Franchise Fees In Australia: A Complete Guide (2025 Updated)

Franchising your business in Australia remains a proven strategy for expanding your brand across diverse locations. By leveraging the local expertise of franchisees, you can focus on overarching brand development and growth while delegating day-to-day operations to trusted local partners. For additional insight on launching your business journey, you might also explore our guide on How to Start a Business in Australia.

The franchisee’s operation within their exclusive territory ensures that your brand engages directly with local customers, delivering a tailored experience that builds regional loyalty – all without demanding constant intervention from you.

Before You Start…

Before embarking on a franchising journey in 2025, it’s vital to consider both the operational and legal aspects. As the franchisor, you need to assess everything from initial planning to ongoing support. It also helps to review our comprehensive guide on Business Set Up and Planning to ensure you’re fully prepared for the challenges ahead.

Costs

There are several legal and operational costs in establishing and maintaining the franchising relationship. It’s essential you understand these financial responsibilities before finalising any arrangements, so you can weigh whether the benefits of expansion outweigh the associated expenses.

Control

When you franchise your business, you inevitably cede a degree of control over each branch’s day-to-day operations. While you retain oversight of core systems and strategic directions, franchisees typically manage the local operations independently.

This is why structured fees are incorporated into the franchising model – to compensate for the operational autonomy granted and to cover the support, training, and legal documentation that safeguard the franchising relationship.

Franchise Agreements

It’s crucial to thoroughly understand your Franchise Agreement and the protective clauses it contains. This document establishes the written obligations and rights binding both you and the franchisee. Make sure the agreement is updated to reflect the latest legal requirements in 2025, safeguarding both parties in a changing regulatory landscape.

Code Of Conduct And Other Documents

Being conversant with the ACCC’s updated Franchising Code of Conduct is essential. As of 2025, the Code clarifies the obligations, including your duty to act in good faith when dealing with franchisees. Recent updates – most notably the revisions to section 19A(1) – stipulate that while you cannot pass on the majority of legal costs incurred after the agreement is finalised, a fixed fee for document preparation may be agreed upon in advance.

Any documentation fee must be paid in full before the franchisee commences operations, and it must exclude any legal costs arising after the agreement is executed. For further details on the necessary documents, please refer to our resource on Legal Documents You Need For Franchising.

Franchisor Costs

As you consider the benefits and challenges of franchising in 2025, it’s critical to familiarise yourself with the costs involved. Understanding these expenses will help you decide whether franchising is the right approach for your business expansion strategy. For additional insights on managing start-up expenses, you might find our insights on what is a business valuable.

The following list is not exhaustive – there are several other legal costs that could arise in your franchising arrangement. Note that the latest legislative updates may affect which of these costs can be transferred to the franchisee.

Agreement Costs

You’ll need to be prepared for expenses related to the drafting and review of your franchising agreement. Ensure you budget not only for the initial drafting but also for any periodic revisions required by new regulatory standards.

Legal Costs

As a franchisor, you may incur various legal costs for drafting and administering essential documents. For complex circumstances, consider utilising our Find The Right Lawyer service to ensure you have the necessary legal expertise on hand.

• Breach notice – informs the franchisee of a contractual breach
• Termination notice – notifies the franchisee of the intended termination of the agreement
• Renewal documents – facilitate the renewal of the franchise term

What Fees Can I Charge As Franchisor?

Keep in mind that the list below is not exhaustive. Depending on your unique franchise model, additional fees – such as licence or service fees – might be applicable to suit your operational needs.

For instance, in a restaurant franchise, if a liquor licence is required and administered by you, the cost may be passed on to the franchisee as part of the overall fee structure.

Initial Fee

This is usually a lump sum charged to the franchisee upfront, at the time of signing the contract and establishing the franchising relationship. In many cases, the franchisee can treat this cost as an intangible asset, recognising it as a business asset for accounting purposes.

