Franchising Code Of Conduct 2026: Key Draft Changes And What They Mean For Your Small Business

If you run (or are thinking about joining) a franchise in Australia, you’ve probably noticed that franchise regulation never stays still for long. The Franchising Code of Conduct is designed to set minimum standards for fairness, transparency and dispute handling in the franchising sector - and when the Code is updated, the flow-on effect can be very real for day-to-day operations.

With draft changes flagged for a 2026 update, many small business owners are asking the same questions: What’s likely to change, what do we need to do, and how quickly do we need to act?

In this article, we’ll walk through the key draft change themes (at a practical level), what they could mean if you’re a franchisor or franchisee, and how you can prepare your business now so you’re not scrambling later.

Important note: if you’re reading this while the reforms are still in “draft” form, the final details may shift before commencement. The goal here is to help you understand the direction of change and get your processes ready, rather than treating any single draft point as settled law.

What Is The Franchising Code Of Conduct (And Why Does The 2026 Update Matter)?

The Franchising Code of Conduct (the Code) is a mandatory industry code under competition and consumer law settings in Australia. In plain English, it’s one of the main rulebooks that shapes how franchisors and franchisees must deal with each other - especially around disclosure, good faith, dispute resolution, and certain end-of-term issues.

The Code matters because it affects:

• Pre-contract negotiations (what must be disclosed and when)
• What your documents need to say (and how they’re structured)
• How disagreements are handled (including process requirements)
• How changes to the franchise system are rolled out (and how consultation works)

Even if you have “good relationships” across your network, Code compliance is still a must. It’s also closely connected to broader Australian Consumer Law (ACL) expectations - especially around fairness and transparency.

When reforms happen, it’s common for businesses to need to update:

• their disclosure documents and processes
• their franchise agreements and supporting documents
• sales practices and training for franchise recruitment
• internal dispute-handling procedures

If you’re a small business, the 2026 update matters because it’s likely to change what “best practice” looks like. Waiting until the commencement date can mean rushed variations, inconsistent communications, and higher legal risk.

Key Draft Change Themes For 2026 (What We’re Seeing And Why It Matters)

While exact wording and start dates depend on what is finalised, draft reform packages typically focus on a few repeat pressure points in franchising: transparency, power imbalance, exit/renewal pathways, and how system changes are imposed.

Below are the most common “buckets” of change that small business owners should keep on their radar for 2026.

1) Stronger Disclosure Expectations (And Less Room For Ambiguity)

Franchise disclosure is already central to Code compliance, but reform cycles often aim to make disclosure:

• more comparable between different franchise systems
• clearer for franchisees to understand (especially around costs and risks)
• harder to “gloss over” with generic statements

For franchisors, this usually means more time spent validating your numbers, ensuring your statements match operational reality, and tightening the “story” told during the sales process so it aligns with the documents.

For franchisees, it can mean a better ability to compare systems and ask targeted questions early - but you’ll still need to read the documents carefully and pressure test assumptions (especially around earnings, site costs, and exclusivity).

Practically, if the draft changes tighten disclosure requirements, you may need an annual (or more frequent) update workflow for your disclosure pack. This is often where a structured Franchise disclosure document update process becomes part of your compliance rhythm rather than an occasional project.

2) Increased Focus On “Real” Transparency In Marketing And System Costs

One area that frequently attracts reform attention is where money flows within the franchise system - for example:

• marketing or advertising contributions
• rebates from suppliers
• technology and platform fees
• other mandatory network-wide charges

Draft reforms often push toward clearer explanations of:

• what franchisees pay
• how those funds are used
• what controls, approvals, or reporting exist

From a small business perspective, the risk is rarely just “getting the numbers wrong.” The bigger risk is a mismatch between expectation and reality - which can trigger disputes, exits, and reputational damage across the network.

3) Sharper Rules Around Variations, Unilateral Changes, And “System Updates”

Many franchise agreements give the franchisor power to update manuals, require new systems, or change supplier requirements.

Where reforms head in this space, the usual direction is: if a change materially impacts franchisees, there should be clearer limits, clearer process, and (often) clearer consultation.

