On-boarding new franchisees

The sequence, with the dates you must record

Keep this as a checklist on every file. If the ACCC audits you, the question will not be whether you meant to comply. It will be whether you can produce the dates.

The mistakes that cause most of the problems

• Sending documents piecemeal. The clock is only reliable once the full set has been given. Send everything at once with a covering letter that lists it.
• Taking a deposit early. A non-refundable payment before the period has run is a contravention. If you take a holding deposit, make it genuinely refundable and say so in writing.
• Negotiating up to the signing date. Material changes to the agreement after disclosure create a re-disclosure problem. Settle the commercial terms first, then start the clock.
• Missing the advice statements. The franchisee must give signed statements about independent legal, business and accounting advice before signing. A franchisee who declines advice must still sign a statement saying so.
• Letting the franchisee trade before the cooling-off period expires. It is not prohibited, but it makes an unwinding messy if they terminate. Where possible, schedule fit-out and training so nothing irreversible happens in the first fortnight.
• Forgetting that the same rules apply on transfers and renewals. A transfer to a new franchisee has its own disclosure and cooling-off consequences, and a renewal is a new agreement for Code purposes.

What happens if the franchisee cools off

A franchisee entering a new franchise agreement may terminate it within 14 days of entering into it. The notice must be in writing. On termination, the franchisor must repay all money paid by the franchisee under or in connection with the agreement within 14 days, less the franchisor's reasonable expenses, and those expenses can only be deducted if they are set out in the agreement.

Two practical consequences for franchisors. First, your agreement needs a properly drafted reasonable expenses clause, itemising what may be deducted, or you will be refunding everything. Second, be careful about what you spend in the first fortnight, because you may have to return the franchisee's money regardless of what you have committed to a landlord or a shopfitter.

From 1 November 2025 a narrow opt-out became available: a franchisee can agree not to have the cooling-off period where they recently held a substantially similar agreement with the same franchisor for the same or substantially the same business. That is a renewal and re-engagement provision. It does not apply to a genuinely new franchisee.

Building it into your systems

Treat onboarding as a controlled process with a single owner inside your business. A sales manager who is measured on signings and who also controls the document timeline is a structural risk.

Use a template covering letter that lists every document and states the date on which the 14 day period expires. Use a file checklist that cannot be closed without the advice statements. Diarise the cooling-off expiry, and do not treat the franchisee as fully onboarded until it passes.

Review the whole set annually against the disclosure document update. See advice for franchisors for the annual calendar, and the disclosure document for content requirements.