{"id":116240,"date":"2025-10-09T13:37:35","date_gmt":"2025-10-09T13:37:35","guid":{"rendered":"https:\/\/my.legal500.com\/guides\/?post_type=comparative_guide&#038;p=116240"},"modified":"2025-10-09T13:37:35","modified_gmt":"2025-10-09T13:37:35","slug":"australia-franchise-licensing","status":"publish","type":"comparative_guide","link":"https:\/\/my.legal500.com\/guides\/chapter\/australia-franchise-licensing\/","title":{"rendered":"Australia: Franchise &amp; Licensing"},"content":{"rendered":"","protected":false},"template":"","class_list":["post-116240","comparative_guide","type-comparative_guide","status-publish","hentry","guides-franchise-licensing","jurisdictions-australia"],"acf":[],"appp":{"post_list":{"below_title":"<div class=\"guide-author-details\"><span class=\"guide-author\">Hitch Advisory\u00a0<\/span><span class=\"guide-author-logo\"><img src=\"https:\/\/my.legal500.com\/guides\/wp-content\/uploads\/sites\/1\/2025\/10\/Hitch-Advisory-Logo-Black-344.jpg\"\/><\/span><\/div>"},"post_detail":{"above_title":"<div class=\"guide-author-details\"><span class=\"guide-author\">Hitch Advisory\u00a0<\/span><span class=\"guide-author-logo\"><img src=\"https:\/\/my.legal500.com\/guides\/wp-content\/uploads\/sites\/1\/2025\/10\/Hitch-Advisory-Logo-Black-344.jpg\"\/><\/span><\/div>","below_title":"<span class=\"guide-intro\">This country specific Q&amp;A provides an overview of Franchise &amp; Licensing laws and regulations applicable in Australia<\/span><div class=\"guide-content\"><div class=\"filter\">\r\n\r\n\t\t\t\t<input type=\"text\" placeholder=\"Search questions and answers...\" class=\"filter-container__search-field\">\r\n\t\t\t<\/div>\r\n\r\n\t\t\t\r\n\r\n\r\n\t\t\t<ol class=\"custom-counter\">\r\n\r\n\t\t\t\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Is there a legal definition of a franchise and, if so, what is it?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Yes, there is a legal definition of a franchise under the Competition and Consumer (Industry Codes &#8211; Franchising) Regulations 2024 (<strong>the Franchising Code of Conduct<\/strong>). A &#8220;franchise agreement&#8221; is defined as an agreement (written, oral, or implied) where:<\/p>\n<ol style=\"padding-left: 0\" type=\"a\">\n<li>the franchisor grants the franchisee the right to carry on the business of offering, supplying, or distributing goods or services in Australia under a system or marketing plan substantially determined, controlled, or suggested by the franchisor or its associate;<\/li>\n<li>the operation of the business is substantially or materially associated with a trademark, marketing, or commercial symbol owned, used, or licensed by the franchisor or its associate; and<\/li>\n<li>the franchisee must pay or agree to pay the franchisor or its associate an amount (such as an initial fee, royalty, or training fee), excluding payments for goods\/services supplied on a genuine wholesale basis, repayments of loans, or market value payments for property or equipment.<\/li>\n<\/ol>\n<p>All three elements must be satisfied to be deemed a \u2018franchise agreement\u2019 captured by the Franchising Code of Conduct.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any requirements that must be met prior to the offer and\/or sale of a franchise? If so, please describe and include any potential consequences for failing to comply.<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Before offering or selling a franchise, franchisors must:<\/p>\n<ol style=\"padding-left: 0\" type=\"a\">\n<li>provide a disclosure document (in the prescribed form) to prospective franchisees at least 14 days before the franchise agreement is signed;<\/li>\n<li>provide a copy of the franchise agreement (in the form to be executed) and a copy of the Franchising Code;<\/li>\n<li>provide an information statement published by the Commission within 7 days of a formal application or expression of interest;<\/li>\n<li>allow a 14-day &#8220;consideration period&#8221; before execution of the agreement; and<\/li>\n<li>obtain written statements from the franchisee confirming receipt and understanding of the disclosure document and the Code, and that the franchisee has received or declined independent legal, business, and accounting advice.<\/li>\n<\/ol>\n<p>Failure to comply with these requirements can result in civil penalties (up to 600 penalty units per breach for individuals, or up to $10 million or more for bodies corporate for certain breaches), and may give rise to rights for the franchisee to terminate the agreement or seek remedies for misleading or deceptive conduct.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any registration requirements for franchisors and\/or franchisees? If so, please describe them and include any potential consequences for failing to comply. Is there an obligation to update existing registrations? If so, please describe.