Factors Affecting Franchise Agreement Terminations: Lessons for the Franchising Sector

  • Lorelle Frazer Griffith University, Logan, Australia
  • Andrew Terry University of New South Wales, Sydney, Australia

Abstract

The practice  of termination  of franchise   agreements  raises  significant  strategic  and  legal issues. This paper aims to provide descriptive information about franchise terminations in relation to which the appropriateness of regulatory responses can be measured. Data were collected from surveys of Australian franchisers in 1998 and 1999 to explore the nature, reasons and outcomes of franchise  agreement terminations.  A model predicting  the likelihood of terminations was developed, based on franchise system maturity, support structures provided, and level of conflict experienced. The results indicate that mature franchises were more  likely  than younger  systems  to experience franchise  terminations.  No  consistent  link was found between the amount of system support or the level of conflict and the incidence of franchise terminations. The data  lends  support  to judicial  responses  to  termination  issues which accommodate the relational aspect of  franchise  relationships  and  addresses termination issues in the context of the underlying relationship and the legitimate business expectations  of the parties.

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Published
2002-06-23
How to Cite
FRAZER, Lorelle; TERRY, Andrew. Factors Affecting Franchise Agreement Terminations: Lessons for the Franchising Sector. Journal of Small Business Strategy, [S.l.], v. 13, n. 1, p. 105-116, june 2002. ISSN 2380-1751. Available at: <https://libjournals.mtsu.edu/index.php/jsbs/article/view/498>. Date accessed: 15 june 2019.
Section
Small Business Brief