Franchising in Australia continues to evolve - and the latest updates to regulation and enforcement mean franchisors need to tighten processes, refresh documents and double‑check their compliance posture.
If you’re growing your network, this is good news too. The goal of these changes is to create a fairer, more transparent system. When you do compliance well, you build trust with prospective franchisees and reduce disputes.
In this guide, we’ll walk through the key areas franchisors should focus on right now: what’s changed under the Franchising Code of Conduct, how the Australian Consumer Law (ACL) interacts with your franchise offer, where franchisee protections are strongest, and the practical actions to take next.
What’s Changing For Franchisors Under The Code?
The Franchising Code of Conduct (the Code) is a mandatory industry code under the Competition and Consumer Act. Over the past few years it has been progressively strengthened, with further refinements flagged by government and the ACCC’s ongoing enforcement focus.
Here are the headline themes franchisors should have on their radar.
Stronger Disclosure And Transparency
- Up‑to‑date Disclosure Document: You need to provide a current disclosure pack at least 14 days before a franchisee signs. Expect continued scrutiny of earnings representations, costs, rebates, site criteria and lease terms. If figures are used, they should be accurate, clearly qualified and supported by reasonable grounds.
- Disclosure Register: Franchisors are required to maintain a public profile on the government’s online register. Keep your listing current - incomplete or outdated listings are a red flag for regulators and candidates. If you’re refreshing your pack, align it with your Disclosure Register entry.
- Key Facts Summary And Information Statement: The concise snapshot of critical terms helps franchisees compare offers. Make sure it mirrors your disclosure and proposed agreement.
Cooling‑Off And Exit Protections
- Cooling‑Off Periods: Franchisees generally have a cooling‑off right after signing a new agreement and, in some cases, after receiving a final lease for premises. Ensure your processes clearly track these timelines and refund obligations (less permitted expenses) if cooling‑off is exercised.
- End‑Of‑Term Clarity: The Code emphasises transparent renewal/non‑renewal decisions and handover steps, including treatment of stock, equipment, restraints and goodwill. Spell these out early to avoid disputes at exit.
Marketing Funds And Capital Expenditure
- Marketing Funds: If you collect marketing contributions, you must keep funds in a separate account, provide annual statements (often independently audited) and spend money on legitimate marketing or advertising expenses for the network’s benefit.
- Capital Expenditure Limits: Franchisees shouldn’t be required to make significant unexpected capital expenditure unless disclosed before entry, agreed later, required by law, or justified by a clear business case. Be careful about mid‑term refit or tech‑upgrade clauses.
Good Faith And Dispute Resolution
- Good Faith Duty: Both franchisor and franchisee must act in good faith in all dealings. This underpins negotiations, performance, variations, renewals and termination. It’s a behavioural standard - be honest, responsive and reasonable.
- Dispute Resolution: The Code supports early resolution (e.g. conciliation and mediation). Your internal grievance process should be accessible, timely and well‑documented. For resolved matters, a tailored Deed of Settlement can formalise outcomes and prevent lingering issues.
How The ACL Amplifies Franchisee Protections
The Australian Consumer Law sits alongside the Code. In recent years it has become an even bigger lever for the ACCC and courts, especially around unfair terms and misleading claims.
Unfair Contract Terms (UCT) Now Attract Penalties
Standard form franchise agreements that apply to small businesses can be caught by the UCT regime. Certain clauses (for example, broad unilateral variation rights, liquidated damages that don’t reflect likely loss, or imbalanced termination rights) risk being declared unfair.
Civil penalties for proposing or relying on unfair terms now apply. It’s prudent to run a dedicated review of your agreement and ancillary documents - a targeted UCT review and redraft helps rebalance risks without undermining your business model.
Misleading Or Deceptive Conduct
All pre‑contract statements (verbal, written, sales decks, ROI calculators, case studies) are captured by the ACL’s general prohibition on misleading or deceptive conduct. That includes silence where you should reasonably disclose a material fact.
If you provide financial performance information or projections, make sure they are clearly explained, evidence‑based and not presented as guaranteed results. Align your sales process with the principles in section 18 of the ACL - our practical explainer on misleading or deceptive conduct is a helpful refresher for your team.