For franchisors, the operational challenge is balancing system consistency (which is essential for brand value) with fairness and predictability for franchisees.

For franchisees, the key is understanding what you are signing up for: what must you adopt, what can you push back on, and what happens if a new system is unaffordable or doesn’t work for your location?

This is one of the reasons your Franchise Agreement needs to be more than a template - it should reflect how your network actually runs, and how you want change to be implemented in practice.

4) More Emphasis On Dispute Resolution Pathways That Actually Work

Most franchise relationships don’t break down because of one big event. They break down because small issues become entrenched, communications get messy, and there isn’t a trusted pathway to resolve disputes early.

Draft changes often seek to:

• clarify dispute resolution steps
• encourage early engagement and better information sharing
• reduce the “power imbalance” effect in dispute processes

For small businesses, the practical takeaway is: your internal process matters. Even if your legal documents are technically compliant, poor handling of complaints can quickly become a legal and commercial issue.

5) A Crackdown On High-Risk Sales Conduct (And Misaligned “Earnings Talk”)

Franchise recruitment is an area where businesses can get into trouble quickly - often unintentionally - through enthusiastic sales conversations.

Any 2026 reform package is likely to sit alongside the existing risk that misleading representations can trigger serious consequences under consumer law. If you want a refresher on how the legal test works in practice, the elements of misleading or deceptive conduct are worth understanding because they’re commonly relevant to franchise recruitment materials, claims about profitability, and “how quickly you’ll break even” conversations.

In a tightening environment, franchisors should assume they’ll need:

• clearer scripts and training for sales staff and brokers
• more disciplined written communications
• stronger “paper trails” showing what was (and wasn’t) promised

What The 2026 Draft Changes Could Mean If You’re A Franchisor

If you’re a franchisor, reforms can feel like “more paperwork.” But in practice, they usually force a shift toward more mature systems - which can be a competitive advantage if you get ahead of it.

You May Need To Rebuild Your Compliance Calendar

Many franchisors operate with a light-touch annual update: refresh disclosure, confirm franchisee contact details, and move on.

Where the draft changes point toward greater transparency, it may push you to implement a cycle like:

• pre-sale compliance (consistent documents, consistent sales practices)
• annual updates (disclosure and any required registers)
• in-year updates when systems, fees, suppliers, or key risks change

Depending on how final reforms are implemented, you may also need to maintain or update internal registers. For example, if reporting requirements expand, a central Franchise disclosure register process can help keep your network organised and reduce the risk of “we can’t find that version” issues.

Your Franchise Agreement And Supporting Documents May Need A Full Rework

Small tweaks to a franchise agreement often create inconsistencies elsewhere - for example between the agreement, manual, disclosure documents, and what your team says to prospects.

If 2026 reforms tighten areas like variations, costs, dispute pathways, or disclosure, it’s often more efficient to do a full legal review so your franchise package is aligned end-to-end. A targeted Franchise Agreement Review can also help identify legacy clauses that no longer match modern expectations (or your real operational practice).

Your Recruitment And Marketing Process Will Need Stronger Guardrails

In a reform climate, franchisors should expect closer attention on “how the sale happened,” not just what the documents say.

That means looking at:

• website claims and ads
• information nights and webinars
• broker scripts and follow-up emails
• earnings discussions (especially anything that sounds like a guarantee)

This is also where general ACL expectations can overlap with the Code. If you’re tightening your marketing, it helps to understand the baseline standard under the Australian Consumer Law for misleading or deceptive conduct, because the cost of getting it wrong can be significant.

Network Trust Can Become A Compliance Asset

One underestimated benefit of preparing early is franchisee confidence. When franchisees can see you are transparent about costs, responsive to disputes, and clear about change processes, it reduces friction.

Less friction often means:

• fewer disputes escalating
• higher renewal rates
• more referrals from existing franchisees

In other words, compliance isn’t just “defensive.” Done well, it can support growth.

What The 2026 Draft Changes Could Mean If You’re A Franchisee (Or Considering Buying A Franchise)

If you’re a franchisee, reforms often aim to improve balance and transparency. That’s helpful - but it doesn’t remove the need for careful due diligence.

