ALERT: 2022 Changes To The Franchising Code (Updated 2026)

If you’re a franchisor (or you’re thinking about franchising your business), compliance with Australia’s Franchising Code of Conduct isn’t optional. It’s one of the biggest legal frameworks governing how you recruit, onboard, and manage franchisees.

When people talk about the “2022 changes” to the Franchising Code, they’re usually referring to the modern wave of reforms that reshaped day-to-day franchising in Australia (including stronger enforcement and more practical disclosure expectations), and the way those reforms have continued to affect franchising practices since.

Now that we’re in 2026, it’s also important to read those changes in context. The Code doesn’t operate in a vacuum. Your obligations as a franchisor (and your protections as a franchisee) are influenced by related legal areas like Australian Consumer Law (ACL), unfair contract term (UCT) rules, privacy, and employment compliance.

Below, we break down what the “2022 changes” mean in practice, what we’re still seeing in 2026, and what you should do next to keep your franchise system compliant and commercially strong.

What Is The Franchising Code And Who Does It Apply To?

The Franchising Code of Conduct (the Code) is a mandatory industry code that applies to most franchise relationships in Australia.

In simple terms, if you’re licensing your brand and business system to another operator (the franchisee), and they pay fees or other consideration for the right to operate under your system, there’s a strong chance you’re operating a franchise arrangement.

Why This Matters (Even If You Don’t Call It A Franchise)

One of the most common issues we see is businesses accidentally creating franchise arrangements without realising it. For example, you might think you’re offering a “licence”, “distribution model”, or “agency arrangement”, but the legal substance of the relationship can still fall within the Code.

This is where accidental franchising becomes a real risk. If the Code applies and you don’t comply, you can expose your business to serious penalties and disputes.

What The Code Tries To Do

The Code is designed to create a fairer, more transparent franchise sector by:

• requiring pre-contract disclosure so franchisees understand what they’re buying into
• setting rules around how franchisors deal with franchisees (including dispute handling and good faith behaviour)
• creating guardrails for high-risk issues like termination, renewal, and capital expenditure

If you’re building a franchise network in Australia, the Code is one of your “core compliance documents” alongside your brand protection and your key contracts.

So What Were The “2022 Changes” Everyone Talks About?

There wasn’t a single switch flipped on 1 January 2022 that changed everything overnight. Instead, the industry has been dealing with a set of reforms that became part of the day-to-day “new normal” around that period, and that continue to shape compliance expectations.

From a practical perspective, the “2022 changes” are usually discussed as shifts in:

• how much disclosure is expected (and how clearly it must be presented)
• how strictly behaviour is regulated (good faith, transparency, dispute conduct)
• how enforcement works (more meaningful penalties and consequences)

1) Stronger Focus On Clear, Front-Loaded Disclosure

Franchising has always involved disclosure. But what changed (in how the market experienced the reforms) was the expectation that franchisees receive clearer, more usable information early, rather than a dense pack of documents that technically comply but don’t practically inform.

In 2026, that expectation is still very much alive. Regulators and courts tend to look at the substance of what was provided and whether a franchisee had a realistic opportunity to understand the deal before signing.

That’s why your Disclosure Document needs to be more than a template you dust off once a year. It should reflect what is actually happening in your network (fees, supplier arrangements, dispute history, and other operational realities).

2) More Meaningful Consequences For Non-Compliance

Another major shift that people associate with the 2022 era is the practical reality that franchising compliance is enforced more seriously than it used to be.

In other words, “everyone does it this way” is not a legal defence, and franchisors should assume their documentation and recruitment process may be scrutinised if a franchisee relationship breaks down.

This matters not just for large franchise systems. Smaller and emerging franchisors can also be exposed, particularly if they are scaling quickly and using informal recruitment processes.

3) Higher Expectations Around Conduct (Not Just Paperwork)

Many franchisors assume compliance is just about getting the documents signed. But a big theme since the 2022 period is that franchising disputes often turn on conduct: what you said during recruitment, what you promised informally, and how you acted when issues arose.

This overlaps heavily with the ACL and the risk of claims involving misleading or deceptive conduct. Even if your franchise agreement is well-drafted, sales conversations and marketing claims can create serious legal exposure if they don’t match reality.

4) Cooling-Off And Pre-Contract Timing Still Matter In 2026

Cooling-off rights and pre-contract timing obligations are not the sort of thing you want to “fix later”. They need to be built into your sales workflow from the start.

If your internal process is messy (for example, you email documents in dribs and drabs, or you rush a prospect to sign), you can create risk around whether a franchisee was genuinely given time to consider the arrangement.

It’s also worth remembering that cooling-off concepts appear in other business contexts too, which is why many business owners also want a broader understanding of cooling-off periods across Australian law.

What Do These Changes Mean If You’re A Franchisor In 2026?

If you’re the franchisor, the big “2026 reality check” is this: franchising is not just a growth strategy, it’s a compliance system.

Scaling through franchisees can be a fantastic way to expand your brand and footprint, but only if your legal foundations keep up with your commercial growth.

Your Recruitment Process Needs To Be Legally Engineered

In 2026, a strong franchisor recruitment process typically includes:

• consistent information provided to all candidates (no “special promises” to close a deal)
• clear written explanations of fees, costs, and what the franchisee is responsible for
• a disciplined approach to timelines (including pre-contract delivery requirements)
• a “no surprises” approach to site selection, exclusivity, marketing funds, and supplier rebates

A franchisor can have great intentions and still end up in trouble if the sales process is informal or inconsistent.

