Frequently Asked Questions

What is the Franchising Code of Conduct?

The Franchising Code of Conduct is a mandatory industry code that regulates franchising in Australia. It is prescribed under the Competition and Consumer Act 2010 and sets binding rules on disclosure, good faith, cooling-off rights, dispute resolution, and how franchisors and franchisees must deal with one another.

​

Is the Franchising Code of Conduct mandatory?

Yes. The Franchising Code of Conduct applies automatically to every franchise agreement in Australia, whatever the parties agree between themselves. Franchisors and franchisees cannot contract out of it, and breaches carry civil penalties.

​

Who enforces the Franchising Code of Conduct?

The Australian Competition and Consumer Commission (ACCC) is responsible for compliance and enforcement of the Franchising Code of Conduct. It conducts compliance checks, investigates complaints, issues infringement notices, and can take court action. Franchisees and franchisors can also take their own private legal action against each other.

​

What are a franchisor's main obligations under the Franchising Code of Conduct?

Franchisors must act in good faith, give prospective franchisees full and accurate disclosure before they commit, and keep that disclosure current. They must maintain a profile on the Franchise Disclosure Register, follow strict rules for any specific purpose funds they operate (such as marketing funds), including auditing and reporting to franchisees, and comply with limits on the terms they can include in a franchise agreement. Franchise agreements must also give franchisees a reasonable opportunity to make a return on their investment.

​

What documents must a franchisor provide before a franchise agreement is signed?

At least 14 days before a franchisee enters into, renews, or extends an agreement, the franchisor must give a copy of the franchise agreement in the form it will be signed, a disclosure document, and a copy of the Franchising Code of Conduct. An information statement must also be provided early, as soon as the prospective franchisee expresses interest. This 14-day period exists to give the franchisee time to review everything and obtain independent advice. Whelan Lawyers thoroughly recommend seeking legal advice before signing any documents.  

​

What is the cooling-off period under the Franchising Code of Conduct?

A franchisee may terminate a new franchise agreement within 14 days of entering into it (the cooling-off period). The period runs from whichever happens earlier: signing the agreement or making a payment under it. A further 14-day cooling-off period can apply where the franchisor or its associate provides a lease or right of occupancy. If the franchisee terminates in time, the franchisor must refund monies paid within 14 days, though it can keep reasonable expenses set out in the agreement.

​

Can a franchisee opt out of the cooling-off period?

In limited circumstances, yes. A franchisee can opt out by written notice where they already hold, or recently held, a substantially similar agreement with the same franchisor for substantially the same business. Opting out means giving up the right to terminate within 14 days and to a refund, so it should not be done without advice.

​

What does "good faith" mean under the Franchising Code of Conduct?

The Franchising Code of Conduct requires franchisors and franchisees to act in good faith towards each other in all their dealings, including negotiation, performance, and dispute resolution. It reflects the common law duty and asks whether a party has acted honestly and reasonably, while still allowing each party to act in its legitimate commercial interests. Failure to act in good faith can attract a civil penalty.

​

What happens if a franchisor ends a franchise agreement early?

Where a franchisor ends an agreement before it expires for its own reasons, such as withdrawing from the market or restructuring the network, the agreement must provide for the franchisee to be compensated, and for the franchisor to buy back or compensate the franchisee for certain stock and equipment. The Code also limits a franchisor's ability to rely on restraint of trade clauses where an agreement is not renewed or extended.

​

What are the penalties for breaching the Franchising Code of Conduct?

Most breaches of the Franchising Code of Conduct carry civil penalties of up to 600 penalty units per breach, a substantial amount that is indexed over time. The most serious breaches, such as failing to disclose materially relevant facts, can expose a franchisor to penalties running into the millions. The ACCC can also issue infringement notices, and the Australian Small Business and Family Enterprise Ombudsman can publicly name franchisors who refuse to take part in dispute resolution.

​

Does the Franchising Code of Conduct apply to licence agreements?

It can, and this catches many businesses out. Whether an arrangement is a franchise does not depend on what the parties call it. If a relationship has the essential features of a franchise, namely an agreement, the right to carry on business under the franchisor's brand or system, a system or marketing plan substantially determined by the franchisor, and payment of a fee, it will be governed by the Franchising Code of Conduct even if it is labelled a licence, distribution, or agency agreement. If you operate or are entering a licence arrangement, it is worth having it reviewed to confirm whether the Code applies.

​

What is the Franchise Disclosure Register?

The Franchise Disclosure Register is a public online register, administered by the ACCC, where franchisors must publish key information about their franchise system. It allows prospective franchisees to research a franchise before they commit.

​

Where can I get advice on the Franchising Code of Conduct?

Because the Franchising Code of Conduct carries significant penalties and imposes detailed obligations, both franchisors and franchisees should obtain specialist franchising legal advice before signing, renewing, or updating any franchise documents. 

​

​

About the Author

This guide was written by Neda Whelan, Principal Solicitor and founder of Whelan Lawyers.

Neda brings a rare combination of in-house and private practice experience to franchising law. She has held senior in-house legal roles at some of Australia's best known franchise systems, including Jim's Group and Clark Rubber, giving her a practical, operator's understanding of how franchise networks are built, run, and grown from the inside. Alongside this, her commercial private practice background means she advises across the full franchise lifecycle, from establishing and documenting a franchise system, through disclosure and compliance, to renewals, transfers, and dispute resolution.

​

Neda has seen the Franchising Code of Conduct applied from both sides of the table: as the lawyer helping a franchisor scale a compliant, investable system, and as the adviser protecting a franchisee's position before they commit. She has written this guide to help prospective franchisors and franchisees navigate what can be a legally complex and high stakes area, so that they can approach a franchise arrangement informed, prepared, and properly advised.

​

If you are considering franchising your business or buying into a franchise system, Neda and the team at Whelan Lawyers can help you understand your obligations and protect your interests under the Franchising Code of Conduct.