<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>There is no registration requirement for franchisors to commence franchising. However, franchisors must create a profile on the public Franchise Disclosure Register, including the following information:<\/p>\n<ol style=\"padding-left: 0\" type=\"a\">\n<li>the legal name of the franchisor;<\/li>\n<li>business address and contact details;<\/li>\n<li>Australian Business Number or Australian Company Number;<\/li>\n<li>description of the goods\/services offered under the franchise;<\/li>\n<li>whether the franchise operates in Australia only or internationally; and<\/li>\n<li>whether the franchise is a master-franchise or sub-franchise.<\/li>\n<\/ol>\n<p>This information must be provided at least 14 days before entering into a franchise agreement and must be updated or confirmed annually. Failure to comply attracts civil penalties (600 penalty units).<\/p>\n<p>There is no registration requirement for franchisees.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any disclosure requirements (franchise specific or in general)? If so, please describe them (i.e. when and how must disclosure be made, is there a prescribed format, must it be in the local language, do they apply to sales to sub-franchisees) and include any potential consequences for failing to comply. Is there an obligation to update and\/or repeat disclosure (for example in the event that the parties enter into an amendment to the franchise agreement or on renewal)?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Franchisors must provide a disclosure document (in the form and order of Schedule 1 to the Franchising Code of Conduct) to prospective franchisees at least 14 days before the agreement is signed. The document must be in English and include detailed information about the franchisor, the franchise system, fees, litigation, financials, and more.<\/p>\n<p>Disclosure must also be made to sub-franchisees. The franchisor must update the disclosure document annually and provide updated disclosure upon request by a franchisee (once every 12 months), or when there are materially relevant changes such as ownership changes or litigation or insolvency events.<\/p>\n<p>If the franchise agreement is amended, renewed, or extended, updated disclosure must be provided to the franchisee. Note that under the Franchising Code of Conduct an \u2018extension\u2019 of a franchise agreement is very broad and is not restricted to extensions (in the literal sense) to terms or scope but captures any material change in the rights, obligations or liabilities of the parties. If in doubt, it is recommended that the disclosure process be followed.<\/p>\n<p>Civil penalties apply for failure to provide, update, or properly format disclosure documents. Non-compliance may also give rise to claims for misleading or deceptive conduct.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">If the franchisee intends to use a special purpose vehicle (SPV) to operate each franchised outlet, is it sufficient to make disclosure to the SPVs\u2019 parent company or must disclosure be made to each individual SPV franchisee?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Under the Franchising Code of Conduct, \u2018franchisee\u2019 is broadly defined to include the actual franchisee as well as persons holding an interest in the franchise. Disclosure must be made to the entity and\/or individuals that will be the franchisee under the franchise agreement as well as to other parties to the franchise agreement such as guarantors. If the SPV is the franchisee, disclosure must be made to the SPV itself, not just its parent company.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What actions can a franchisee take in the event of mis-selling by the franchisor? Would these still be available if there was a disclaimer in the franchise agreement, disclosure document or sales material?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>A franchisee may:<\/p>\n<ol style=\"padding-left: 0\" type=\"a\">\n<li>seek remedies under the Australian Consumer Law for misleading or deceptive conduct, false representations, or unconscionable conduct.<\/li>\n<li>terminate the agreement during the cooling-off period.<\/li>\n<li>initiate dispute resolution under the Franchising Code of Conduct, including mediation, conciliation, or arbitration.<\/li>\n<li>seek damages or other remedies through the courts.<\/li>\n<\/ol>\n<p>Disclaimers in the franchise agreement, disclosure document, or sales material do not prevent these actions, as the Franchising Code of Conduct prohibits franchisors from requiring franchisees to sign general releases or waivers of representations (civil penalty applies).<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Would it be legal to issue a franchise agreement on a non-negotiable, \u201ctake it or leave it\u201d, basis?