Unconscionable Conduct And Harsh Practices
High‑pressure tactics, take‑it‑or‑leave‑it deadlines, or refusing to provide key information can attract scrutiny. The ACCC is increasingly active in investigating systemic issues across networks. Train your field staff and brokers on compliant sales behaviour and record‑keeping.
Your Immediate To‑Do List: Compliance Housekeeping For 2025
Proactive franchisors treat Code and ACL compliance like a rolling program, not a once‑a‑year scramble. Here’s a practical checklist to work through now.
1) Update Your Disclosure Pack And Register Entry
- Refresh the Disclosure Document with current financials, supplier rebates, marketing fund data, fees, ongoing costs and any significant capital expenditure expectations. If needed, get support with a Disclosure Document update.
- Check every figure, footnote and cross‑reference matches your Franchise Agreement. Inconsistencies are a common source of disputes.
- Confirm your Disclosure Register profile is complete and in step with your latest pack.
2) Rebalance Your Franchise Agreement
- Run a UCT screen across termination rights, step‑in powers, indemnities, restraints, unilateral variations, fees, set‑off, and limitation clauses. A focused Franchise Agreement review can flag and fix pressure points while keeping your brand protected.
- Where your model has changed (e.g. new tech, marketing channels, delivery partners), ensure the agreement and operations manual reflect reality. If terms need tweaking mid‑term, use a carefully drafted Deed of Variation.
3) Tighten Marketing Claims And Sales Process
- Standardise how earnings and case studies are presented. Avoid cherry‑picking outliers and add contextual explanations and assumptions.
- Map your pre‑contract timeline to ensure franchisees always get the information statement, Key Facts Summary and the full disclosure pack at least 14 days before signing.
- Keep a clean audit trail of what was shown and said to each prospect. This is invaluable if a dispute arises later.
4) Refresh Policies, Privacy And Hiring Documents
- If your network collects customer or franchisee personal information (online enquiries, CRM, loyalty programs), ensure your Privacy Policy and data practices align with the Privacy Act and your actual workflows.
- For corporate‑owned stores or head office roles, make sure every team member has a current Employment Contract and that your staff handbook and training include Code and ACL obligations.
- Confirm your operations manual is consistent with the agreement and disclosure pack - the trio should tell the same story.
5) Strengthen Your Dispute Prevention And Resolution Toolkit
- Train field managers on the good faith duty, dispute handling and documentation standards.
- Adopt a clear pre‑mediation playbook (timeframes, decision‑makers, settlement authority). When a matter resolves, close it out with a suitable Deed of Settlement to capture agreed terms and releases.
Key Franchisee Protections You Should Design Around
Well‑designed franchise systems embrace the protections baked into the Code and the ACL. That alignment reduces friction, improves franchisee satisfaction and supports sustainable growth.
Clear, Evidence‑Backed Financial Information
Franchisees are typically making a life‑changing investment. If you provide projections or typical performance data, explain the methodology, time periods, assumptions and whether results vary by location or operator experience. Avoid absolute promises and make it easy for candidates to request further details.
Predictable Costs And No Surprise Capex
Franchisees should be able to see the total cost picture: fees, fit‑out, equipment, working capital, training, ongoing software and marketing contributions. If a refit cycle is part of the brand standard, disclose timing, scope and likely costs upfront.
Balanced, Transparent Exit Terms
Restraints, IP handback, stock buyback, refurbishment and de‑branding should be fair and proportionate. Where the agreement allows restraint post‑term, calibrate it to what’s reasonably necessary to protect legitimate business interests in the territory and time period.
Fair Dispute Processes And Good Faith Conduct
Quick, respectful dialogue resolves most issues. Encourage early issue‑spotting, have escalation pathways and commit to timely mediation when needed. Good faith is as much culture as it is law.
Governance Tips For Franchisors: Turn Compliance Into An Advantage
Compliance can feel like admin, but it’s also a differentiator. Here’s how to embed it into your growth strategy.
Build An Annual Compliance Calendar
- Set dates for disclosure updates, marketing fund statements, audits, register refresh, and training. Tie them to your financial year to streamline data gathering.
