1.What is the current legal landscape for Franchise & Licensing in your jurisdiction?

Franchising Law

The franchising legal landscape in Australia is governed by the Competition and Consumer (Industry Codes – Franchising) Regulations 2024 (Cth), commonly known as the Franchising Code of Conduct (the “Code”). The Code is a mandatory code enacted pursuant to the Competition and Consumer Act 2010 (Cth) and governs the conduct of franchisors and franchisees in Australia.

The legal landscape has recently been reformed due to the 2023 Schaper Review, which brought about the new Code in 2024, replacing the 2014 Franchising Code. The new Code came into effect in April 2025, with some provisions having a delayed commencement in November 2025. The new Code aims to address the existing power imbalance between franchisors and franchisees by strengthening requirements related to fairness, transparency and accountability.

Key changes include the following:

I. Reasonable opportunity for Return on Investment (ROI) – Franchisors are prohibited from entering into a franchise agreement “unless the agreement provides the franchisee with a reasonable opportunity to make a return, during the term of the agreement, on any investment required by the franchisor” (Reg 44). This is not a profit guarantee but a requirement for the franchisor to provide the franchisee with a reasonable opportunity to recoup the initial outlay and earn a return.

II. Compensation for Early Termination – All franchise agreements must include a provision for compensation if there is an early termination by the franchisor under certain circumstances, such as withdrawal from the Australian market, network rationalisation or changes to its distribution models in Australia (Reg 43). Franchise agreements must now include provisions requiring the franchisor to buy back or compensate franchisees for specific stock and equipment needed to operate the franchise, if the agreement is terminated for any of those reasons.

III. Disclosure and Funds Transparency – The rules for disclosing significant capital expenditures (Reg 47) and managing specific purpose funds (Reg 61) have been strengthened and now require clearer disclosure and more structured financial reporting.

IV. Enhanced Penalties and Prohibitions – The new code imposes increased civil penalties in the form of a penalty formula for serious breaches and standard penalties of 600 points (currently A$198,000) for general breaches. In addition, restraint of trade clauses cannot be enforced against franchisees if franchisors deny renewal or extension requests that the franchisees were eligible for.

Licensing Law

In Australia, licensing arrangements are not governed by any overarching national code unless it falls within a regulated sector such as liquor, broadcasting, financial services, or telecommunications. Instead, licensing is generally subject to contractual principles and governed by common law, relevant intellectual property statutes and state-specific regulations.

The key legislative pillars include:

1. Copyright Act 1968 (Cth) which governs the ownership and licensing of copyright works.
2. Trademarks Act 1995 (Cth) which deals with trademark licensing, including control requirements for valid trademark use (section 8).
3. Patents Act 1990 (Cth) and Designs Act 2003 (Cth) which regulates patent and design licences and registration of exclusive rights.
4. Australian Consumer Law – Schedule 2 of the Competition and Consumer Act 2010 (Cth) which applies to consumer guarantees, misleading conduct, unconscionable behaviour and unfair contract terms in licensing agreements.

2. What three essential pieces of advice would you give to clients involved in your Franchise & Licensing matters?

Franchise Matters

I. Prioritise Disclosure Compliance and Pre-Contractual Due Diligence

For Franchisors: A franchisor’s paramount obligation is to provide a fully compliant Disclosure Document and supporting documents at least 14 days before the agreement is signed or a non-refundable payment is made, as mandated by the Code. Given the new requirements around Return on Investment (ROI) and Significant Capital Expenditure, the franchisor needs to ensure that the financial data is accurate, verifiable and its disclosures are aligned with the new regulatory requirements.

For Franchisees: The Code requires that franchisees receive independent legal, accounting and business advice (unless they formally waive these requirements). This is important to ensure they properly understand the commercial and legal implications. Franchisees should not rely solely on the Franchisor’s representations regarding viability. They need to conduct their own independent due diligence on the financial performance, market conditions, competitor landscape, including reaching out and getting to know more about the business and its viability from existing franchisees prior to executing any documents.

