Buying a Franchise in Australia: What the Code Protects
Buying a franchise in Australia means paying for a licence to run someone else's system under their brand, and the Franchising Code of Conduct protects you mainly by forcing disclosure: you must get the disclosure document, the Code and the final agreement at least 14 days before you sign, and you get 14 days to change your mind afterwards. What the Code doesn't do is promise the business will make money. Here's what you're entitled to, what it costs, and what to check while the fee is still refundable.
What you're actually buying
A franchise agreement gives you the right to run a business under the franchisor's trade mark, using a system the franchisor substantially controls, in exchange for a fee. That definition triggers the Code, so it catches plenty of arrangements that don't call themselves franchises.
You're buying a term, not an asset you own outright. Most agreements run five years with options, and when the term ends there's no automatic right to renew. That's the structural difference between a franchise and buying an existing independent business, where the goodwill you build stays yours.
What the Franchising Code protects
A new Franchising Code started on 1 April 2025, replacing the 2014 version, with a second wave of obligations from 1 November 2025. It's a mandatory industry code under the Competition and Consumer Act, enforced by the ACCC, and both sides must act in good faith.
Most substantive obligations now carry civil penalties, in most cases up to 600 penalty units — $218,400 at the current $364 penalty unit (as at September 2026) — with higher penalties for the most serious breaches.
The documents you must get, and when
| Document | When you must get it |
|---|---|
| Information statement (the ACCC's plain-English guide to franchising risks) | Within 7 days of you expressing interest, before any other document |
| Disclosure document | At least 14 days before you sign or pay non-refundable money |
| A copy of the Franchising Code | At least 14 days before signing |
| The franchise agreement in final form | At least 14 days before signing |
| Lease or occupancy documents, if you lease from the franchisor or an associate | At least 14 days before signing |
| Related agreements (confidentiality, guarantee, loan, hire purchase) | At least 14 days before signing, or when available |
The Key Facts Sheet was abolished on 1 April 2025; its content now sits inside the disclosure document.
The disclosure document must include a solvency statement, establishment costs, ongoing payments, supply restrictions and rebates the franchisor receives, territory, intellectual property, litigation history, and contact details for current and former franchisees. Since 1 November 2025 it must also detail significant capital expenditure you may be required to make and how specific purpose funds operate.
The 14 days after you sign
You can terminate within 14 days of entering the agreement by giving written notice, and the franchisor must refund your money within 14 days of being notified. It can keep reasonable expenses relating to the termination if the agreement spells those out or says how they're calculated.
From 1 November 2025 there's a limited opt-out where you already have, or recently had, a substantially similar agreement with the same franchisor for substantially the same business. Waiving cooling off means losing the right to walk away and get your money back, so treat any pressure to opt out as a decision worth a lawyer's time.
What the 2025 changes added
- Restraint of trade limits. A restraint has no effect where your agreement expires, you gave written notice seeking to extend on substantially the same terms, the franchisor refused, you weren't in serious breach, and you got no genuine compensation for goodwill.
- A reasonable opportunity to make a return. For agreements entered, renewed or extended from 1 November 2025, the franchisor must give you a reasonable chance to recoup the capital investment it requires within the term. That isn't a guarantee of profit.
- Compensation for early termination. If the franchisor withdraws from the Australian market, rationalises its network or changes its distribution model, the agreement must say how you'll be compensated for lost revenue and profit, unamortised capital expenditure, lost goodwill and wind-up costs.
- Specific purpose funds. Marketing, conference and IT funds now share the same transparency rules: an annual financial statement within 4 months of the fund's financial year end, audited unless 75% of contributing franchisees vote otherwise, and given to contributors within 30 days.
The Franchise Disclosure Register
Franchisors must create and update a profile on the government's free register at franchisedisclosure.gov.au before 14 November each year, and the ACCC has taken action against several for missing information there. A franchisor that isn't listed, or whose profile is stale, is telling you something.
Two limits: since 1 April 2025 full disclosure documents are no longer publicly viewable there, and the ACCC doesn't vet or endorse what franchisors upload.
