Why a General Commercial Lawyer Is Not a Franchise Expert
- Neda Whelan (LLB, LLM, GDLP)
- 5 hours ago
- 4 min read
Introduction
When clients weigh up a franchise, their first instinct is to send the paperwork to the commercial lawyer they already know and trust. That is reasonable. A capable commercial lawyer can read a contract, negotiate a lease and set up a company without difficulty. Franchising, though, sits inside its own regulatory world, and the gap between general commercial competence and a genuine franchise expert is where costly mistakes take root. After years as in-house counsel inside national franchise networks, and now advising both franchisors and franchisees, I have watched a well-meaning generalist miss things the Franchising Code treats as non-negotiable. This article explains what a generalist overlooks and how to judge whether your adviser truly understands the field.
Why this topic matters
Franchising is not commercial contracting with a brand attached. It is governed by a mandatory industry code under the Competition and Consumer Act 2010, remade as the Competition and Consumer (Industry Codes – Franchising) Regulations 2024. Its obligations do not appear in an ordinary commercial agreement and cannot be negotiated away. A lawyer who reads a franchise agreement as they would a supply contract is reading the wrong map. The consequences are real: a breach of the good faith obligation alone carries a civil penalty of up to 600 penalty units per contravention, which for a company can run into the hundreds of thousands of dollars.
What a franchise expert sees that a generalist misses
The difference is rarely about diligence. It is about knowing where franchising keeps its risks.
The disclosure regime is technical and time-bound
A franchisor must provide a disclosure document, an information statement and the agreement, and set periods must pass before signing and before any money changes hands. These periods have long been part of the Code, so the risk is not that they are new but that a generalist may not look for them, or may not see how a defective disclosure document undermines the whole transaction.
The clauses that matter are not the ones that look important
Much of what protects a franchisee sits in provisions a commercial eye can skim past. Under the current Code, a franchisor generally cannot rely on a post-term restraint where the agreement was not renewed or extended in defined circumstances, yet I still see restraints drafted as though that limit did not exist. Marketing funds, unilateral variation rights and the mechanics of transfer and termination each carry rules a general review will not surface. Our franchising lawyers work through them as a matter of course.
Good faith is a live, enforceable obligation
Both parties owe a statutory duty to act in good faith across the life of the relationship, not just at signing. Advising on a franchise without accounting for how that duty shapes conduct, disputes and exit is advising on an incomplete picture.
Considering a franchise, or reviewing arrangements you already hold?
Our franchising team brings both a franchisor and a franchisee perspective to every agreement we advise on.
Practical guidance for choosing an adviser
If you are choosing who should review your franchise arrangements, a few questions tell you a great deal. Ask how often the person advises on franchising specifically, not on commercial matters generally. Ask whether they will review the disclosure document and register listing alongside the agreement. Ask how they approach good faith and the Code’s limits on restraint and termination. A generalist will often say honestly that franchising is not their main area, and that candour is worth more than a confident review that misses the regime. Getting this wrong is not a redraft; it is a five or seven year commitment on terms you did not fully understand.
How we can help
Franchising has sat at the centre of my work for a long time, first inside major national networks as in-house counsel and now advising businesses on both sides of the agreement. I read a franchise arrangement the way the Code intends, with an eye to disclosure, good faith, marketing funds, restraint and exit. If you are buying a franchise, granting one or working through a network dispute, our Franchising Law team can help you understand your position before you commit.
Frequently asked questions
Can my regular commercial lawyer review my franchise agreement?
They can, but franchising is governed by a mandatory code with obligations absent from ordinary commercial contracts. Unless your lawyer advises on franchising regularly, risks in the disclosure document, restraint and termination provisions can be missed. Have the arrangement reviewed by someone who works in this area.
What is the Franchising Code of Conduct?
It is a mandatory industry code under the Competition and Consumer Act 2010, remade as the Competition and Consumer (Industry Codes – Franchising) Regulations 2024. It governs disclosure, good faith, dispute resolution, restraint and termination, and applies whether or not your agreement mentions it.
What happens if a franchisor breaches the Code?
Many provisions carry civil penalties. A breach of the good faith obligation can attract up to 600 penalty units per contravention, a six-figure penalty for a company, and the ACCC actively enforces the Code. Franchisees may also have dispute resolution and other remedies.
When should I get franchising advice?
Before you sign, and ideally before you pay anything or commit to a site. The Code builds in periods that must pass before signing, and early advice lets you use that time to understand the disclosure document and negotiate where you can.
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.
