Rescuing a franchisee business

How insolvency experts turned around struggling franchisee businesses.

When a franchisee company facing insolvency needs rescue, directors must carefully consider several issues before exploring restructuring options. Key issues include:

• Intellectual property: By placing the franchisee company into voluntary administration (VA) or a small business restructuring (SBR) plan, the franchisee company may lose its right to use the intellectual property associated with the franchise business, such as images, brands and logos.
• Stock supply: the franchisee may be unable to purchase stock if they receive it through the franchisor or its affiliates.
• Premises: The franchisee may lose their right to occupy the premises if the franchisor holds the head lease.