II. Act in Good Faith and establish robust Communication Procedures

The mandatory obligation of good faith applies to both parties. The obligation requires the parties to act honestly, not arbitrarily and to cooperate to achieve the agreement’s objectives. Clients need to document all significant communications, use formal processes for dispute notification and avoid conduct that could be perceived as unconscionable under Australian Consumer Law.

III. Review and Stress-Test Agreements against the new Code
Even if a franchise agreement was signed prior to the new Code coming into effect, parties need to understand the transition rules and the new mandatory compensation requirements. For new agreements from 1st November 2025, ensure the new requirements (such as ROI, compensation for termination, restraint of trade limitations) are correctly incorporated.

Licensing Matters

I. Protect and Clearly Define the Scope of Intellectual Property (IP)

For Licensors: The crown jewel of the license agreement is the IP. Before granting a licence, ensure all registrable IP such trademarks, patents, designs and plant breeder rights are properly registered and maintained under applicable IP law. The licence agreement among other things must meticulously define the licensed IP, restrictions on use, fees and payment terms, territory, exclusivity, liability caps, warranties, indemnities and most importantly, the robust quality control and audit mechanisms which the licensee must comply with. In the case of trademarks, failure to enforce quality standards can lead to loss of trademark distinctiveness.

For Licensees: A clearance search must be conducted to ensure the Licensor owns the IP and has the right to grant the licence. Ensure the agreement explicitly details the warranties and indemnities the licensor provides regarding the IP’s validity and non-infringement of third-party rights.

II. Be aware of the Franchise vs Licence distinction to avoid accidental Franchising

Licensors should ensure the level of control or assistance provided does not constitute a franchise under the Code, triggering the onerous disclosure and compliance requirements of the Code. The definition of a franchise under the Code is broad and the purpose of this is to prevent businesses from avoiding the Code’s protections simply by calling their agreement a “licence”, “distribution agreement” or a “dealership” instead of a franchise. Careful analysis of the operational reality between the parties, sound legal advice and drafting is required to avoid breaching the Code.

III. Address ACL and Unfair Contract Terms Risk Proactively

All licensing agreements with small businesses (i.e. less than 100 employees or less than A$10 million turnover) that are considered ‘standard form’ are subject to the strengthened Unfair Contract Terms (UCT) regime under Australian Consumer Law (ACL). Clients need to review their agreements to ensure no provision causes a significant imbalance in the parties’ rights and obligations (e.g. unilateral variation clauses, broad indemnity clauses, or unreasonable termination rights). Provisions found to be unfair are void and can attract significant ACCC action and penalties, as reinforced by the amendments to the ACL in late 2023.

3. What are the greatest threats and opportunities in Franchise & Licensing law in the next 12 months?

(i) Franchising Threats

a. Litigation based on ‘Reasonable ROI’: The lack of a clear legislative definition for “reasonable opportunity to make a return on investment” (Reg 44) may lead to an increase in disputes, renegotiations or even regulatory scrutiny as the parties test the boundaries of this provision.

b. ACCC Scrutiny and Penalties: The ACCC is empowered with increased civil penalties of a substantial penalty formula for serious breaches and standard penalties of 600 points (currently A$198,000) for general breaches. It will likely focus on enforcing the new set of obligations as non-compliance is now significantly more expensive.

(ii) Franchising Opportunities

Network Sustainability and Trust: The new Code forces Franchisors to build more commercially viable and ethically sound franchising models. Therefore, the Franchisors by proactively embracing these changes can significantly improve franchisee trust, network stability and brand reputation, leading to expansion of the franchise network and lower dispute rates.