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>It is not illegal per se to offer a franchise agreement on a non-negotiable, &#8220;take it or leave it&#8221; basis and many franchise systems within Australia will take this approach in particular where there is high demand for their franchises. However, the franchisor must still comply with the Franchising Code of Conduct\u2019s requirements for good faith, disclosure, and fair dealing. The agreement must not contain unfair contract terms, namely, terms that are not reasonably necessary for the protection of a legitatime commercial interest, that do not cause a significant imbalance between the parties and the if relied on could cause a material adverse impact on the franchisee.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">How are trademarks, know-how, trade secrets and copyright protected in your country?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Trademarks are protected under the Trade Marks Act 1995 (registration required). It is critical that franchisors secure a Trade Mark as a first step to avoid potential account of profits claims and forced rebrand costs from a conflicting Trade Mark holder in Australia.<\/p>\n<p>Copyright protection forms automatically under the Copyright Act 1968.<\/p>\n<p>Trade Secrets\/Know-How are protected by common law (confidentiality agreements, breach of confidence actions).<\/p>\n<p>Franchise agreements typically include robust provisions to protect the franchisor\u2019s intellectual property and confidential information.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any franchise specific laws governing the ongoing relationship between franchisor and franchisee? If so, please describe them, including any terms that are required to be included within the franchise agreement.<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The Franchising Code of Conduct governs the ongoing relationship, including:<\/p>\n<ol style=\"padding-left: 0\" type=\"a\">\n<li>obligation to act in good faith;<\/li>\n<li>requirements for dispute resolution, end-of-term arrangements, and transfer\/termination procedures;<\/li>\n<li>prohibitions on certain terms (e.g., requiring franchisees to pay franchisor\u2019s legal costs except as a fixed, reasonable amount; general releases; unfair restraint of trade clauses);<\/li>\n<li>requirements for compensation mechanisms in franchise agreements for early termination by franchisors due to withdrawal of franchise system, rationalisation of the network or change in distribution model;<\/li>\n<li>requirements for provision of a reasonable opportunity to provide a return on investment; and<\/li>\n<li>record-keeping and reporting obligations.<\/li>\n<\/ol>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any aspects of competition law that apply to the franchise transaction (i.e. is it permissible to prohibit online sales, insist on exclusive supply or fix retail prices)? If applicable, provide an overview of the relevant competition laws.<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The Competition and Consumer Act 2010 (CCA) applies to franchise transactions in Australia. Key points:<\/p>\n<ol style=\"padding-left: 0\" type=\"a\">\n<li>prohibiting online sales, exclusive supply, or price fixing may breach competition law unless authorised or exempted;<\/li>\n<li>exclusive supply and territorial restrictions may be permissible if they do not substantially lessen competition;<\/li>\n<li>resale price maintenance (fixing minimum prices) is generally prohibited; and<\/li>\n<li>franchisors should seek authorisation from the ACCC for potentially anti-competitive conduct.<\/li>\n<\/ol>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are in-term and post-term non-compete and non-solicitation clauses enforceable and are there any limitations on the franchisor's ability to impose and enforce them?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>In-term and post-term non-compete and non-solicitation clauses are generally enforceable if they are reasonable in scope, duration, and geography, and protect legitimate business interests. Section 42 of the Franchising Code of Conduct restricts the use of restraint of trade clauses if the franchise is not renewed or extended in certain circumstances.<\/p>\n<p>Historically the use of cascading restraints (i.e. alternative lengths of time or scope of area so that unenforceable restraint scopes can be struck out and the lesser alternatives relied on) is typical in Australia however with the stricter unfair contract term regime it is recommended that a fixed restraint scope be applied that meets reasonability requirements.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Is there an obligation (express or implied) to deal in good faith in franchise relationships?  If so, what practical effects does this have on the relationship between franchisor and franchisee?