What a franchise really costs
| Cost | What to pin down before you sign |
|---|---|
| Initial franchise fee | What it buys (training, territory, opening support) and whether any part is refundable |
| Fit-out and equipment | Who picks the builder and suppliers, and whether you can get competing quotes |
| Working capital | Months of losses you must fund before break-even |
| Royalty | Commonly 4% to 9% of gross revenue, or a flat monthly fee in some networks |
| Marketing or specific purpose fund levy | Commonly another 1% to 4% of revenue, plus local-area spend you fund yourself |
| Refurbishment | Timing and cost, now disclosable as significant capital expenditure |
| Renewal and transfer fees | What you pay to renew, and what the franchisor takes when you sell |
| Technology, POS and training fees | Anything charged monthly or per staff member |
Royalties are almost always charged on revenue, not profit, so a quiet month costs you the same percentage as a good one. Model the fees against your break-even rather than the franchisor's best-case store, and put the assumptions somewhere a lender or your accountant can pull them apart, such as the business plan builder.
Due diligence: how to use the 14 days
Ring the franchisees. The disclosure document must give you contact details for current and former franchisees, and this is the most valuable thing in the pack. Call as many as you can, chasing the former ones hardest. Ask what they actually turned over against what they were shown, the hours they work, how fast head office responds when something breaks, what the refurbishment cost, and whether they could sell when they wanted to.
Test the numbers. Any earnings information must be in or attached to the disclosure document. If a salesperson quotes a figure verbally or emails a spreadsheet that isn't in the pack, ask for it as part of the disclosure. Have an accountant rebuild the store P&L with your rent, wages and loan repayments.
Check the territory. Is it exclusive, and against what? Plenty of agreements stop another store opening near you while leaving the franchisor free to sell online, through delivery platforms or wholesale in your area.
Check supply, rebates and the lease. Which suppliers must you use, what prices are set for you, and what rebates does the franchisor collect on your purchases? If the franchisor holds your premises, check the lease term lines up with the franchise term.
Check the exit. How does a transfer work, what can the franchisor refuse, what fee applies, and what restraint applies afterwards? Have a franchise-specialist lawyer read the agreement — these are standard-form documents drafted for the franchisor, and understanding what you're signing before the 14 days expire is the only leverage you get. Settle how you'll hold the business at the same time, because franchisors often require a particular entity plus personal guarantees.
Red flags
- Pressure to sign, or to pay a large non-refundable deposit, before the 14-day disclosure period has run.
- Earnings figures given verbally or in documents that aren't part of the disclosure document.
- A short or reluctant list of former franchisee contacts, or network numbers showing heavy churn or terminations.
- No current profile on the Franchise Disclosure Register, a qualified solvency statement, or a franchisor that won't provide financial reports where the Code requires them.
- Terms letting the franchisor unilaterally change the operations manual, fees or territory. Standard-form franchise agreements are covered by unfair contract terms law, and the ACCC has publicly warned franchisors to strip these out.
- A major refurbishment due early in your term, or resistance to your lawyer and accountant asking questions.
Franchise or independent?
| Franchise | Independent business | |
|---|---|---|
| Brand and system | Ready to trade | You build it |
| Ongoing fees | Royalty plus levies on revenue | None |
| Control | Suppliers, pricing and marketing largely set for you | Yours |
| Term | Fixed, no automatic right to renew | Indefinite |
| Selling | Buyer must be approved, transfer fee payable | Sell to whoever you like |
| Training and support | Included in the fees | You buy it or learn it |
A franchise buys a shortcut on system and brand, and charges for it every week regardless of how you're going. If the fees would swallow most of your margin anyway, the same capital in an independent business buys goodwill you keep.
If something goes wrong
The Code sets out a dispute process: give written notice describing the dispute, the outcome you want and what you want the other party to do, then try to resolve it between yourselves. If that fails, either party can take it to mediation or conciliation, and the Australian Small Business and Family Enterprise Ombudsman can appoint an ADR practitioner. Arbitration binds you only if both parties agree in writing, and the Ombudsman can now publicly name franchisors that refuse or walk out of ADR.
