council of Australia, ‘Buying a Franchise: Guidelines’ <http://www.franchise.org.au/buying-a-franchise.html>.

50. Frazer, above n 21, 20.

51. Jenny Buchan et al, ‘The Effectiveness of Undertaking Due Diligence Prior to Starting Up or Purchasing a Small Business or Franchise’ (Report for CPA Australia, 2015).

52. Ben Butler, ‘Behind Closed Doors: An Exclusive Club is Determined to Stay Private. A Clause Allowing Companies to Keep Accounts Secret Looks Set to Stay’, The Sydney Morning Herald (online), 21 July 2012 < https://www.smh.com.au/business/behind-closed-doors-an-exclusive-club-is-determined-to-stay-private-20120720-22fne.html>.

53. Benoliel, Buchan and Gutentag, above n 18.

54. James R Brown, Robert F Lusch and Carolyn Y Nicholson, ‘Power and Relationship Commitment: Their Impact on Marketing Channel Member Performance’ (1995) 71 Journal of Retailing 363.

55. As observed in a letter dated October 2016 from then franchise lawyer Philip Linacre to Buchan.

56. Alan Wein, ‘Review of the Franchising Code of Conduct’ (Report to The Hon Gary Gray AO MP, Minister for Small Business and The Hon Bernie Ripoll MP, Parliamentary Secretary for Small Business, Commonwealth of Australia).

57. British Franchise Association, ‘European Code of Ethics for Franchising’ <http://www.thebfa.org/Content/FileManager/2016-european-code-of-ethics-and-bfa-extension-and-interpretation.pdf>.

58. Chris Wormald, ‘Domestic and International Franchising, Master Franchising, and Regulation of Franchise Agreements in the UK (England and Wales): Overview’ (1 Nov 2018) <https://uk.practicallaw.thomsonreuters.com/0-632-9722?transitionType=Default&contextData=(sc.Default)> notes that the only sanction for noncompliance by a member is exclusion from the BFA.

59. International Franchising Association, ‘Our Mission Statement, Vision & Code of Ethics’ <http://www.franchise.org/mission-statementvisioncode-of-ethics>.

60. For example, the administrator of former Australian franchisor Beach House Group Pty Ltd wrote under the heading Insolvent Trading ‘there are sufficient grounds to suspect that the company was insolvent from at least February 2008.…There is also evidence to suggest that the company was likely insolvent prior to February 2008. In particular, statutory debts owed to the Australian Taxation Office [statutory demands totalling $1,409,785] relates [sic] to debts incurred as far back as 2005 and 2006’ (Bruno A Secatore, Cor Cordis, Beach House Group Pty Ltd (Administrators Appointed) ACN 098 577 667 Administrators Report 16 December 2008, 14.). The authors have on file evidence of one franchise agreement entered by Beach House Group on 22 September 2006.

61. Per the Competition and Consumer (Industry Codes—Franchising) Regulation 2014 (Cth) sch 1 annex 1 cl 21.1, the following is required for pre-contract disclosure: ‘A statement of the franchisor’s solvency that:

  1. (a)

    (a) reflects the franchisor’s position:

    1. (i)

      (i) at the end of the last financial year; or

    2. (ii)

      (ii) if the franchisor did not exist at the end of the last financial year — at the date of the statement; and

  2. (b)

    (b) is signed by at least one director of the franchisor; and

  3. (c)

    (c) gives the directors’ opinion as to whether there are reasonable grounds to believe that the franchisor will be able to pay its debts as and when they fall due.’

62. Buchan et al, above n 16, 323. The same conduct by different franchisors was reported in Jenny Buchan, ‘Franchising: A Honey Pot in a Bear Trap’ (2014) 34 Adelaide Law Review 283, 312.

63. Frazer, above n 21, 37.

64. Buchan et al, above n 16, 318.

65. Frazer, above n 21, 37.

66. Table from Buchan, above n 41, 61–4, and updated with 2016 data. Items in Columns 1, 3 and 4 were supplied to one of the authors by a former franchisee of the failed franchisor Danoz Directions Pty Ltd.

67. In Cheque One Pty Ltd v Cheque Exchange (Australia) Pty Ltd (in liq) [2002] FCA 593, 12 applicant franchisees sought leave of the court under s 471B of the Corporations Act to join proceedings commenced against the franchisor in 2000.