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>There is an express obligation for all parties to act in good faith in relation to the franchise agreement under the Franchising Code of Conduct. This includes acting honestly, not arbitrarily, and cooperating to achieve the agreement\u2019s purposes. The obligation cannot be excluded or limited by contract. Breach of this obligation attracts civil penalties and may affect the enforceability of certain actions.<\/p>\n<p>Recent cases in Australia have clarified franchisors ability to act in their own commercial interests whilst still satisfying their good faith obligations i.e. simply acting in a manner that is in the franchisors genuine interests but not necessarily the franchisees does not automatically render it a failure to act in good faith.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any employment or labour law considerations that are relevant to the franchise relationship? Is there a risk that the staff of the franchisee could be deemed to be the employees of the franchisor? What steps can be taken to mitigate this risk?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Generally, franchisees and their staff are not employees of the franchisor. However, there is a risk of &#8220;deemed employment&#8221; if the franchisor exercises significant control over the franchisee\u2019s operations. To mitigate this risk:<\/p>\n<ol style=\"padding-left: 0\" type=\"a\">\n<li>ensure the franchisee is genuinely independent;<\/li>\n<li>avoid direct control over franchisee staff;<\/li>\n<li>clearly document the independent contractor relationship.<\/li>\n<\/ol>\n<p>The Fair Work Act 2009 also imposes vicarious liability on franchisors and officeholder \/ decision makers within franchisors for certain workplace law breaches by franchisees in some circumstances namely where they knew or ought to have known about systemic workplace law breaches and failed to take reasonable steps to procure compliance. A robust employment compliance framework is a key component of a franchise system in Australia.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Is there a risk that a franchisee could be deemed to be the commercial agent of the franchisor? What steps can be taken to mitigate this risk?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>There is a risk that a franchisee could be deemed a commercial agent if the agreement or conduct suggests the franchisee is acting on behalf of the franchisor. To mitigate this risk:<\/p>\n<ol style=\"padding-left: 0\" type=\"a\">\n<li>clearly state in the agreement that this is a franchisor\/franchisee relationship;<\/li>\n<li>avoid giving the franchisee authority to bind the franchisor contractually.<\/li>\n<\/ol>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any laws and regulations that affect the nature and payment of royalties to a foreign franchisor and\/or how much interest can be charged? Are there any requirements for payments in connection with the franchise agreement to be made in the local currency?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>There are no franchise-specific laws restricting the payment of royalties to foreign franchisors or the amount of interest charged. However, payments must comply with general tax, exchange control, and anti-money laundering laws. There is no requirement for payments to be made in local currency, but practical considerations (e.g. tax reporting) may apply.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Is it possible to impose contractual penalties on franchisees for breaches of restrictive covenants etc.? If so, what requirements must be met in order for such penalties to be enforceable?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Contractual penalties are generally unenforceable under Australian law if they are punitive rather than a genuine pre-estimate of loss. Liquidated damages clauses are enforceable if they reflect a genuine pre-estimate of loss. The Franchising Code of Conduct does not specifically address penalties, but any such clause must comply with general contract law principles.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What tax considerations are relevant to franchisors and franchisees? Are franchise royalties subject to withholding tax?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Australian tax law, not the Franchising Code of Conduct, governs the tax treatment of franchise arrangements. Key considerations include:<\/p>\n<ol style=\"padding-left: 0\" type=\"a\">\n<li>Income Tax: Both franchisors and franchisees are subject to income tax on profits derived from their business activities in Australia.<\/li>\n<li>Goods and Services Tax (GST): Most franchise fees, royalties, and other payments are subject to GST at 10%. Franchisors and franchisees must register for GST if their turnover exceeds the threshold.