You May Get Clearer Cost Information (But You Still Need To Stress-Test It)

Even with better disclosure, there’s a practical reality: costs vary between locations, and small assumptions can have big impacts.

When reviewing a franchise opportunity, you should still ask:

• What are the mandatory ongoing fees (including tech, marketing, training)?
• Are there supplier constraints that affect your margins?
• What happens if the franchisor mandates a new system or refurbishment?
• Are there fees payable on renewal, transfer, or exit?

If the 2026 update increases transparency, it’s a great opportunity for you to compare systems more confidently - but only if you’re methodical.

Understanding Change Powers Will Be Crucial

Many franchisees are comfortable with reasonable system updates (new branding, updated menus, revised software). The issue is when changes are expensive, rushed, or don’t suit your market.

So, you should look closely at:

• how the agreement defines “system changes”
• whether consultation is required
• whether there are timeframes for compliance
• what happens if a change isn’t commercially viable for your site

This is a “read the fine print” moment - and it’s far easier to negotiate expectations before you sign than after you’re locked in.

Dispute Processes May Become More Structured (Use Them Early)

If dispute resolution pathways are strengthened, that can help franchisees who feel stuck. But it’s still important to raise issues early, and in a documented way.

If something is going wrong in your franchise relationship, consider:

• putting your concerns in writing (clear and factual)
• requesting a meeting with a clear agenda
• keeping records of costs, communications and outcomes

In many disputes, the “paper trail” becomes the backbone of a workable resolution.

How To Prepare Now (A Practical Checklist For 2026)

If you want to be ready for the 2026 Code changes, the best time to prepare is before the deadline pressure hits. Whether you’re a franchisor or franchisee, the goal is to reduce surprises and tighten your documentation.

If You’re A Franchisor

• Map your franchise document suite: list every document involved in recruitment and operation (disclosure, agreement, manual, marketing fund policies, onboarding packs).
• Audit “what you say” vs “what you sign”: compare sales scripts, emails and ads against your written documents so there are no mismatches.
• Review fee explanations: ensure ongoing fees and pass-through charges are clearly described and consistently applied.
• Check variation/change clauses: assess whether your change powers are too broad, unclear, or inconsistent with how you actually operate.
• Refresh dispute pathways: implement a simple internal escalation framework and train relevant team members on it.
• Plan your update workflow: set dates and responsibilities now for document updates, approvals, and rollouts.

It’s also worth lining up support early. A franchise lawyer can help you interpret reforms as they’re finalised and update your documents in a coordinated way, rather than patching issues one clause at a time.

If You’re A Franchisee (Or Prospective Franchisee)

• Do a document-first review: don’t rely on conversations - work from the agreement and disclosure documents, then ask questions.
• Model the costs: list initial costs, ongoing fees, and “possible future costs” (upgrades, refurbishments, required systems).
• Clarify operational control: understand what decisions you control vs what the franchisor controls (suppliers, pricing guidance, branding, hours).
• Ask about change management: how often does the system change, what’s the typical cost of compliance, and how much notice is given?
• Plan for exit pathways: understand what happens at the end of term, on transfer, or if you want to sell.

Even if reforms improve protections, your best leverage is still before you sign - because once you’re in, your rights and obligations are usually driven by your documents.

Key Takeaways

• The Franchising Code of Conduct shapes disclosure, conduct, dispute handling and the overall fairness framework in Australian franchising.
• The 2026 reform direction is likely to focus on clearer disclosure, tighter transparency around system costs, and more practical dispute resolution pathways.
• Franchisors should prepare by auditing disclosure, aligning sales practices with documents, and reviewing variation/change clauses to avoid future disputes.
• Franchisees should treat reforms as a chance to do better due diligence, but still pressure test the numbers and understand how system changes can impact profitability.
• Getting your franchise documents and processes updated early can reduce compliance risk and support stronger franchise relationships long-term.

If you’d like help preparing for the Franchising Code Of Conduct 2026 changes - whether you’re updating your franchise documents or reviewing a franchise opportunity - reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.