The ACCC enforces the Code through compliance checks, infringement notices and court action, but it won't resolve your dispute or recover your money. Unfair contract terms law runs separately from the Code and applies to the standard-form agreement itself, so a clause the Code doesn't reach may still be void and expose the franchisor to civil penalties.
Key takeaways
- The Code's core protection is time and information: the information statement within 7 days of enquiring, then the disclosure document, the Code and the final agreement at least 14 days before you sign.
- You get 14 days after signing to terminate in writing and be refunded, less the franchisor's reasonable expenses if the agreement sets them out.
- The Key Facts Sheet is gone as of 1 April 2025, and full disclosure documents are no longer public on the Franchise Disclosure Register.
- Since 1 November 2025 franchisors must disclose significant capital expenditure, run specific purpose funds transparently, give you a reasonable opportunity to earn a return, and compensate for early termination in set situations.
- Ring the current and former franchisees listed in the disclosure document, and model royalties against your break-even — they're charged on revenue, not profit.
Where to get help
- ACCC franchising pages (accc.gov.au) — the Code, the information statement, guidance on the 2025 changes, and how to report a breach.
- Franchise Disclosure Register (franchisedisclosure.gov.au) — free public register of franchisors and their network profiles.
- Australian Small Business and Family Enterprise Ombudsman (asbfeo.gov.au) — franchising dispute assistance, mediation and ADR practitioner appointments.
- Your state or territory small business commissioner — low-cost mediation before a dispute escalates.
- A franchise-specialist lawyer and your accountant — engage both inside the 14-day disclosure period, not after you've signed.
Frequently asked questions
How long is the cooling off period for a franchise in Australia?
You have 14 days from entering the franchise agreement to terminate it, and you must do it in writing. The franchisor then has 14 days to refund your money, though it can keep its reasonable expenses relating to the termination if those expenses, or the way they're calculated, are set out in the agreement. If you're taking over an existing franchise by transfer, the cooling-off period ends 14 days after you become the franchisee or when you take possession of the business, whichever happens first.
How much does it cost to buy a franchise in Australia?
There's no standard price, but the cost has four parts: an upfront franchise fee, fit-out and equipment, working capital to cover losses until you break even, and ongoing fees. Ongoing royalties commonly run 4% to 9% of gross revenue with a marketing or specific purpose fund levy of roughly another 1% to 4%, though flat monthly fees are used by some networks. The franchisor's disclosure document is the authority on the actual numbers for that system, and it must set out establishment costs, ongoing payments and any significant capital expenditure you'll be asked to make.
Can I get out of a franchise agreement?
Easily within the 14-day cooling-off period, and with difficulty after that. Once cooling off ends you're bound for the term, and your realistic exits are selling the business to a buyer the franchisor approves, negotiating an early surrender, or relying on a termination right in the agreement. Franchise agreements are drafted so the franchisor has far more termination rights than you do, which is why the 14 days before signing matter more than anything you can do afterwards.
What is the Franchise Disclosure Register?
It's a free public register at franchisedisclosure.gov.au where franchisors must create and update a profile before 14 November each year. It shows who is franchising in Australia and basic details of each network, but since 1 April 2025 full disclosure documents are no longer publicly viewable on it, and the ACCC doesn't vet or endorse what franchisors upload. Use it to check a franchisor exists and is meeting its obligations, not as a substitute for the disclosure document you're entitled to receive.
Is buying a franchise safer than starting your own business?
It's a different risk, not a smaller one. You get a tested system, a known brand, training and buying power, which removes a lot of the guesswork, but you also carry fixed royalties on revenue rather than profit, limited control over pricing and suppliers, and a fixed term with no automatic right to renew. A weak site or a network in decline will sink a franchise as fast as an independent business.
General information only. This guide doesn't take your personal or business circumstances into account and isn't financial, legal or tax advice. Rates and thresholds change — check the official sources linked in this guide and get qualified advice where your circumstances require it.