The main source of regulation for franchises is the federal Franchising Code of Conduct, which regulates the conduct of franchisors and franchisees. The current Code of Conduct came into effect on 1 April 2025. Changes to the Code apply to all franchises entered, extended, renewed or transferred from that date.

The Code is regulated by the Australian Competition and Consumer Commission. For more detailed information about franchises, visit the ACCC's Franchising webpage.

A franchise is a system of business developed by the franchisor who is then able to sell the rights to use the system to others, usually for an agreed period. The franchisee may also have to buy or lease the normal aspects of a business, including premises and plant and equipment in addition to entering into the franchise itself.

A prescribed Information Statement must be given to a prospective franchisee before the franchisor gives them other disclosure related documents [see Competition and Consumer (Industry Codes — Franchising) Regulations 2024 (Cth) reg 22]. This statement contains a checklist of important steps to consider prior to signing a franchise agreement. This includes learning about franchising, conducting due diligence, obtaining professional advice and considering other options (for example, looking at more than one franchise business).

The prospective franchisee must be given a minimum of 14 days to read all of the information that a franchisor provides, including the franchise agreement, disclosure document, and a copy of the Franchising Code of Conduct.

Franchisors must maintain a franchise profile and upload key disclosure information to the Franchise Disclosure Register. The Register allows prospective franchisees to search, view and compare information and contact a franchisor about opportunities to buy into the franchise.

A franchisee may terminate a new franchise agreement within 14 days after signing the agreement. This is known as the 'cooling off' period. If the prospective franchisee terminates the agreement during this period, all payments must be refunded (excluding any reasonable expenses already incurred by the franchisor). After a franchise agreement is made, a franchisor can only alter or add terms to the agreement that apply retrospectively if the franchisee gives their consent in writing.

Buying a franchise can be expensive. It is important to get legal and accounting advice before entering into a franchise agreement to understand how it works and whether it is going to be profitable. Talk to other franchisees to see how they have managed.

Running a franchise may involve long working hours and take some time before it is profitable. Remember that some of the income goes towards the franchisor for the rights to use the system. A franchisee may also be required to contribute to marketing costs and some legal costs (although these are limited under the Code - see the ACCC website for more information).

Dealing with Disputes

The Code sets out a regime for dealing with disputes arising out of the franchising agreement. This dispute resolution regime is intended to avoid costly legal proceedings by encouraging mediation.

Ending a franchise

The Code sets out a procedure for early termination by a franchisee, which must be in writing. Most franchises have an end date, but there may be many reasons for early termination, such as illness or death of an owner or partner, or dissatisfaction with the performance of the franchise. If a franchisee proposes an early termination, the franchisor must respond within 28 days, and give reasons if the request is refused.

If the franchisor wishes to end the agreement early, notice must be given to the franchisee. The franchisor can terminate without notice in certain circumstances, including if the franchisee is bankrupt or is externally administered (liquidation), or abandons the business.