<\/li>\n<li>Withholding Tax on Royalties: If royalties are paid by an Australian franchisee to a foreign franchisor, they are generally subject to withholding tax under Australian tax law. The standard rate is 30%, but this may be reduced under a relevant double tax agreement.<\/li>\n<li>Other Taxes: Stamp duty, payroll tax, and other state-based taxes may also apply depending on the structure and location of the franchise.<\/li>\n<\/ol>\n<p>The Franchising Code of Conduct does not specifically address tax or withholding tax obligations, but parties should ensure compliance with all relevant tax laws.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">How is e-commerce regulated and does this have any specific implications on the relationship between franchisor and franchisee?  For example, can franchisees be prohibited or restricted in any way from using e-commerce in their franchise businesses?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The Franchising Code of Conduct requires franchisors to disclose detailed information about e-commerce arrangements:<\/p>\n<ol style=\"padding-left: 0\" type=\"a\">\n<li>Disclosure Requirements: The disclosure document must state whether franchisees may make goods or services available online, any restrictions or conditions, and whether the franchisor or other franchisees also sell online. It must also disclose any profit-sharing arrangements relating to online sales and whether these can be unilaterally changed by the franchisor.<\/li>\n<li>Franchisor Restrictions: The franchise agreement may restrict or prohibit franchisees from engaging in e-commerce, provided such restrictions are clearly disclosed and do not breach competition law. For example, a franchisor may limit online sales to protect brand integrity or avoid channel conflict.<\/li>\n<li>Competition Law: Any prohibition or restriction on online sales must not have the purpose or effect of substantially lessening competition. Blanket bans may attract scrutiny under the Competition and Consumer Act 2010.<\/li>\n<\/ol>\n<p>In summary, franchisors can restrict or regulate franchisee e-commerce activities, but must do so transparently and in compliance with competition law.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What are the applicable data protection laws and do they have any specific implications for the franchisor\/franchisee relationship?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The Privacy Act 1988 (Cth) and the Australian Privacy Principles (APPs) apply to most franchisors and franchisees, particularly if their annual turnover exceeds $3 million or they handle sensitive information. The Franchising Code of Conduct specifically references the Privacy Act, authorising certain disclosures of personal information (e.g., of former franchisees) in accordance with the Franchising Code of Conduct and the Privacy Act.<\/p>\n<p>Franchisors and franchisees must ensure that personal information (such as customer data, employee records, and franchisee details) is collected, used, and disclosed in accordance with the Privacy Act. This includes providing privacy notices, obtaining consents where required, and ensuring data security. Where a franchisor intends to \u2018own\u2019 the client database it is critical that the privacy policies and notices\/consents align to this position across their franchise network.<\/p>\n<p>The Franchising Code of Conduct restricts the disclosure of former franchisees\u2019 personal information to prospective franchisees unless certain conditions are met, including giving the former franchisee an opportunity to object.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Is the franchisor permitted to restrict the transfer of (a) the franchisee's rights and obligations under the franchise agreement or (b) the ownership interests in the franchisee?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><ol style=\"padding-left: 0\" type=\"a\">\n<li>The Franchising Code of Conduct allows franchisors to restrict or impose conditions on the transfer of a franchisee\u2019s rights and obligations. The franchisee must request consent in writing and provide all reasonably required information. The franchisor must not unreasonably withhold or revoke consent, but may do so in specified circumstances (e.g., if the prospective transferee does not meet financial or selection criteria).<\/li>\n<li>The Franchising Code of Conduct does not specifically regulate changes in the ownership of the franchisee entity, but franchise agreements often require franchisor consent for changes in control or ownership. Such provisions are generally enforceable if clearly drafted.<\/li>\n<\/ol>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Does a franchisee have a right to request a renewal on expiration of the initial term? In what circumstances can a franchisor refuse to renew a franchise agreement? If the franchise agreement is not renewed or it if it terminates or expires, is the franchisee entitled to compensation? If so, under what circumstances and how is the compensation payment calculated?