A new Code applies from 1 April 2025
The Franchising Code of Conduct was replaced on 1 April 2025. The new Code applies to franchise agreements entered into, transferred, renewed or extended on or after that date, and to most conduct from that date. Agreements in place before it continue under the old Code until they are transferred, renewed or extended.
- The Key Facts Sheet requirement was removed
- Existing franchisees can opt out of disclosure for a substantially similar agreement
- Cooling off can be waived by those franchisees
- Marketing and cooperative funds now sit under "specific purpose funds"
- Defined grounds allow termination on 7 days' notice
- Significant capital expenditure must be disclosed and discussed
- ASBFEO can name franchisors who refuse dispute resolution
- More civil penalty provisions apply
Franchisors with documents drafted for the old Code need them updated. References to the Key Facts Sheet and to old Code provisions are now wrong, and the possibility of a franchisee opting out needs to be accommodated.
Buying a franchise
A franchise is not a business you own outright. It is a licence to operate someone else's system, on their terms, for a defined period. That can be an excellent way to start — established brand, proven system, training and support — but the constraints are real and permanent.
The questions worth answering before you sign: what happens at the end of the term, whether renewal is a right or a hope, what you can sell and to whom, what territory you actually have, what you must buy from the franchisor and at what price, and what capital expenditure you can be required to incur mid-term.
The disclosure period
14 days to consider, before you can be asked to sign
A franchisor must give a prospective franchisee the disclosure document and a copy of the Code, and there is then a 14-day consideration period before the franchise agreement can be signed. The franchisor must not sign during that period either.
Use it. The disclosure document contains the information you need — existing and former franchisees, fees, supply arrangements, litigation history, significant capital expenditure — and 14 days is enough to read it and get advice.
Call some former franchisees. Their contact details are in the disclosure document, and a fifteen-minute conversation with someone who left the system tells you more than any amount of marketing material.
Cooling off
A franchisee has 14 days to cool off after signing a franchise agreement or paying any non-refundable money, whichever happens first. Under the new Code an existing franchisee entering a substantially similar agreement with the same franchisor can waive it by written notice, but a first-time franchisee cannot.
Cooling off is a genuine protection, but it is not a substitute for advice beforehand. Once it expires you are committed for the term, and franchise agreements are long.
The terms that decide the outcome
- Term, renewal rights and end-of-term arrangements
- Territory, and whether it is exclusive
- Fees — initial, royalty, marketing, and what they fund
- Supply obligations and pricing
- Required capital expenditure and refurbishment
- Transfer — whether and how you can sell
- Termination rights on both sides
- Restraint of trade after the agreement ends
End of term is the provision franchisees most often overlook. If there is no right of renewal and no compensation for goodwill, the business you built may simply end — and a restraint may prevent you continuing independently. The new Code extends to all franchise agreements an obligation to provide a reasonable opportunity to make a return on investment, which previously applied only to vehicle dealerships.
Disputes
The Code requires both parties to act in good faith, and provides a dispute resolution procedure — written notice, then mediation or conciliation before litigation. The Australian Small Business and Family Enterprise Ombudsman administers the process and can now publicly name franchisors who refuse to participate or withdraw.
Penalties for Code breaches are substantial, and the ACCC enforces it. Where a genuine breach has occurred, that leverage is real.
What it costs
- Fixed fee for franchise document review
- Advice within the 14-day consideration period
- Franchisor document updates quoted separately
- Transfers and renewals quoted per matter
- Stage estimates for disputes
- Honest advice on whether to proceed
Frequently asked questions
A new Code commenced on 1 April 2025, applying to agreements entered into, transferred, renewed or extended on or after that date. The Key Facts Sheet requirement was removed, existing franchisees can opt out of disclosure and cooling off for substantially similar agreements, marketing and cooperative funds became 'specific purpose funds', and more civil penalty provisions apply.
14 days after signing the franchise agreement or paying any non-refundable money, whichever happens first. Under the new Code, an existing franchisee entering a substantially similar agreement with the same franchisor can waive it by written notice, but a first-time franchisee cannot.
There is a 14-day consideration period after you receive the disclosure document and a copy of the Code, before the franchise agreement can be signed. The franchisor must not sign during that period either. Use the time to read the document and obtain advice.
Yes. Their contact details are included in the disclosure document, and a short conversation with someone who has left the system typically tells you more about the reality of operating it than any marketing material. It is one of the most useful things you can do in the consideration period.
It depends entirely on the agreement. If there is no right of renewal and no compensation for goodwill, the business may simply end, and a post-term restraint may prevent you continuing independently. The new Code extends to all franchise agreements an obligation to provide a reasonable opportunity to make a return on investment.
More information
Thinking of buying into a franchise? Or need advice on how your franchise agreement actually works? Avoid big risks by getting expert advice.
Franchising lawyers Rockhampton
Perhaps you are thinking about going into business for the first time and you are weighing your options.
Should you start your own from scratch, buy an existing, independent business, or a franchise? Of course, there are pros and cons to each and the one that is best for you depends on your own circumstances.
However, if you are considering purchasing a franchise, there are a few things to keep in mind. The first is that in this type of arrangement, you are buying into an established business with an established brand.
While this offers some security, it also provides less flexibility than other business models. Additional concerns include the initial (upfront) and ongoing costs, and potential risks.
Our business lawyers can help you identify these risks, suggest changes to the franchise agreement to protect your interests, and ensure that you fully understand all of the legal matter associated with these types of arrangements. We ensure that you are aware of the issues associated with the franchise disclosure statement, franchise agreement, business contract, lease/licence, and the retail shop lease disclosures (if applicable).
If the transaction is handled properly from the outset, owning a franchise can be a wonderful business opportunity. If not, you may find yourself in a difficult situation. So don’t leave anything to chance.
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This page is general information about the law as it applies in Queensland, current as at 2026. It is not legal advice and does not take your circumstances into account. Figures set by regulation are indexed and change. Speak to one of our lawyers before acting.