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As a franchisee, buying a franchise remains an exciting opportunity for those who’ve always wanted to start their own business. The landscape in 2025 continues to offer innovative models and growth prospects for new franchisees.
However, running a business can be challenging – and it becomes even more complex when it comes to buying a franchise in today’s competitive market.
This is because there are certain updated rules and guidelines that you must comply with, which have evolved to keep pace with new business practices and consumer protection standards in 2025.
These rules are also dependent on the franchising network you want to join, as well as on the latest industry trends as outlined in the Australian Competition & Consumer Commission guidelines.
The starting point for buying and selling your own franchise is drafting a Franchise Agreement.
Here are the key things you need to know as a franchisee about a Franchise Agreement in 2025.
What Is A Franchise And What Do I Need?
A franchise is a type of business structure whereby the owner of a business (the franchisor) licenses others (the franchisee) to use the business’s trade name, operating model and proven systems – often within a well‐recognised brand.
If you’re thinking of becoming a franchisee, in addition to a strong business plan you will need:
- A Franchise Agreement
- Operations Manual
- …and other essential legal documents!
A lawyer can help you review these documents, but the most crucial legal document you’ll require is a Franchise Agreement. For further guidance, you might check out our Legal Tips section.
What Is A Franchise Agreement?
A Franchise Agreement is one of the five essential documents a franchisor (the person licensing the franchise) must provide you, the franchisee (the person operating the franchised business).
The document outlines four main areas:
- Key terms of the business
- Your obligations as a franchisee
- The franchisor’s obligations
- Relevant procedures and operational guidelines for the franchised business
Along with these details, the Franchise Agreement will include clauses that differ from a standard business sale agreement, often to cater for the ongoing support and strict brand guidelines required in franchising.
It’s important to be aware that no two franchises are identical.
This is because franchisors have the opportunity to tailor their franchise model – sometimes incorporating unique training programmes or cutting-edge marketing tools. For example, our detailed guide on business set-up ideas can offer further insights.
According to the Franchising Code of Conduct, every franchisor is required to present a Franchise Agreement to any potential franchisee. In 2025, while the fundamental principles remain unchanged, there have been updates ensuring greater transparency and fairness across the industry.
However, the Code does not prescribe a specific format for the Franchise Agreement. This flexibility means that it is crucial to have a lawyer review the document, ensuring that it addresses your unique needs and complies with the latest regulatory standards.
What’s The Difference Between A Franchise Agreement And A Licence?
It’s easy to get confused about the distinction between a Franchise Agreement and a Franchise Licence. In general, a Franchise Licence simply authorises you to sell branded products under the franchisor’s name.
In contrast, a Franchise Agreement permits you to establish and operate a franchised business. This agreement grants you access to distinctive intellectual property, proprietary systems, assets, suppliers, and comprehensive support networks.
Franchise Agreements are typically more comprehensive (and thus more demanding) than licensing agreements, as you are expected to fulfil detailed operational and marketing requirements while representing the brand.
Understanding whether you’re entering a Franchise Agreement or a Franchise Licence is essential because your responsibilities and rights will differ significantly based on the type of arrangement.
What Are The Main Franchise Agreement Provisions?
As a potential franchisee, there are several key provisions you should carefully review in any Franchise Agreement.
Training and Support
The franchisor should provide comprehensive training and ongoing support for you and your staff. This might include access to specialised software, marketing support and industry-specific advice, which can be invaluable in a competitive marketplace.
Geographical Location & Exclusivity
The Franchise Agreement will specify your operational territory and may include exclusivity arrangements that protect your market by preventing other franchisees from opening nearby. This provision is particularly valuable in ensuring you have a competitive edge as the franchising industry evolves in 2025.
Duration
An important component is the duration of the agreement. The length of the Franchise Agreement will help you assess your long-term commitment to the business. You might find different term options and renewal conditions which can be negotiated to suit your business strategy.
Fees
Fees typically include the initial franchise fee-which covers the cost of using the franchisor’s branding and systems-alongside ongoing royalties. It’s crucial that the Franchise Agreement provides a clear and transparent fee structure to avoid any unexpected financial obligations.
Renewal & Sale Rights
Renewal and sale rights should be clearly outlined in the Franchise Agreement. These provisions detail your options if you wish to extend the franchise term or if you decide to sell your franchise at a later stage, which can be an important exit strategy.
What If I Want To End My Franchise Agreement?
If you wish to exit the franchise either by selling the business or ending the agreement early, it is wise to ensure that a termination clause is included in your Franchise Agreement.
A termination clause is particularly effective if either party breaches the terms of the contract. In many agreements, termination clauses offer two outcomes:
- Suspension – where the agreement is temporarily halted until issues are resolved and both parties agree on a suitable reinstatement date;
- Termination – where the agreement is ended permanently.
Having a well-drafted termination clause is in the best interests of both franchisor and franchisee, as it provides a clear exit strategy should the business relationship not proceed as planned.
Franchising Resources
Laws around franchising can be intricate, and staying updated is vital. We offer a range of resources to guide you through various stages of the franchising process. You might also find our articles on Franchising Royalties and Franchise Grant Process particularly useful. Additionally, our Franchise Agreement service page provides expert legal support to ensure your agreement meets all current standards.
- Selling A Franchise
- What To Do At The End Of A Franchise
- Legal Documents You Need For Franchising
- What Fees The Franchisee Has To Pay
- Terminating A Franchise Agreement
- What To Do With A Bad Franchisee
- Franchisees’ Legal Obligations
- What Are Franchising Royalties?
- Franchise Grant Process
What To Take Away…
As a franchisee, the process of buying and selling a franchise can seem complicated and detailed. However, understanding the structure of your Franchise Agreement is key to making informed decisions.
It’s essential to seek advice from an experienced lawyer who stays current with the latest legal standards and industry best practices in 2025. Having your Franchise Agreement reviewed ensures that it includes comprehensive provisions to protect both your interests and the franchisor’s, making any future sale or renewal as seamless as possible.
In 2025, franchising has evolved with new technologies and rising sustainability demands. It’s important that your Franchise Agreement addresses contemporary issues such as digital transformation, robust data privacy (as outlined in our Privacy Policy services), and clear dispute resolution mechanisms. By ensuring these elements are meticulously detailed, you are better equipped to adapt to market changes and regulatory updates, securing both your business future and brand integrity.
If you’re considering selling your franchise or are interested in purchasing one in 2025, don’t hesitate to give our team a call on 1800 730 617 or email us at team@sprintlaw.com.au – we’re here to help you navigate every step of your franchising journey!
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