Your Documents Need To Match How You Actually Operate

There’s a common trap here: a franchisor uses documents that were drafted years ago, while the franchise model has evolved (new fees, new suppliers, new products, new tech platforms, new marketing practices).

This creates a compliance gap. And it also creates a relationship gap, because franchisees feel like they were sold one model but received another.

As a starting point, your core legal package typically includes:

• the Franchise Agreement (the core contract setting out rights and obligations)
• the Disclosure Document (your pre-contract compliance document)
• operations manuals and system standards (often not “legal documents” in the strict sense, but still critical)
• brand and intellectual property protections (so franchisees can’t walk away with your identity)

Good Faith Is A Practical Standard, Not A Buzzword

“Good faith” is often misunderstood. It doesn’t mean you must always agree with a franchisee, and it doesn’t mean you can’t enforce standards.

It generally means you must act honestly, not arbitrarily, and not for an improper purpose when dealing with franchisees. From a risk management perspective, good faith is easiest to demonstrate when you have:

• clear reasons for decisions
• consistent enforcement of standards
• documented communications (especially when disputes arise)

If you’re not sure whether your system is set up to meet these expectations, it’s often worth speaking to a franchise lawyer before you expand further.

What Do These Changes Mean If You’re Buying A Franchise?

If you’re a franchisee (or prospective franchisee), the 2022-era reforms and 2026 expectations are generally good news. The direction of travel is towards clearer information and stronger accountability.

But it doesn’t remove the need for careful due diligence on your side.

Don’t Rely On The Brand Reputation Alone

A franchise brand can have strong marketing and a great public image, but your legal and commercial reality depends on the documents you sign and the numbers you’re working with.

Before committing, you’ll want to understand (at a minimum):

• your total upfront costs and ongoing fees
• what you must buy from approved suppliers (and whether there are rebates involved)
• your territory rights (if any) and what “exclusivity” really means in practice
• renewal terms and what happens at the end of the agreement
• restraint clauses and exit restrictions

Pay Attention To What You’re Being Told During The Sales Process

In disputes, franchisees often say: “I was told it would be profitable” or “I was told head office would deliver leads” or “I was told I’d have a protected area.”

Sometimes those statements are accurate and supported in writing. Sometimes they aren’t. And when they aren’t, the franchisee may consider legal options (often under the ACL) depending on what was represented and how it influenced the decision to buy.

A good practice is to ask for key statements in writing and to ensure they align with the contract and disclosure documents.

Understand Your Ongoing Compliance Burden

Buying a franchise isn’t like buying a stand-alone small business. You’re buying into a system, and with that comes system compliance.

That can include:

• brand standards and mandatory processes
• software platforms and reporting requirements
• marketing fund contributions
• approval processes for staff, premises, signage, and suppliers

None of that is inherently bad. In many cases, it’s what makes franchising work. But you should be comfortable with the level of control the franchisor will have before you sign.

How Do You Stay Compliant (And Commercially Strong) After 2022, Heading Into 2026?

Whether you’re a franchisor building your network or a franchisee joining one, the most sustainable approach is to treat compliance as a system you maintain, not a one-off task you tick off.

For Franchisors: A Practical Compliance Checklist

• Review your franchise model before you sell it: Be clear on fees, supply arrangements, marketing funds, territory policy, and operational support.
• Update documents in line with the real business: Your agreement and disclosure need to reflect the current franchise system, not last year’s version.
• Train your sales team (or yourself): Make sure anyone talking to prospects understands what they can and can’t promise.
• Document communications: If it isn’t documented, it’s harder to prove what actually happened when a dispute arises.
• Build a renewal and exit process: Many disputes happen at the end of a term, not the start.

For Franchisees: A Practical Due Diligence Checklist

• Read the agreement end-to-end: Focus on fees, restraints, renewal, termination rights, and what you must do day-to-day.
• Compare the “sales story” to the documents: If someone promised something verbally, ask for it in writing.
• Stress-test the numbers: Make sure the franchise is commercially viable for you, not just in theory.
• Get advice early: It’s much easier to negotiate or walk away before signing than to unwind problems later.

Why 2026 Is Also About “Connected Compliance”

One of the biggest franchising lessons we see in practice is that problems rarely stay confined to the Code.

For example:

• If your franchisees hire staff, employment compliance issues can quickly become a brand-wide reputational risk.
• If marketing claims are too bold, the ACL becomes relevant (especially for profitability claims, “exclusive territory” claims, and earnings representations).
• If you collect customer data through centralised systems, privacy and data handling obligations matter more than ever.

So while the Code is the centrepiece, your franchise system should be built to withstand pressure from multiple legal angles.

Key Takeaways

• The “2022 changes” to franchising are best understood as a shift towards clearer disclosure, stronger accountability, and higher expectations around franchisor conduct.
• In 2026, franchising compliance is about more than paperwork - your recruitment process, communications, and ongoing management all affect risk.
• Franchisors should ensure their franchise agreement and disclosure documents match how the business actually operates today, not how it operated years ago.
• Franchisees should treat buying a franchise like a serious due diligence exercise, especially around fees, territory rights, renewal/exit, and what was represented during the sales process.
• Franchise disputes often intersect with other legal areas like misleading or deceptive conduct under the ACL, so clear and consistent communications are crucial.

If you’d like a consultation on franchising your business or buying into a franchise, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.