Documentation Fee

The legal costs incurred during the preparation of franchising documents can be passed on to the franchisee as a documentation fee. Under the 2025 regulations, ensure that this fee is clearly specified in your franchising agreement and is paid in full before the franchise operations commence – excluding any costs arising post-agreement.

Ongoing Franchise Fee

Your ongoing franchise fee, or royalty, covers the continuous access the franchisee has to your proprietary systems, trade secrets, and brand reputation. This fee can be structured as a percentage of turnover or as a fixed fee and is typically invoiced on a regular monthly or weekly basis.

To protect your revenue stream, include clear remedies in your Franchise Agreement should the franchisee default on payments. More details on royalty structures can be found in our guide on What Fees Franchisees Pay To Franchisor.

Marketing Fee

Marketing is essential for enhancing brand recognition and driving customer traffic across all franchise locations. As the franchisor, you might spearhead nationwide advertising, social media campaigns, and promotional events. Such efforts not only increase brand exposure but also contribute directly to franchisees’ success.

To support these initiatives, consider establishing a marketing fund where a dedicated fee is collected from each franchisee to finance collective marketing activities.

Training Fee

Training is a cornerstone of a successful franchise. Whether charged as an upfront cost or as an ongoing fee, the training fee covers the expense of imparting essential operational knowledge and ensuring that franchisees are well-equipped to run the business effectively. Ongoing training expenses are often tax-deductible, making staggered payments a preferred option.

Supervision Fee

In situations that require direct oversight-such as setting up specialised equipment or ensuring brand-specific installations-a supervision fee may be charged. For example, in a hospitality franchise, supervising the installation of a commercial kitchen can justify a fee commensurate with the added complexity of the process.

Transfer Fee

A transfer fee applies when a franchisee wishes to sell or transfer their franchise to a new owner. This fee covers the due diligence and administrative efforts required to facilitate the transfer. Given that such costs relate to post-commencement legal services, it is advisable to consult with a legal professional to ensure compliance with the latest 2025 legislative updates.

Renewal Fee

A renewal fee is designed to cover the costs associated with renewing the contractual relationship at the end of the initial term. However, under the current 2025 legal framework, renewal fees that incur additional legal costs after the franchisee has launched operations may be restricted. Be sure to obtain tailored legal advice to determine the viability of such fees in your agreement.

Speaking To A Lawyer

The complexities of franchising costs and fee structures have only increased with recent legislative updates. In 2025, ensuring that your legal documents are accurately drafted and fully compliant is more important than ever. A specialist lawyer can offer guidance to ensure that the fees you charge are both fair and within the ambit of current laws. For comprehensive support, consider utilising our Find The Right Lawyer service.

Regularly reviewing your agreements is essential in an evolving legal landscape. Staying informed through our updated resources, such as the Industry Regulations Guide, can help you keep your franchising model competitive and legally sound.

Franchising Resources

Franchising law is complex, and expert legal assistance can make all the difference. We offer a wide array of resources to help you navigate every stage of the franchising process, including:

• Selling A Franchise
• What To Do At The End Of A Franchise
• Legal Documents You Need For Franchising
• Franchise Agreements
• 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

Staying updated with legal changes is crucial for a thriving franchising network. Regular consultations and utilising our expert resources can help ensure your approach remains compliant and competitive in 2025.

Key Takeaway

Franchising involves a variety of costs, but many of these can be strategically passed on to franchisees to offset your investment. A clear, well-drafted Franchise Agreement that incorporates modern legislative updates is essential to protecting your interests.

Ensuring that your legal documentation and fee structures are compliant with 2025 regulations will not only safeguard your business but also establish a strong foundation for a mutually beneficial franchising relationship. Consulting with a specialist lawyer is a prudent step to navigate these complexities with confidence.

If you need help, reach out to our team for a free, no-obligations chat at team@sprintlaw.com.au or 1800 730 617.

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