Alex is Sprintlaw's co-founder and principal lawyer. Alex previously worked at a top-tier firm as a lawyer specialising in technology and media contracts, and founded a digital agency which he sold in 2015.
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If you’re thinking about franchising your business in Australia, it usually means one thing: your systems work, your brand has momentum, and you’re ready to grow beyond a single location.
But franchising isn’t just “replicating what you already do” with new operators. It’s a highly regulated way of expanding - and your paperwork needs to match the reality of the relationship. That’s where having a strong franchise agreement template matters.
A template can be a great starting point, but only if it’s built for Australian law, the Franchising Code of Conduct, and the practical risks that come with giving someone else the right to operate under your brand. In this guide, we’ll walk through what a franchise agreement is, what a good franchise agreement template should include, and how to set yourself up for a smoother rollout with franchisees.
What Is A Franchise Agreement (And Why A Template Isn’t “Set And Forget”)?
A franchise agreement is the legally binding contract between you (the franchisor) and your franchisee. It sets out the rules of the relationship - including how the franchisee can use your brand, what fees they pay, and what each of you must do over the term.
In Australia, franchising is also governed by the Franchising Code of Conduct (under the Competition and Consumer Act 2010). This means your franchise relationship isn’t purely “whatever the contract says” - you also have statutory obligations around disclosure, cooling-off rights, good faith, dispute resolution, and more.
That’s why a franchise agreement template should be treated as a starting framework, not a shortcut. What works for one business model may expose another business to serious risk.
When A Franchise Agreement Template Can Help
- Consistency: You can roll out franchise deals with a stable baseline of clauses and a consistent commercial structure.
- Speed: Once properly built, you can update only the variables (site details, fees, territory, term) rather than drafting from scratch each time.
- Risk control: A well-structured agreement can reduce misunderstandings and disputes by clearly setting expectations.
When A Template Can Create Problems
- It doesn’t match your business model: For example, delivery-only vs bricks-and-mortar franchises often need different operational controls and territory logic.
- It’s not compliant with the Code: A franchise agreement should align with your disclosure documents and the Code’s requirements (including good faith and dispute processes).
- It’s too generic: Franchise agreements are detailed for a reason - if key issues aren’t addressed, you can end up in costly conflict.
Key Parties, Definitions And The Franchised Business “Scope”
Most franchise disputes start with a simple issue: the parties didn’t have the same understanding of what the franchise actually includes. Your franchise agreement template should define the scope clearly from day one.
Parties And Business Details
Your agreement should correctly identify:
- The franchisor entity (company name, ACN/ABN, address)
- The franchisee entity (individual, partnership, or company)
- The franchised business name and concept
- The approved franchise location (or operating model, if mobile/online)
If you’re franchising through a company, it’s also important that your broader governance documents support what you’re doing (for example, a Company Constitution that matches your ownership and decision-making structure).
Definitions (They Matter More Than You’d Think)
In a franchise agreement, definitions aren’t just “legal fluff” - they are the backbone of enforcement. Your template should define things like:
- Franchise System: the operational methods, standards and procedures the franchisee must follow
- Intellectual Property (IP): trade marks, logos, brand assets, software, manuals
- Territory: what area (if any) the franchisee has rights to operate in
- Confidential Information: recipes, pricing, suppliers, training materials, customer data
Grant Of Franchise And Permitted Business Activities
Your franchise agreement template should make it very clear:
- what the franchisee is allowed to do (and not do)
- whether they can sell outside the franchise system
- whether they can operate other businesses (and when you can restrict this)
- what products/services are approved, and who has final say on changes
This section is also a good place to tie in your expectations around how customers are treated, refunds are handled, and marketing claims are made - all of which connect back to obligations under the Australian Consumer Law. (If you want a deeper grounding in the “no misleading claims” side of things, the elements of misleading or deceptive conduct are a useful benchmark.)
Fees, Royalties, Marketing Levies And Financial Reporting
Commercial terms are often the first thing franchisees focus on - and the first thing that can sour the relationship if the documents aren’t clear. Your franchise agreement template should set out all payments, when they’re due, and what happens if they’re late.
