Franchising law in Australia

What changed on 1 April 2025

The new Code replaced the 2014 Regulation. Much of the old machinery was carried across, but several things people still quote from older websites are now wrong.

• The Key Facts Sheet is gone. The requirement to prepare and give a Key Facts Sheet was removed. If a franchisor is still producing one, it is not a Code obligation.
• Cooling off is 14 days. A franchisee entering a new franchise agreement can terminate within 14 days of entering into it. Sites still quoting seven days are describing the old Code.
• Restraints on non-renewal are restricted. A restraint of trade clause is unenforceable after an agreement expires where the franchisee sought renewal on substantially the same terms, met the conditions, was refused, and was not paid genuine compensation for goodwill.
• Civil penalties were extended and increased. Many more obligations now carry a civil penalty, with the maximum for a number of them set at 600 penalty units. Penalty units are indexed, so check the current dollar value rather than relying on a figure published online.
• The ASBFEO can name and shame. The Australian Small Business and Family Enterprise Ombudsman can publicise franchisors who refuse to participate in, or who withdraw from, an alternative dispute resolution process.

A further set of protections applies to agreements entered into, renewed, extended or transferred on or after 1 November 2025: compensation for early termination in defined circumstances, a requirement to give franchisees a reasonable opportunity to make a return on any investment the franchisor requires, expanded rules for specific purpose funds beyond marketing funds, and a limited ability for a franchisee to opt out of the cooling-off period on a renewal of a substantially similar agreement.

The timetable a franchise sale has to follow

Those dates are the spine of the Code. Almost every franchising dispute we see involves at least one of them being missed.

Who this section is for

Franchisors and franchisees have opposite interests and we do not act for both sides of the same system.

If you are thinking about franchising a business you already run, start at franchising your business, then for franchisors for the ongoing compliance load.

If you are buying a franchise, start at buying your first franchise, then read what a disclosure document is and what a franchise agreement contains.

If you are already in a franchise and something has gone wrong, go to franchise disputes, because the Code imposes a process you have to follow and there are deadlines in it.

What the Code does not do

The Code is a disclosure and process regime. It is not a guarantee that a franchise is a good investment, and it does not require a franchisor to tell you what you will earn.

• Earnings projections are optional. A franchisor is not obliged to give you financial projections. If they do, the information must not be misleading and the assumptions must be disclosed. Many disclose nothing, which is lawful.
• The Code does not fix the fees. Royalty rates, marketing levies and required capital expenditure are commercial terms. The Code requires disclosure of them, not fairness in setting them.
• Good faith is not a right to renegotiate. The obligation to act in good faith does not prevent a party acting in its own legitimate commercial interests.
• Not every business system is a franchise. A licence, distributorship or agency can fall outside the Code, and some franchises are exempt, for example where franchise sales are no more than 20 per cent of the franchisee's gross turnover.

The Australian Consumer Law runs alongside the Code. Misleading statements made during the sales process, and unfair terms in a standard form franchise agreement, are dealt with under that law rather than under the Code, and the ACCC has taken action in both areas.

How we work on franchising matters

For franchisees, the standard piece of work is a review of the disclosure document and franchise agreement, delivered as a written report that says plainly which terms are normal, which are unusual, and which we would want changed. That is quoted as a fixed fee range, and it is designed to be delivered inside the 14 day disclosure period rather than at the end of it.

For franchisors, the work is the document set and the compliance system around it: the agreement, the disclosure document and its annual update, the register profile, the onboarding process and the records that prove you complied. Also quoted as a fixed fee range.

Start with a free 15 minute call, and if it needs more than that a first appointment at Southport or Brisbane is $440 including GST. If you have a 14 day period running, say so when you call, because that changes how quickly we need to see the documents.

One practical note about conflicts. Franchising is a small sector and we cannot act for a franchisee against a franchisor we already act for. Tell us the system name at the first call so we can run a conflict check before you send us anything confidential. If we cannot act, we will say so immediately rather than after you have spent a week waiting.