- Run quarterly mini‑reviews for any changes in suppliers, fees, technology, marketing channels or legislation that affect your documents.
Upgrade Your Sales Enablement
- Centralise approved sales materials and ban “shadow” decks. Create templated emails with correct attachments and timeframes built in.
- Use deal‑stage checklists in your CRM so no one can skip mandatory steps (information statement, Key Facts Summary, disclosure pack timing, cooling‑off acknowledgement).
Invest In Manager Training
- Field teams should understand the Code basics, the ACL (particularly unfair terms and misleading conduct), and how to spot issues early.
- Offer refresher sessions whenever you update the agreement or operating model.
Keep Your Contracts Cohesive
- Your franchise agreement, operations manual, disclosure pack and sales scripts should be aligned. If your model evolves (delivery partners, loyalty apps, marketplace sales), capture those changes in the contractual suite. A targeted agreement review each year is a simple way to stay current.
- If you’re unsure how to frame consumer‑facing policies or warranties, speak with a consumer law specialist to ensure your templates are ACL‑compliant across the network.
Essential Legal Documents For Franchisors
Every network will have its own set of documents, but most franchisors rely on the following core suite. Getting these drafted and maintained properly reduces risk and makes onboarding smoother.
- Franchise Agreement: The backbone of your relationship with franchisees - territory, term, fees, obligations, IP, marketing, training, performance standards, termination and exit.
- Disclosure Document: Detailed pre‑contract information about the network, costs, litigation, rebates and financials. Pair it with a current Key Facts Summary. When updating, consider a structured Disclosure Document update.
- Operations Manual: Day‑to‑day standards and procedures. Keep it consistent with the agreement (and avoid burying “new” obligations here that should sit in the contract).
- Deeds For Variations/Settlement: Use a Deed of Variation to change terms cleanly mid‑term, and a Deed of Settlement to document resolved disputes or negotiated exits.
- Supplier And Technology Agreements: If you mandate systems or exclusive suppliers, ensure your upstream contracts match what you promise franchisees (service levels, pricing, uptime).
- Privacy And Data Suite: A network‑wide Privacy Policy, data processing clauses and information security standards for customer and franchisee personal information.
- Employment Agreements: For corporate locations and head office roles, issue a current Employment Contract and maintain policies that reflect your brand and compliance obligations.
Not every network needs every document at once, but most mature systems will carry several of the above. The key is tailoring: templates borrowed from overseas or other industries often miss critical Australian requirements.
Common Pitfalls (And How To Avoid Them)
We see the same avoidable issues crop up across networks. Here’s how to stay ahead.
- Inconsistent Numbers: Fees, costs, rebates and marketing contributions don’t match between the disclosure document, the agreement and brochures. Fix by using a single master data source and reconciling every update.
- Out‑Of‑Date Register Entry: Failing to refresh your profile undermines credibility. Schedule the register refresh alongside your disclosure update to keep them aligned with your Disclosure Register entry.
- Over‑Broad Restraints: Blanket restraints that go further than reasonably necessary risk being unenforceable and may trigger UCT concern. Calibrate by territory, duration and scope.
- Unsubstantiated Earnings Claims: Even well‑intended examples can mislead. Use ranges, explain assumptions, and keep evidence on file.
- “Set And Forget” Manuals: Operations evolve. If the manual drifts from practice, disputes follow. Assign ownership for quarterly content checks.
Key Takeaways
- Disclosure, transparency and franchisee protections have been strengthened - keep your documentation, processes and register entry current and consistent.
- The ACL is a powerful overlay: unfair contract terms can attract penalties and misleading claims are under close scrutiny, so review your agreement and sales materials.
- Design with protections in mind: clear financial information, predictable costs, fair exit terms and practical dispute processes build trust and reduce risk.
- Turn compliance into an advantage by running an annual update cycle, training your team and aligning your contracts, manuals and sales journey.
- Get targeted help where it counts - from a Franchise Agreement review and UCT review to a Disclosure Document update and consumer‑law‑ready templates.
If you’d like a consultation on your franchisor obligations and documents, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no‑obligations chat.
