Buying a Franchise: The Legal Advice You Need Before You Sign
- Neda Whelan (LLB, LLM, GDLP)
- Jun 26
- 6 min read
Introduction
Buying a franchise can feel like the safer route into business ownership. You acquire a recognised brand, a tested operating model and, in most cases, a measure of ongoing support. Yet beneath that reassurance sits a binding commercial relationship that will shape your finances and your working life for years, and the documents that create it are drafted to protect the franchisor, not you. For anyone weighing a franchise opportunity in Melbourne or regional Victoria, sound franchise legal advice when buying is what turns an appealing brochure into an informed decision.
This article explains why legal advice matters before you commit, what the law expects of you and the franchisor, the documents a lawyer reviews on your behalf, and the risks that early advice helps you avoid. It is written for prospective franchisees and small business buyers who want to understand the commitment clearly before signing, rather than discovering its consequences afterwards.
Why Legal Advice Matters Before Buying a Franchise
A franchise agreement is one of the longest and least negotiable contracts most business owners will ever sign. It typically runs for five years or more, ties you to a single supply network, governs how you operate down to fine detail, and sets out the circumstances in which the franchisor can end the arrangement. The franchisor has used the same documents many times. For you, it is almost certainly the first. That imbalance is precisely why the Franchising Code of Conduct, the mandatory industry code regulated by the Australian Competition and Consumer Commission, builds in time and information for prospective franchisees, and why it contemplates that you will either obtain professional advice or make a considered decision not to.
Treating that advice as an optional cost rather than a protection is one of the more expensive mistakes a buyer can make. The point of legal advice is not to talk you out of a good opportunity. It is to make sure the opportunity is what it appears to be, and that you understand what you are agreeing to.
What the Law Expects Before You Sign
Franchising in Australia is governed by the Franchising Code of Conduct, which commenced on 1 April 2025 and replaced the previous Code. The Code does not guarantee that a franchise will succeed, but it does require the franchisor to give you specific information and time before you are bound. For a fuller explanation of franchising regulation, see our franchising law page.
Before you can be required to sign, the franchisor must provide a disclosure document, the franchise agreement in the form you will sign, and a copy of the Code, and you must be given at least fourteen days to consider them. This consideration period exists so that you are not rushed into a decision of this size. You are also entitled to an Information Statement, a short document outlining the key risks and steps involved in buying a franchise, given early in the process.
After you sign, the Code provides a further fourteen day cooling off period, during which you may terminate the agreement in writing and recover what you have paid, less the franchisor’s reasonable expenses. These periods are longstanding features of the Code rather than recent innovations, and a lawyer can help you use the consideration period properly rather than letting it lapse.
The Documents a Franchise Lawyer Reviews
Much of the value in legal advice lies in reading the documents closely and explaining what they actually mean for you. A franchise purchase is rarely a single contract. It is a bundle of related agreements that must be read together.
The franchise agreement is the centrepiece. It sets the term, the fees, your territory, your obligations, the franchisor’s rights, and the grounds for renewal and termination. The disclosure document sits alongside it and contains financial information about the franchisor and the network, details of current and former franchisees, and a summary of the costs you will face. A lawyer reads these against each other to check that what you have been told matches what you are signing.
Beyond those two, there will often be a lease or licence for your premises, which should align with the franchise term so you are not left holding one without the other. There may be personal guarantees that put your own assets on the line, supply agreements, a confidentiality deed, and an operations manual that binds you to procedures you have not yet seen. Each deserves attention, and the way they interact often matters more than any single clause.
Buying an Existing Franchise
Purchasing an established franchised business from a departing franchisee adds a further layer. As well as the franchise documents, you are buying the existing business, which means due diligence on its trading history, its lease, its staff entitlements, its equipment and any liabilities it carries. The franchisor must usually approve the transfer, and you will generally enter a fresh franchise agreement on current terms rather than inheriting the seller’s. Understanding which obligations you are taking on, and which you are not, is central to advice in a resale, and it is an area where assumptions are easily and expensively wrong.
The Risks Good Advice Helps You Avoid
The risks worth identifying before signing tend to be the ones that surface later, when they are hardest to fix. Restraint of trade clauses can limit what you do after the franchise ends. Territory provisions may allow other franchisees, or the franchisor’s own online channel, to compete for customers you assumed were yours. Renewal terms can be less certain than they first appear, and exit provisions can make leaving costly. Ongoing fees, marketing contributions and capital expenditure obligations can erode margins that looked comfortable on paper.
None of these is necessarily a reason to walk away. Many are standard, and some are negotiable, particularly where the franchisor is keen to grow the network. The value of advice is in seeing them clearly, understanding their commercial effect on your particular plans, and deciding with full information rather than discovering the implications once you are committed.
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What Franchise Legal Advice Costs, and What You Get
Cost is a fair question, and the honest answer is that it depends on the work. A review of a franchise agreement and disclosure document, with a written summary of the risks and a conversation to talk them through, is often offered on a fixed fee, which gives you certainty before you start. More involved matters, such as negotiating amendments, advising on a lease, or acting on the purchase of an existing franchised business, are usually charged on the time they take.
Set against the sum you are about to invest, and the years you will be bound, the cost of advice is modest. The return is a clear understanding of the commitment, the chance to negotiate where there is room, and the confidence that you are signing with your eyes open.
How Whelan Lawyers Can Help
At Whelan Lawyers, we advise franchisees and franchisors across Melbourne and Sydney at every stage of the franchise relationship. Because we act for both sides, we understand where the real pressure points in a franchise agreement sit, and we bring that perspective to every review. Our background includes senior in-house roles within national franchise groups, which means our advice is grounded in the commercial reality of how these networks actually operate, not just the words on the page. If you would like help choosing a lawyer experienced in franchise matters, we have written separately on what to look for.
If you are considering buying a franchise and want to understand the agreement before you sign, we would be glad to help. Contact our franchising team for an initial discussion about your opportunity and the advice that would suit it.
Frequently asked questions
Do I legally have to get advice before buying a franchise in Australia?
You are not strictly required to obtain legal advice, but the Franchising Code expects you either to seek professional advice or to make an informed decision not to, and franchisors commonly ask you to sign a statement confirming which you have done. Given the size and length of the commitment, obtaining advice is strongly advisable.
How long do I have to review a franchise agreement before signing?
The Code gives you a consideration period of at least fourteen days after you receive the disclosure document, the franchise agreement and a copy of the Code. The franchisor cannot require you to sign during this period, which exists to give you time to seek advice and consider the commitment.
Can a franchise agreement be negotiated?
Sometimes. Franchisors often present their agreements as standard, and many terms are held firm to keep the network consistent. Even so, particular terms can be open to negotiation, especially where a franchisor is expanding, and a lawyer can identify which points are worth raising and how best to raise them.
How much does franchise legal advice cost in Melbourne?
It depends on the work involved. A review of the franchise agreement and disclosure document with a written summary is often offered on a fixed fee, while negotiation or the purchase of an existing franchise is usually charged on time spent. We are happy to discuss the likely cost before any work begins.
Disclaimer: This article provides general information only and is not legal advice. The law is complex and varies based on individual circumstances. You should seek specific legal advice about your particular situation before making any decisions about legal matters.
Neda Whelan
Neda Whelan is the Founder and Principal of Whelan Lawyers. With over a decade of experience as former General Counsel for major national networks such as Clark Rubber and Jim's Group, she provides practical, commercial-first legal strategies for franchisors and business owners.