(iii) Licensing Threats

a. Unfair Contract Terms (UCT) Regime: The newly strengthened UCT regime under the ACL has serious consequences. Standard-form licensing agreements with small businesses that contain traditional ‘one-sided’ clauses (e.g., automatic renewal, broad termination rights, excessive indemnity) are at risk of being declared void by a court or targeted by the ACCC.

b. Emerging Technology Liability: Licensing of new and rapidly evolving technologies such as AI-generative software, machine-learning systems and data-driven services raises complex liability considerations under Australian law. These include allocating responsibility for inaccuracies, defects or harmful outputs and determining the extent to which liability may arise under contract, negligence or the ACL. Licensing arrangements must also address the risk of third-party intellectual property infringement where the technology reproduces, incorporates or relies upon data, content or other materials to which the licensee or licensor may not hold sufficient rights.

c. Privacy and data security: Licensing arrangements involving generative-AI technologies also raise privacy risks. Where personal information is used in training datasets or collected through system usage, the handling of that information must comply with the Privacy Act 1988 (Cth) and the Australian Privacy Principles (APP). From an end-user perspective, these systems may also collect metadata or usage data and any secondary use or disclosure of that information must be consistent with the entity’s notified purposes and the limits imposed by APP 6. These risks make it essential for licensing arrangements to address privacy compliance, data-security obligations and allocation of responsibility between the parties.

(iv) Licensing Opportunities

a. Strategic IP Commercialisation: A clear and compliant licensing strategy allows businesses to rapidly commercialise their IP in new domestic and international markets without the intensive capital and regulatory overhead of a franchise system.

b. Leveraging Data and AI Licensing: Data, algorithms and AI tools are becoming major licensed assets. Lawyers who can expertly draft agreements to cover data rights, input/output ownership, ethical use and indemnities for AI-related risks will unlock significant commercial value for clients in this high-growth sector.

4. How do you ensure high client satisfaction levels are maintained by your practice?

i. Specialised Industry Knowledge and Proactive Regulatory Compliance:

We ensure our team is aware of the latest legal developments pertaining to franchising and licensing. Our clients expect us not just to interpret the law, but also to be reasonably commercially astute when advising them on the law.

For Franchisor Clients: We implement compliance audits and perform any resulting work. We also provide ongoing legal updates relevant to the client’s business.

For Licensing Clients: We offer IP portfolio management, renewal reminders and template review to ensure enforceable and brand-consistent agreements.

ii. Transparency and Predictability in Cost and Process:

Legal matters can be intimidating due to their complexity and uncertain costs. We maintain high satisfaction by demystifying both. We adopt fixed-fee structures for most legal services wherever possible, such as drafting and review of disclosure documents, franchise agreements and licence agreements.

iii. Responsive Communication and Client-Focussed Service:

In fast-moving commercial transactions and disputes, timely advice is critical. We commit to a quick response time which is based on the urgency of the client’s queries, ensuring the client feels supported and their matter is being actively progressed.

5. What technological advancements are reshaping your practice area and how can clients benefit from them?

Lately, although there have been technological advancements in calendar scheduling software and legal practice management software which make law firms more efficient and productive, the key technological advancement which clients can directly benefit from are AI-generative legal research software which can assist lawyers in providing legal services as these research tools, if used in the right manner by reasonably experienced lawyers while providing the necessary factual details, can deliver relevant legal information including information on statutory law, case law and also perform contract drafting and review work. Since these softwares are currently in their nascent stage, lawyers are required to carefully verify all information before relying on them for legal purposes. We use AI generative legal software to conduct analysis of our contract drafts to eliminate any high-risk clauses such as any ambiguities in the scope of the IP, broad termination rights and other unfair contract terms.

We strongly believe that these kinds of AI generative software that produce legal information can only be effectively utilised by reasonably experienced lawyers as only they have the ability to create the initial qualified prompts and the follow-up prompts in a manner that elicits the best response the software can provide in terms of legal information or contractual work. Sometimes the software’s best response may not be accurate or comprehensive and that is where the experience of the lawyer comes to the fore, to know which information to verify and which information to rely upon for legal services.