Franchising 2025 Comparisons

The franchising business segment in Australia represents AUD174 billion in economic activity. This includes over 1,200 franchise networks, with more than 94,000 individual franchised outlets, employing over 565,500 Australians across the country.

Key brands in the Australian market include McDonald’s, Harvey Norman, Boost Juice, 7-Eleven, Priceline Pharmacy, Laser Clinics Australia and Jim’s Group, covering food and beverage, furniture retail, health, beauty and a range of services.

Australia is home to arguably the highest level of franchising regulation in the world.

Over the past decade, franchising protection for franchisees has become highly politicised, with the Labor party and the Liberal and National parties competing to position themselves as offering the strongest protections for franchisees.

The Regulator

The regulator of franchising in Australia is the Australian Competition and Consumer Commission (ACCC).

Franchising Code

The key regulatory document is the Franchising Code of Conduct, which is a regulation under the federal Competition and Consumer Act 2010 (the Act).

A new version of the Franchising Code came into effect on 1 April 2025, under which new rules apply to franchise agreements that are entered into, extended, renewed or transferred from 1 April 2025. For these agreements, new rules apply from 1 April 2025 and from 1 November 2025. Previous versions of the Code remain applicable to franchising agreements entered into before these dates, depending on their terms.

Australian Consumer Law

The Act also contains the Australian Consumer Law, which sets out consumer protections. While not specific to franchise businesses, many provisions have application in a franchising context.

Other Relevant Laws

Franchisors and franchisees may have obligations under other legislation, such as:

• the Fair Work Act 2009;
• the Australian Securities and Investments Act 2001;
• Australia’s tax laws; and
• state and territory licensing schemes.

Federal, State and Territory Laws

Australia has both State and Territory laws, as well as federal laws, so when doing business across more than one State or Territory in Australia, it should not be assumed that there is consistency of laws.

When the Franchising Code Does Not Apply

All or some parts of the Franchising Code may not apply to a franchising agreement or the specific circumstances, with the following examples.

New vehicle dealership agreements

There are specific parts of the Code that only apply to new vehicle dealership agreements. These are agreements where one party is a motor vehicle dealership that deals mostly in new passenger vehicles or new light goods vehicles, or both.

When another mandatory industry code applies

The Franchising Code does not apply to a franchise agreement that is covered under another mandatory industry code, such as the Oil Code of Conduct.

Exceptions are the Unit Pricing Code and the Food and Grocery Code.

If sales covered by the agreement are less than 20% of turnover

The Franchising Code does not apply if the agreement is for goods or services that are:

• substantially the same as those supplied by the franchisee for at least two years immediately before entering the franchise agreement; and
• likely to provide no more than 20% of the franchisee’s gross turnover for goods or services in the first year of the franchise.

Co-operatives registered under a State or Territory law

The Franchising Code does not apply to franchise agreements that form part of arrangements under which the franchisee is a member of a co-operative registered under the Co-operatives National Law or the Co-operatives Act 2009 (WA).

Mutual entities

The Franchising Code does not apply to franchise agreements that form part of arrangements under which the franchisee is a member with voting rights of a mutual entity.

The definition of a franchise agreement is set out in Section 5 (1) of the Franchising Code of Conduct, as an agreement:

• that takes the form, in whole or part, of any of the following:
1. a written agreement;
2. an oral agreement;
3. an implied agreement; and
• in which a person (the franchisor) grants to another person (the franchisee) the right to carry on the business of offering, supplying or distributing goods or services in Australia under a system or marketing plan substantially determined, controlled or suggested by the franchisor or an associate of the franchisor; and
• under which the operation of the business will be substantially or materially associated with a trade mark, advertising or a commercial symbol:
1. owned, used or licensed by the franchisor or an associate of the franchisor; or
2. specified by the franchisor or an associate of the franchisor; and
• under which, before starting or continuing the business, the franchisee must pay or agree to pay to the franchisor or an associate of the franchisor an amount including, for example:
1. an initial capital investment fee;
2. a payment for goods or services;
3. a fee based on a percentage of gross or net income, whether or not called a royalty or franchise service fee; or
4. a training fee or training school fee;
• but excluding:
1. payment for goods and services supplied on a genuine wholesale basis;
2. repayment by the franchisee of a loan from the franchisor or an associate of the franchisor;
3. payment for goods taken on consignment and supplied on a genuine wholesale basis; or
4. payment of market value for purchase or lease of real property, fixtures, equipment or supplies needed to start business or to continue business under the franchise agreement.

A motor vehicle dealership agreement is taken to be a franchise agreement regardless of whether the elements of the definition set out above are satisfied.

The provision of a disclosure document is mandatory when granting or extending a franchise agreement.

The form of the disclosure document is mandated in the Franchising Code of Conduct.

In addition to the disclosure document itself, the following are mandatory:

• the franchisor must give certain information and documents to a potential franchisee before a franchise agreement is signed;
• the franchisor must give the franchisee specific information and documents during the franchise agreement;
• franchisees can back out of new franchise agreements within a certain timeframe, known as the cooling-off period;
• franchisors and franchisees must act in good faith towards each other;
• franchisors and franchisees can resolve a franchising dispute without going to court;
• specific steps must be followed if either the franchisor or franchisee wants to end the franchise agreement early; and
• franchisors must create a franchise profile and publish key disclosure information on the franchise disclosure register.

Where a franchisor fails to provide a disclosure document at all, the franchise agreement is voidable (rather than being void). The franchisee can apply to the court for termination of the agreement and for damages to be awarded.