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>There is no automatic right for a franchisee to renew a franchise agreement unless the agreement expressly provides for it. The Franchising Code of Conduct requires the franchisor to notify the franchisee in writing, before the end of the term, whether it intends to extend, renew, or not renew the agreement.<\/p>\n<p>A franchisor may refuse to renew or extend the agreement, provided it gives the required notice and reasons (for new vehicle dealership agreements, reasons must be given). The franchisor must act in good faith.<\/p>\n<p>If the agreement is not renewed or is terminated early by the franchisor for reasons such as market withdrawal, network rationalisation, or change in distribution model, the franchisee is entitled to compensation. The agreement must specify how compensation is calculated, including lost profit, unamortised capital expenditure, loss of opportunity to sell goodwill, and winding-up costs. The Franchising Code of Conduct prohibits provisions that exclude compensation except where the franchisee is in breach.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any mandatory termination rights which may override any contractual termination rights? Is there a minimum notice period that the parties must adhere to?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The Franchising Code of Conduct provides mandatory rights for both parties to terminate in certain circumstances, regardless of contractual terms. For example, franchisees have a 14-day cooling-off period after signing a new agreement or being provided with an occupancy document from the franchisor or an associated entity for premises relevant to the franchise (with some exceptions).<\/p>\n<p>The Franchising Code of Conduct prescribes minimum notice periods for termination:<\/p>\n<ol style=\"padding-left: 0\" type=\"a\">\n<li>For breach: franchisor must give written notice and a reasonable period (up to 30 days) to remedy.<\/li>\n<li>For certain serious grounds (e.g., bankruptcy, loss of licence): 7 days\u2019 written notice.<\/li>\n<li>For other grounds (e.g., abandonment, endangering public safety): 7 days\u2019 notice, with a further 28 days if the franchisee disputes the termination.<\/li>\n<li>For non-renewal: at least 6 months\u2019 notice for agreements of 6 months or longer (12 months for new vehicle dealership agreements).<\/li>\n<\/ol>\n<p>There is also the right for franchisee to request early termination of a franchise agreement with an obligation on franchisor to respond to the request including reasons (if rejecting the request) within a specified timeframe. Whilst there is no obligation on a franchisor to accept such a request, the good faith obligation would be relevant in their assessment of and response to an early termination request.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any intangible assets in the franchisee\u2019s business which the franchisee can claim ownership of on expiry or termination, e.g. customer data, local goodwill, etc.<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Typically, customer data is owned by the franchisor, but this depends on the agreement. The Franchising Code of Conduct does not grant franchisees ownership of customer data. The Franchising Code of Conduct requires disclosure of the franchisee\u2019s rights to goodwill. In most cases, goodwill generated by the franchisee accrues to the franchisor, unless the agreement provides otherwise. Intellectual property, trade secrets, and brand assets remain the property of the franchisor. Franchisees may only claim ownership of assets expressly provided for in the agreement.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Is there a national franchising association? Is membership required? If not, is membership commercially advisable? What are the additional obligations of the national franchising association?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The Franchise Council of Australia (FCA) is the principal national association. Membership is not mandatory but is commercially advisable for access to resources, networking, and advocacy. The FCA sets standards and provides education, but membership does not impose additional legal obligations outside of the Franchising Code of Conduct.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are foreign franchisors treated differently to domestic franchisors? Does national law\/regulation impose any debt\/equity restrictions? Are there any restrictions on the capital structure of a company incorporated in your country with a foreign parent (thin capitalisation rules)?