Upfront Fees
Many franchises charge an initial franchise fee (sometimes described as a joining fee). Your template should cover:
- the amount and when it’s payable
- whether it’s refundable (and in what circumstances)
- what it covers (training, set-up support, site approval, onboarding)
Be careful with how you describe upfront fees and deposits - particularly if you use “non-refundable” language. Whether a fee is truly non-refundable can depend on the circumstances and consumer law concepts around fairness and representations.
Ongoing Fees (Royalties)
Your template should clearly define:
- how royalties are calculated (percentage of gross sales, fixed fee, or hybrid)
- what counts as “gross sales” (including online sales, gift cards, delivery platform sales)
- reporting requirements and audit rights
- GST treatment (if applicable - you should confirm your GST and broader tax position with an accountant)
Marketing Fund Contributions
If you collect a marketing levy, your agreement should explain:
- what the fund is used for (national brand marketing, digital campaigns, creative production)
- how contributions are calculated
- how you report to franchisees on spending
Marketing fund transparency is a common pressure point in franchise networks. Clear drafting helps reduce suspicion and friction.
Books, Records And Audit Rights
Most franchisors require franchisees to keep accurate records and use specified point-of-sale systems. Your agreement should cover:
- minimum recordkeeping standards
- software and reporting obligations
- your right to inspect and audit (and who pays for audits if discrepancies are found)
- data access, including access to customer and transaction data
If your systems collect customer personal information (names, emails, phone numbers, purchase history), you’ll also want to think carefully about privacy compliance and how data is used within the network.
Operations, Brand Standards, IP Use And Confidentiality
One of the biggest reasons to franchise is to scale your brand - but your brand is only as strong as your franchisees’ day-to-day execution. Your franchise agreement template should give you practical control over standards while still being fair and workable.
Brand And Intellectual Property Licence
The franchise agreement should grant the franchisee a licence to use your IP, subject to strict conditions. Typically, you’ll want to cover:
- what IP they can use (trade marks, logo, business name, slogans, software)
- how they must use it (branding guidelines, approved signage, approved uniforms)
- what they must not do (register similar names, modify logos, use brand outside approved channels)
- what happens to IP use rights after termination or expiry
Operating Manual And System Updates
Most franchise systems use an operations manual rather than embedding every procedure into the agreement itself. Your template should address:
- that the manual forms part of the franchise system
- how updates will be issued
- whether updates are binding (and any notice process)
- training obligations for new procedures
This matters because your business will evolve. If your agreement can’t accommodate change, you’re stuck managing a network with outdated rules.
Training And Support
Set expectations upfront about:
- initial training (duration, location, costs, attendance requirements)
- ongoing training
- site visits, coaching and performance reviews
- support limits (what you do and don’t provide)
Confidential Information And Restraints
Franchisees will access sensitive information (systems, pricing, supplier terms, customer lists). Your franchise agreement template should include:
- confidentiality obligations during the term
- post-term confidentiality obligations
- restrictions on using your know-how outside the franchise
- restraints (for example, non-compete / non-solicitation), drafted carefully to be enforceable
Confidentiality is often reinforced by separate documents too, but the franchise agreement is the core place to set the rules clearly.
Term, Renewal, Termination And Dispute Resolution (Getting The Exit Right)
When you’re excited about growth, it’s easy to focus on the start of the franchise relationship. But your template needs to handle the end just as well - because that’s where disputes often arise.
Term And Renewal
Your franchise agreement template should specify:
- the initial term (e.g. 5 years)
- renewal options (if any) and renewal conditions
- renewal fees and updated agreement requirements
- what happens if the franchisee doesn’t meet renewal conditions
Renewal conditions might include being up to date on payments, meeting operational standards, completing refurbishment requirements (where relevant), and signing the then-current franchise agreement.