Where a franchisor provides a disclosure document but it omits some required information, the remedies available to the franchisee will depend on the nature and extent of the shortcomings. Termination will only be ordered where the omissions or shortcomings are sufficiently material to justify that outcome; otherwise, damages may be awarded with or without termination.

Monetary penalties can be imposed by the ACCC where the franchisor fails to provide a disclosure document or where the disclosure is found to be deficient.

There are no exemptions from the requirement to provide disclosure documents on the basis that a franchisee is considered sophisticated.

Historically, there was an exemption for the grant of a single franchise, intended to allow an international franchisor to enter into a master franchise agreement for Australia without the need to comply with the Franchising Code. This exemption has now been abolished.

In Australia, disclosure documents should be prepared in English, which is the national language of Australia. There is no requirement for translation into any other languages.

Pursuant to Chapter 2, Part 7, Division 2 of the Franchising Code, most franchisors are required to register on the ACCC Register and to provide certain information about the franchise offer.

The registration process requires certain franchisors to create a franchise profile on the ACCC Register.

Each year, those franchisors who are required to be on the Register also need to confirm or update their franchise profile before the 14th day of the fifth month following the end of the franchisor’s financial year.

Financial penalties apply for a failure to obtain and maintain the registration.

There is no obligation for the franchisor to demonstrate that the business offered under a franchise agreement has operated profitability for any prior period of time, nor is there any requirement for the franchisor to have had other locations in operation prior to the franchise being granted.

There is no minimum or maximum duration for a franchise agreement in Australia. The only requirements for duration relate to the termination process (see 5.3 Termination of the Franchise Agreement).

Franchisees do not have a statutory right to renewal nor to compensation.

However, where a franchisor does not offer a renewal of the franchise agreement, the franchisee is relieved of their non-compete and restraint obligations. This means the franchisee can de-brand and continue to trade, provided they do not use any intellectual property or confidential information belonging to the franchisor.

The circumstances in which a franchisor can terminate a franchise agreement are highly regulated. Typically, a breach notice and rectification opportunity is the starting point, and a franchisor can only safely terminate if the relevant breach is not rectified in that period.

The Franchising Code sets out limited circumstances in which a franchisor can terminate on a more truncated basis, including solvency issues, criminal convictions and other similarly serious matters.

Franchisees have relatively few termination rights after the initial cooling-off period, which applies immediately after signing the agreement.

Territory restrictions are permitted in Australia, provided they do not lead to a substantial lessening of competition in an overall market (not just the franchise network).

Purchase ties are also permitted in Australia, provided they do not lead to a substantial lessening of competition in an overall market (not just the franchise network). There is also a restriction on resale price maintenance, meaning that a franchisor cannot require a franchisee to purchase a product and then require them to resell it above a particular amount.

Non-compete/restraints are enforceable in Australia, provided they are no more broad than is necessary to protect the franchisor’s legitimate business interests. This is assessed on a case-by-case basis. In some States of Australia, non-compete clauses must be drafted in a cascading manner, as unenforceable aspects must be severable and the balance must be an enforceable restraint. In other States of Australia, there are laws allowing a court to rewrite an otherwise unenforceable clause.

Exclusive territories are permitted, subject to compliance with Australia’s competition laws.

Furthermore, the franchisor is normally entitled to a reasonable restraint that would apply during the term of the franchise agreement and for a period afterwards; this period depends on each particular factual matrix.

Franchisees can be required to purchase specific goods and services from the franchisor or its nominated suppliers, provided that in doing so the franchisor complies with Australian competition laws.

Franchisors are permitted to reserve channels, such as the internet, to themselves, but must clearly describe this in the disclosure document provided before the franchise agreement is entered into.

Vertical agreement blocks are considered in the context of competition laws generally, and do not generally require exemption.

The franchisor in Australia may choose any relevant law they prefer, including an overseas law. Notwithstanding this choice, the Franchising Code of Conduct and the Act and various other laws in Australia will apply, as they are focused on the conduct occurring in Australia.

There is no requirement for franchise agreements in Australia to be governed by local law.

There are no mandatory content requirements under Australian law.

Several provisions are prohibited in Australian franchise agreements.

Some provisions are contained in the Franchising Code, such as a provision that the franchisee pays the legal costs of the entry into the franchise agreement.

However, the more extensive prohibitions on contractual provisions currently arise as a result of the general laws against unfair contract terms in standard form contracts.

Australia is party to the New York Convention. If it is likely that an overseas award will need to be enforced in Australia, it is recommended that an arbitral award is provided for as it is the easiest path to enforcement in Australia.

Australian law does not prohibit any particular types of fees under a franchise agreement. However, under Australian laws, if an amount is a penalty rather than a pre-estimate of loss, it will not be enforceable and certain third-party costs are only to be charged on a pass-through basis, such as credit card fees. These issues are not franchise-specific, and each business should consider any relevant applicable laws that relate generally to their business model.

Withholding tax applies to royalties and other payments where payments are exiting Australia. Tax advice should be obtained.

Relatively few foreign currency controls exist, but certain arrangements apply in relation to jurisdictions based on relevant international considerations from time to time.

If the franchisor or franchisee is a company, the Corporations Act 2001 (Cth) sets out rebuttable presumptions about the proper execution of documents. Where a company has more than one director or a company secretary, execution should be carried out by two officers; this can be either two directors or one director and one company secretary.

Deeds should be signed, sealed, delivered and witnessed by adult witnesses who have no relationship to the signatory.

Electronic signatures are valid in Australia. The laws in relation to electronic signing need to be complied with.

There are stamp duties and other taxes in Australia. Stamp duty is a state-based tax, so care should be taken to check the position in each State or Territory in which the franchise will operate.