General information, not legal adviceThis page summarises the Code and official guidance; it isn’t advice on any franchise or agreement. The ACCC’s franchising pages and business.gov.au’s buying a franchise guide are the places to check.
A tenon in someone else’s mortise
In a mortise and tenon joint, one piece is shaped to fit a slot cut in the other. A franchisee’s business fits the franchisor’s system in much the same way. business.gov.au describes three limits. The franchisor sets the operating procedures and is free to change them whenever it likes. Any change you want to make to your franchise needs the franchisor’s agreement. And the franchisor decides where your products and services come from, even when another source would be cheaper.
In return, it says, the franchisor gives you things like a known product or service, branding and trade marks, ongoing training and support, and operating systems and procedures. Among the risks it names: the franchisor can change what you pay and how you must operate, you may lose access to stock or the brand if the franchisor becomes insolvent, and termination rights are often in the franchisor’s favour.
The Code says its purpose includes addressing “the imbalance of power between franchisors and franchisees and prospective franchisees”. The current Code applies to franchise agreements entered into, transferred, renewed or extended on or after 1 April 2025, and to conduct from that date in relation to them (section 97).
The Code’s timeline
These steps follow the Franchising Code of Conduct, which is Chapter 2 of the franchising industry code regulations made in 2024 (F2024L01605 on the Federal Register of Legislation), for someone entering a new franchise agreement.
-
Within 7 days of showing interest
The information statement
When a prospective franchisee formally applies or expresses an interest, the franchisor must give them the information statement about franchising published on the ACCC’s website, as soon as practicable and no later than 7 days after, and before giving any of the other documents.
-
Before signing
The documents
Section 23(2) of the Code says the franchisor must give “a copy of the franchise agreement, in the form in which it is to be executed”, which is the version you would sign. Unless the prospective franchisee has opted out, the disclosure document and a copy of the Code come with it. If the franchisor or an associate leases premises it plans to sublease to the franchisee, a copy of that lease comes too, or a summary of its commercial terms if they don’t hold the lease. Only someone who has, or recently had, substantially the same franchise agreement with the franchisor, for substantially the same business, can opt out of receiving the disclosure document and Code.
-
At least 14 days
The consideration period
The franchisor must not sign the agreement until 14 days have passed since the latest of: the day it gave the documents; the day it gave a changed agreement (other than minor changes the Code lists, such as ones you asked for); and the day it gave any earnings information.
-
Before the franchisor signs
The statements
Under section 26 of the Code, the franchisor must first have “a written statement that the franchisee or prospective franchisee has received, read and had a reasonable opportunity to understand the disclosure document and this Code”. It must also have statements about advice from each of the three kinds of adviser that section 27 of the Code describes: an independent legal adviser, an independent business adviser and an independent accountant. For each, that means either a signed statement from the adviser that the advice was given, or one from the prospective franchisee saying they got it, or that they know they need it and have decided not to.
-
Signing, and from then on
Good faith, both ways
Each party to a franchise agreement must act in good faith towards the other, and the obligation also applies while the agreement is being negotiated. A court may consider whether a party acted honestly and not arbitrarily, and whether it cooperated to achieve the agreement’s purposes. A franchisor must not enter into an agreement that tries to limit or exclude the obligation.
-
Within 14 days after signing
Cooling off
A franchisee may end a new franchise agreement within 14 days after entering into it, unless a franchisee who has held substantially the same franchise opts out in writing. The franchisor must then, within 14 days, repay the payments the franchisee made in connection with the agreement, less its reasonable expenses relating to the termination if the agreement sets those out. The cooling-off right doesn’t apply to renewing or extending an existing agreement (section 50(6)). As the ACCC puts it, after the cooling-off period has run out “it’s harder to just leave the business”.
During the agreement
Marketing and other specific purpose funds
If the agreement requires the franchisee to pay into a specific purpose fund, such as a marketing fund, the fund’s administrator must prepare an annual financial statement within 4 months after the end of each financial year and give the franchisee a copy within 30 days. The statement must be audited by a registered company auditor unless an exception in the Code applies.
Proposing to end it
A franchisee may at any time give the franchisor a written proposal to end the agreement, with reasons. The franchisor must give a substantive written response within 28 days.
Bargaining as a group of franchisees
Franchisees of the same franchisor can negotiate with it together under the ACCC’s collective bargaining class exemption, whatever their turnover. Bargaining as a group sets out its conditions.
Before the timeline starts
business.gov.au suggests a few things to do before any of this:
- Take the ACCC’s free online course on franchising, which compares franchising with running your own business or employment and covers the main laws.
- Look up the franchisor on the Franchise Disclosure Register, a free directory of franchisors hosted by the Australian Government, to compare costs and contract terms.
- Research the market, confirm how much money you could make, check the franchisor’s financial position, and run a business background check on ASIC Connect.
- Get advice from an accountant, a lawyer and a business adviser with expertise in franchising.
The ACCC adds one habit that pays off later: get the franchisor to put its answers in writing, preferably in the franchise agreement or disclosure document, because otherwise it may be hard to prove what was said.
If things go wrong
business.gov.au says to raise a complaint with the franchisor first, then follow the complaints process in the agreement or the Code. The Australian Small Business and Family Enterprise Ombudsman (ASBFEO) or your state small business commissioner can help with dispute resolution. ASBFEO’s franchising pages are the place to start.