Cooling-Off And Transfer
In Australia, there are specific rules around cooling-off and transfers that interact with the Franchising Code of Conduct. Your agreement should address practical steps like:
- what happens if a franchisee seeks to transfer/sell their franchise
- your approval process for incoming franchisees
- training requirements for the buyer
- fees payable on transfer
Termination Rights (And What Happens After Termination)
Your template should distinguish between different termination scenarios, such as:
- Termination for breach: non-payment, brand damage, repeated operational failures
- Immediate termination events: serious misconduct, insolvency, abandonment (where permitted and correctly handled)
- Termination at the end of term: non-renewal outcomes and exit obligations
It should also spell out post-termination steps clearly, including:
- immediate stop on using brand/IP
- return of manuals, access cards, software credentials
- handover of phone numbers, social media pages, domain names (where relevant)
- de-identification (removing signage, uniforms, branded materials)
- final payments and reconciliation
Dispute Resolution And Good Faith
Dispute resolution clauses matter because franchise relationships can become emotionally charged and commercially urgent. Your agreement should include:
- clear internal escalation steps
- mediation processes
- timeframes for responding
- how costs are handled
Franchising in Australia also involves good faith obligations. While “good faith” can sound vague, it generally means you should deal with franchisees honestly, fairly, and not for an improper purpose.
Other Documents You’ll Usually Need Alongside A Franchise Agreement Template
A franchise agreement template is a central document - but it rarely works alone. A franchise system normally involves a broader “document suite” so the legal position is consistent across recruitment, onboarding, operations, and enforcement.
Depending on how your franchise operates, you may also need:
- Disclosure documentation: required under the Franchising Code of Conduct (this is separate to the franchise agreement, but must align with it).
- IP protection strategy: trade mark registration and IP ownership clarity before you scale your brand across multiple operators.
- Privacy documents: if you collect personal information across the network (for example, via an app, online orders, loyalty programs, or mailing lists). A tailored Privacy Policy is often part of the foundation.
- Website terms: if you take orders, enquiries, or signups online, having clear Website Terms and Conditions can help manage risk around platform use.
- Employment documentation: many franchisors provide templates or guidance, but franchisees still need compliant contracts for staff. If you run a corporate store alongside franchises, you’ll likely need an Employment Contract for your own team as well.
- Supplier arrangements: if you mandate approved suppliers, your upstream contracts should support your ability to maintain quality and continuity. If you’re supplying goods into the network, your own Terms of Trade may be relevant.
Putting the right set of documents in place early can make expansion significantly smoother - because you’re not trying to retrofit legal protections after problems appear.
Do You Need A “Free Franchise Agreement Template” From The Internet?
It’s understandable to look for a free franchise agreement template when you’re scoping costs. But franchising is one of those areas where “free” can become expensive quickly.
Even a well-intentioned generic template may:
- miss key Code-related concepts or mismatch your disclosure approach
- fail to reflect your actual operating model (and create enforceability issues)
- be written for another country’s laws (or outdated Australian requirements)
- leave you exposed on IP, termination, or dispute pathways
If you’re serious about franchising, it’s worth treating your franchise agreement template like a core business asset - because that’s what it is.
Key Takeaways
- A franchise agreement sets the rules for how your franchisees can operate under your brand, and it needs to align with Australia’s franchising laws and the Franchising Code of Conduct.
- A strong franchise agreement template should clearly define the scope of the franchise, the territory (if any), what the franchisee can sell, and how your system must be followed.
- Commercial terms need to be unambiguous, including upfront fees, royalties, marketing levies, reporting obligations, and audit rights.
- Your template should protect your brand through clear IP licensing, operational standards, confidentiality obligations, and carefully drafted restraints.
- Exit clauses matter: make sure your agreement handles term, renewal, termination, post-termination obligations, and dispute resolution in a practical way.
- Most franchise systems need more than just a franchise agreement - supporting documents (like privacy documents and website terms) help your network run consistently and reduce legal risk.
This article is general information only and isn’t legal advice. If you’d like help preparing or reviewing a franchise agreement template for your business, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.
Official Sources to Check
Rules and regulator guidance can change. Check the current official material most relevant to this issue before relying on the article:
Read the code, economics and agreement together
What should you check before granting or buying a franchise?
Disclosure, code timing, fees, supply controls, territory, renewal, transfer and exit rights need to be assessed as one system.