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>There is no distinction in the Franchising Code of Conduct between foreign and domestic franchisors. Both are subject to the same requirements if the franchise system is to be operated in Australia.<\/p>\n<p>There are no franchise-specific restrictions. General company law and tax rules (including thin capitalisation rules) may apply to companies with foreign parents, particularly regarding the deductibility of interest and the level of debt funding.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Must the franchise agreement be governed by local law?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The Franchising Code of Conduct requires that the jurisdiction for disputes between franchisees and franchisors must be resolved in the State or Territory in which the franchised business is located.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What dispute resolution procedures are available to franchisors and franchisees? Are there any advantages to out of court procedures such as arbitration, in particular if the franchise agreement is subject to a foreign governing law?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The franchise agreement must provide for a complaint handling procedure.<\/p>\n<p>The Franchising Code of Conduct provides for notification of disputes, negotiation, mediation\/conciliation (ADR), and, by agreement, arbitration. The Australian Small Business and Family Enterprise Ombudsman can appoint ADR practitioners and arbitrators.<\/p>\n<p>The right to bring legal proceedings is preserved and in certain circumstances (i.e. where injunctive action may be necessary to protect the brand) may be commenced prior to undertaking the otherwise mandatory dispute resolution process.<\/p>\n<p>ADR is often faster, less costly, and more flexible than litigation although mediation is typically the preferred format in Australia rather than arbitration.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Must the franchise agreement and disclosure documents be in the local language?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The Franchising Code of Conduct requires disclosure documents to be in English. There is no requirement for translation into other languages, but parties may choose to do so for commercial reasons.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Is it possible to sign the franchise agreement using an electronic signature (rather than a wet ink signature)?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The Franchising Code of Conduct permits documents, including franchise agreements and disclosure documents, to be signed electronically, in accordance with the Electronic Transactions Act 1999. Note that where the franchise agreement (or associated documents) are to be executed as a deed, then certain states in Australia may restrict electronic execution by individual signatories.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Do you foresee any significant commercial or legal developments that might impact on franchise relationships over the next year or so?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The Franchising Code of Conduct was recently updated, with the 2024 Regulations commencing on 1 April 2025. Key changes include enhanced disclosure, compensation, and dispute resolution provisions.<\/p>\n<p>A proposed licencing regime is currently being considered by the Australian government which if implemented would have substantial repurcussions with additional upfront and ongoing registration requirements in Australia.<\/p>\n<p>A statutory review of the Franchising Code of Conduct is required before 1 April 2030, which may lead to further reforms.<\/p>\n<p>Ongoing regulatory focus on transparency, fair dealing, and dispute resolution in franchising is expected, and franchisors should monitor for further guidance or amendments, particularly in relation to digital commerce, data protection, and competition law.<\/p>\n<p>Franchisors and franchisees should ensure ongoing compliance with the evolving regulatory landscape and seek professional advice as needed.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\r\n<div class=\"word-count-hidden\" style=\"display:none;\">Estimated word count: <span class=\"word-count\">4298<\/span><\/div>\r\n\r\n\t\t\t<\/ol>\r\n\r\n<script type=\"text\/javascript\" src=\"\/wp-content\/themes\/twentyseventeen\/src\/jquery\/components\/filter-guides.js\" async><\/script><\/div>"}},"_links":{"self":[{"href":"https:\/\/my.legal500.com\/guides\/wp-json\/wp\/v2\/comparative_guide\/116240","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/my.legal500.com\/guides\/wp-json\/wp\/v2\/comparative_guide"}],"about":[{"href":"https:\/\/my.legal500.com\/guides\/wp-json\/wp\/v2\/types\/comparative_guide"}],"wp:attachment":[{"href":"https:\/\/my.legal500.com\/guides\/wp-json\/wp\/v2\/media?parent=116240"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}