68. By giving notice under s 443B(3) of the Corporations Act. See Orla M McCoy ‘Administrators and Leases: Obligations and Options’ (2012) 24(2) Australian Insolvency Journal 24, 26.

69. Otto Eduardo Fonseca Lobo, World Insolvency Systems: A Comparative Study (Thompson Reuters, 2009). See the chapters on France, Germany and the United States, for example.

70. Buchan et al, above n 16, 324.

71. Ibid 322–4.

72. Jenny Buchan, ‘Deconstructing the Franchise as a Legal Entity’ (2014) 21(3) Journal of Marketing Channels 143, 153.

73. Jennifer Dolman et al, ‘Unique Circumstances in Litigating Franchise Class Actions’ (Paper presented at the Canadian Institute’s 12th Annual National Forum on Class Actions Litigation, Toronto, Canada, 21–22 September 2011).

74. Steven H Goldman, ‘Tackling Troublesome Insolvency Issues for Franchisees’ (Unpublished, 2003).

75. Gherke, above n 46.

76. Bruce E Schaeffer and Susan J Robins, ‘Valuation of Intangible Assets in Franchise Companies and Multinational Groups: A Current Issue’ (2008) 27(3) Franchise Law Journal 185.

77. Jenny Buchan, ‘Franchisors’ Registered Trademarks — Empirical Surprises’ (2009) 21(7) Australian Intellectual Property Law Bulletin 154.

78. Jenny Buchan and Bill Butcher, ‘Premises Occupancy Models for Franchised Retail Businesses in Australia: Factors for Consideration’ (2009) 17(2) Australian Property Law Journal 143.

79. Meiklejohn, above n 19, 716.

80. Craig R 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).

81. Posner, above n 44.

82. Peta Spender, ‘Scenes from a Wharf: Containing the Morality of the Corporate Law’ (Proceedings of the 9th Annual Corporate Law Teachers Association Conference, Monash University, Melbourne, Australia, 1999) 21–9.

83. Sarah B Foster and Carolyn Johnsen, ‘The war of the worlds: Bankruptcy versus…’ (American Bar Association, 28th Annual Forum on Franchising, Florida 2005).

84. 11 USC § 365(e)(1). Detailed information about franchise insolvency law in the US is available in Jason B Binford and Daniel M Eliades (eds) The Bankruptcy Handbook for Franchisors & Franchisees (ABA, 2018).

85. Buchan, ‘Franchising’, above n 62, 314.

86. Nicholls and Buchan, above n 14.

87. Buchan, above n 72.

88. McCoy, above n 68, 24.

89. Corporations Act s 443B(2)–(3).

90. Ibid s 439A(5)(b).

91. Re REDGroup Retail Pty Ltd ACN 108 801 127 and the Companies Listed in the Attached Schedule (All Administrators Appointed), No NSD 279/2011, Sealed Order, Federal Court of Australia, Sydney (14 March 2011) para 3.

92. Buchan et al, above n 16, 322.

93. This is normally not possible because of Corporations Act ss 440D or 471B.

94. Competition and Consumer (Industry Codes—Franchising) Regulation 2014 (Cth) cl 29 provides for termination in special circumstances. The Treasury Laws Amendment (2017 Enterprise Incentives No. 2) Act 2017 inserted provisions into the Corporations Act to stay the enforcement of ipso facto clauses against relevant entities.

95. Nicholls and Buchan, above n 14.

96. Insolvency Act 1986 (UK) cl 45, sch B1, para 99.

97. Jenny Buchan, ‘Reducing Collateral Damage in Franchisor Insolvency’ in Paul Omar (ed), International Insolvency Law: Themes and Perspectives (Ashgate, 2008) 391.

98. Ibid 392.

99. Jennifer L L Gant, Balancing the Protection of Business and Employment in Insolvency: An Anglo-French Perspective (Eleven International Publishing, 2017) 33–78.

100. PD 10276, Inc. v. Commissioner of Labor (In Re Baez) 520746 (NY App Div 2016).

101. See, eg, Caroline Colton, ‘Professional Misconduct: The Case of the Medical Board of Australia v Tausif (Occupational Discipline)’ (2015) 22 Journal of Law and Medicine 534.

