A franchise agreement, and usually a lease, will shape your business for years. The Franchising Code of Conduct requires franchisors to disclose key information before you commit. Asset Conveyancing reviews franchise agreements, leases and franchise purchases in South Australia, Victoria, New South Wales, Queensland, Western Australia and Tasmania.
What is the Franchising Code of Conduct?
It is a mandatory code under the Competition and Consumer Act 2010, enforced by the ACCC. The current Code is the Competition and Consumer (Industry Codes, Franchising) Regulation 2024, which replaced the 2014 Code from 1 April 2025.
It applies to agreements entered into, renewed, extended or transferred from that date. Some changes, including fund rules and compensation if a franchisor exits the market or restructures its network, applied from 1 November 2025.
What documents must a franchisor give you before you sign?
First the ACCC information statement, soon after you express interest. Then the disclosure document, the franchise agreement in final form and a copy of the Code, at least 14 days before you enter into the agreement.
The disclosure document covers the franchisor’s finances and litigation history, current and former franchisees, fees, any significant capital expenditure required, supply arrangements, territory and end of term arrangements. Contact former franchisees on its list.
Key facts sheet. The old Code required one, but the 2024 Code removed that requirement from 1 April 2025. Check any summary a franchisor offers against the disclosure document.
How does the cooling-off period work for franchises?
A franchisee can terminate a new franchise agreement within 14 days of entering into it. For a transfer of an existing franchise, the period ends on the earlier of 14 days after the transfer or the day the buyer takes possession.
Termination must be in writing, and the franchisor must refund money paid within 14 days, less reasonable expenses set out in the agreement. A franchisee who has, or recently had, a substantially similar agreement with the same franchisor can opt out in limited circumstances. A separate 14-day withdrawal right can apply where the franchisor or an associate is the landlord.
Get independent advice before you sign. The Code requires franchisors to tell prospective franchisees to get independent legal, business or accounting advice. Start early: 14 days is short once a lease and finance are involved.
How does the lease link to the franchise agreement?
Franchisees often lease from the franchisor or an associate, or under a third party lease the franchisor must approve. The documents are usually linked, so ending one can end the other. Check that the lease and franchise terms match. See commercial and retail leasing.
What fees and marketing contributions should you expect?
Expect an initial fee, ongoing royalties or service fees and marketing contributions, plus fit-out and refurbishment costs. Under the 2024 Code, marketing and other pooled funds are specific purpose funds: the franchisor must hold the money in a separate account and prepare annual financial statements for franchisees.
What territory rights does a franchise agreement give?
Only what the agreement says, and many grant no exclusive territory. Check whether the franchisor can open its own outlets, sell online into your area or appoint another franchisee nearby.
What happens at the end of a franchise agreement?
You are not automatically entitled to renew. For most agreements, the franchisor must give a written end of term notice at least six months before the term ends, saying whether it will extend or renew.
Renewal may require refurbishment or a fee. If you leave, a restraint of trade may apply, although the Code limits enforcement in some cases where renewal on substantially the same terms was sought and refused.
What should you check when buying an existing franchise?
It is a business purchase and a franchise transfer at once: a sale contract, the franchisor’s consent, a new or transferred agreement and usually a lease assignment. Ask for the franchisor’s disclosure document, and check the remaining term, transfer fees and whether you must sign the current standard agreement. See buying and selling a business and our business and commercial law overview.
Common questions about franchise agreements
How long is the cooling-off period for a franchise?
Fourteen days. A franchisee can terminate a new franchise agreement within 14 days of entering into it, and a buyer of an existing franchise has a similar right ending on the earlier of 14 days after transfer or taking possession. Termination must be in writing.
When did the new Franchising Code start?
The Competition and Consumer (Industry Codes, Franchising) Regulation 2024 commenced on 1 April 2025, replacing the 2014 Code. It applies to agreements entered into, renewed, extended or transferred from that date. Some provisions, including specific purpose fund rules and compensation for market withdrawal, applied from 1 November 2025.
Do I need a lawyer to review a franchise agreement?
The Code expects independent advice. Franchisors must tell prospective franchisees to get independent legal, business or accounting advice before signing. The documents are long, generally favour the franchisor and bind you for the full term. An accountant should review the financials separately.
Does the Franchising Code apply when buying an existing franchise?
Yes. The Code applies to transfers of franchise agreements, the franchisor must consent, and the buyer has a cooling-off right. You can ask the franchisor for a current disclosure document. The transfer usually runs alongside a business sale and lease assignment, so the documents must be coordinated.