Harvey Norman chairman Gerry Harvey says the furniture and homewares retailer will continue to pay the debts of failed franchisees, even though the 2017 accounts say it has no obligation to do so.

"Harvey Norman's reputation has to be kept at the very highest level," Mr Harvey told business commentator Peter Switzer on Sky News this week.

"If a franchisee failed and didn't pay the account we are under no obligation to pay it but for our reputation sure we pay it – every supplier knows that," he said. "It's just a case of our reputation. Nothing has ever changed."

Mr Harvey's comments have added to confusion about the nature of the retailer's relationship with franchisees, following changes to the accounting treatment for franchisee receivables in Harvey Norman's 2017 accounts.

Receivables from franchisees, or loans to franchisees, fell from $943 million to $535 million in 2017, as Harvey Norman excised inventory after "reiterating" that franchisees, rather than the parent company, were responsible for paying suppliers and that Harvey Norman would no longer guarantee debts.

The reiteration was aimed at rectifying "any incorrect expectations on the part of a supplier that Derni [a Harvey Norman subsidiary] would discharge any of the debts owed by a franchisee to the suppliers," the accounts said.

"As a result, as at June 30, 2017, there was no constructive obligation by Derni to any supplier to any franchisee and no committed advance to any franchisee."

Some retail analysts believed the clarification changed the nature of the relationship between franchisees and suppliers, forcing franchisees to negotiate terms more directly with suppliers, rather than taking advantage of Harvey Norman's support, and potentially leading to less favourable trading terms.

However, Mr Harvey dismissed this suggestion as "bullshit".

"Our franchisees have always been responsible for paying suppliers and nothing has changed, they are still responsible," he told Sky News.

Harvey Norman shares are down 0.5 per cent at $3.86.