102. Donald R Korobkin, ‘Employee Interests in Bankruptcy’ (1996) 4 American Bankruptcy Institute Law Review 5, 7.

103. Christopher Symes and John Duns, Australian Insolvency Law (LexisNexis Butterworths, 2009) 310.

104. Simon Deakin and Frank Wilkinson, ‘Rights vs Efficiency? The Economic Case for Transnational Labour Standards’ (1994) 23(4) Industrial Law Journal 289, 292.

105. Bruce E Kaufman, ‘Labor Law and Employment Regulation: Neoclassical and Institutional Perspectives’ in Kenneth G. Dau-Schmidt, Seth D. Harris, and Orly Lobel (eds), Labour and Employment Law and Economics: Encyclopedia of Law and Economics (Edward Elgar 2009) vol 2, 6–9.

106. Didier Fouarge, ‘Costs of Non-Social Policy: Towards an Economic Framework of Quality Social Policies — and the Costs of not Having Them’ (Report, Directorate-General for Employment and Social Affairs, European Commission, 3 January 2003).

107. Kaufman, above n 105, 30–41.

108. Fouarge, above n 106.

109. Gant, above n 99, 195–208.

110. Ying Fan, Kai-Uwe Kühn and Francine Lafontaine, ‘Financial Constraints and Moral Hazard: The Case of Franchising’ (2017) 125(6) Journal of Political Economy 2082, 2112.

111. James A Brickley and Frederick H Dark, ‘The Choice of Organizational Form: The Case of Franchising’ (1987) 18 Journal of Financial Economics 401, 403.

112. Ibid 420.

113. Lafontaine, above n 13, 279.

114. Uri Benoliel and Jenny Buchan, ‘Franchisees’ Optimism Bias and the Inefficiency of the FTC Franchise Rule’ (2015) 13 DePaul Business & Commercial Law Journal 411.

115. Trevor Sykes, ‘Traveland: Final Tragedy of Errors’, The Australian Financial Review Weekend (Sydney), 9–10 March 2002, 12.

116. Jon D Hanson and Douglas A Kysar, ‘Taking Behavioralism Seriously: The Problem of Market Manipulation’ (1999) 74 New York University Law Review 630.

117. Christine Jolls, Cass R Sunstein and Richard Thaler, ‘A Behavioural Approach to Law and Economics’ (1998) 50 Stanford Law Review 1471; see also Jenny Buchan, ‘Consumer Protection for Franchisees of Failed Franchisors: Is There a Need for Statutory Intervention?’ (2009) 9(2) QUT Law & Justice Journal 232, 241–2 for impediments to prospective franchisees’ ability to conduct thorough due diligence.

118. Hanson and Kysar, above n 116.

119. Benoliel and Buchan, above n 114.

120. Hanson and Kysar, above n 116.

121. Langstaff, above n 1, 133.

122. Worker Adjustment and Retraining Notification Act 29 USC §§ 2101–2109 (1988) (‘WARN Act’).

123. FWA s 531(2)–(3).

124. Alan Wein, ‘Review of the Franchising Code of Conduct’ (Report to the Minister and Parliamentary Secretary for Small Business, 30 April 2013) ix.

125. Council Directive 98/59/EC of 20 July 1998 on the approximation of the laws of the Member States relating to collective redundancies [1998] OJ L 225/16.

126. Ibid art 2(1).

127. Ibid art 2(2).

128. Ibid art 2(3).

129. In Australia, the Australian Competition and Consumer Commission and the Franchise Council of Australia should be informed; in the US, the Federal Trade Commission and the International Franchise Association should be informed; in the UK, the British Franchise Association should be informed.

130. George J Stigler, ‘The Theory of Economic Regulation’ (1971) 2 Bell Journal of Economics & Management Science 3, 4.

131. Robert Baldwin, Martin Cave and Martin Lodge (eds), The Oxford Handbook of Regulation (Oxford University Press, 2010) 89–92.

132. Maria Hamideh Ramjerdi, ‘Monopoly by Contract: The Practice of Franchised Fee and Royalty Rate’ (2014) 3 Journal of Reviews on Global Economics 7.

133. Buchan, above n 41, 258.

134. Ibid 266.