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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Your fitness studio brand is taking off. Maybe your classes are booked out, your members love the experience, and other trainers are asking if they can open a version of your studio in their suburb.
That's an exciting place to be. But before you hand over your logo, workout method or studio playbook, you need to choose the right expansion model.
For many fitness brands, the big question is whether to use a franchise or licence agreement. The tricky part is that calling something a licence doesn't automatically keep it outside franchise law in Australia.
Let's use a practical fitness brand scenario to unpack how a franchise vs licence agreement works, when franchise obligations can be triggered, and what you should have in place before someone else starts operating under your brand.
What Is The Difference Between A Franchise And A Licence Agreement?
A franchise is usually a fuller business model, while a licence is usually permission to use specific intellectual property or rights.
In a fitness context, a licence agreement might allow another studio owner to use your brand name, class name, workout program, music playlist structure, training content or member app. The licensee might still run their own business in their own way.
A franchise agreement usually goes further. It often gives someone the right to operate a business using your brand, your systems, your marketing, your studio standards and your operating model. In other words, they aren't just using one piece of your IP - they're replicating your business format.
For example, say you run PulseFit, a boutique strength and conditioning studio in Melbourne. You want someone in Adelaide to open a PulseFit studio using your name, signage, class structure, pricing model, staff training, member onboarding process and local marketing templates.
Even if you call that document a fitness studio licence agreement, the arrangement may look and feel like a franchise.
Can A Fitness Studio Licence Agreement Still Be A Franchise?
Yes, a licence agreement can still be treated as a franchise if it meets the legal definition of a franchise under the Franchising Code of Conduct.
The Franchising Code of Conduct is a mandatory industry code made under the Competition and Consumer Act 2010. A new version of the Code commenced on 1 April 2025, and the Australian Competition and Consumer Commission, known as the ACCC, can take action for breaches.
Under the Code, an arrangement can be a franchise agreement if, broadly:
- there's an agreement, which can be written, oral or implied;
- you grant another person the right to carry on a business in Australia offering, supplying or distributing goods or services;
- the business is carried on under a system or marketing plan that you substantially determine, control or suggest;
- the business is substantially associated with your trade mark, advertising or commercial symbol; and
- the other person pays, or agrees to pay, a fee to you or your associate for that right.
That definition is broader than many fitness brand owners expect.
The fee doesn't have to be called a franchise fee. It might be described as a licence fee, training fee, onboarding fee, royalty, management fee, software fee or ongoing brand fee. There are some exclusions, such as certain payments for goods at genuine wholesale prices, but you should be careful about relying on those without advice.
The label on the agreement isn't the deciding factor. What matters is how the arrangement actually works.
When Does A Fitness Brand Become A Business Format Franchise?
It depends on how much of your business system you're giving someone, and how much control you keep over the way they operate.
A business format franchise usually involves more than a simple right to use a name or logo. It gives another operator a ready-made way to run the business.
In the fitness studio world, franchise indicators can include:
- you require the studio to use your brand name, logo, colours, signage and fit-out style;
- you control or approve the location, territory or studio layout;
- you provide an operations manual or studio playbook;
- you require the operator to run your class formats or training methodology;
- you set or strongly suggest pricing, membership packages or promotions;
- you require staff to complete your training or certification program;
- you control marketing, social media style, website pages or launch campaigns;
- you require the operator to use your booking software, CRM or member app;
- you monitor performance against your brand standards; and
- you receive ongoing royalties, brand fees or marketing contributions.
Now compare two PulseFit expansion options.
Scenario 1: A Narrow Licence
PulseFit lets an independent gym in Perth run a weekly class called PulseFit Burn. The gym can use the class name and workout program, but it keeps its own business name, pricing, staff, systems, fit-out, customer service approach and marketing.
That may be closer to a licence, depending on the details.
Scenario 2: A Replicated Studio Model
PulseFit gives an operator in Brisbane the right to open PulseFit Brisbane. The operator uses PulseFit signage, studio design, class formats, member contracts, pricing guidance, launch campaign, instructor training and ongoing operational standards.
That's much more likely to raise franchise issues, even if the document is called a licence.
The practical consequence is simple: if your arrangement is a franchise, you need to comply with franchise law from the start. If you do not, you may face disputes, ACCC scrutiny, penalties and problems enforcing parts of the agreement.
What Obligations Apply Under A Franchise Agreement In Australia?
If your arrangement is a franchise, you need to comply with the Franchising Code of Conduct before and during the relationship.
The Code is designed to give franchisees key information before they commit money and to regulate how franchisors and franchisees deal with each other.
For a fitness brand expanding through franchising, key obligations usually include the following.
Disclosure Before Signing
Before you provide the main disclosure pack, you also need to give the ACCC's Information Statement as soon as practicable, and generally no later than 7 days after the prospective franchisee formally applies or expresses interest.
You generally need to give the prospective franchisee the required documents, including the proposed agreement, disclosure document and a copy of the Code, and wait at least 14 days before the franchise agreement is executed. If you require payments before entry, those payments and refund conditions need to be properly disclosed.
These documents commonly include:
- a disclosure document in the format required by the Code;
- a copy of the Franchising Code of Conduct;
- the proposed franchise agreement; and
- other documents required for the specific franchise arrangement, such as lease or occupancy information where relevant.
Your disclosure document needs to be kept up to date. In many cases, franchisors must update their disclosure document within 4 months after the end of each financial year.
Cooling-Off Rights
Franchisees usually have a 14-day cooling-off period after entering into the agreement or making certain payments. The exact start date can depend on the transaction structure, so get advice if you're taking upfront money or dealing with leases, deposits or fit-out costs.
Good Faith
Both parties must act in good faith. For you, that means your decisions about approvals, performance management, marketing funds, renewals and termination need to be commercially genuine and not arbitrary.
Marketing Funds
If you require franchisees to contribute to a marketing fund, the Code regulates how that money is handled and reported. This matters for fitness brands because pooled marketing funds are common for launch campaigns, paid ads, brand content and seasonal promotions.
Dispute Resolution
The Code sets out processes for resolving franchise disputes, including mediation or other forms of alternative dispute resolution. Your agreement should match those requirements, not fight against them.
Termination, Transfer And Renewal
The Code also affects how you deal with ending the arrangement, transferring the franchise to a new operator, and renewal or non-renewal. These clauses need careful drafting because they're often where fitness brand disputes arise.
A franchise agreement in Australia isn't just a longer licence agreement. It sits inside a regulated framework.
When Is A Licence Model A Better Fit?
A licence model may be a better fit if you want to grant limited rights without letting someone replicate your full business system.
Licensing a fitness brand can work well where you're commercialising a specific asset, such as:
- a branded workout program;
- a training method or instructor certification;
- a fitness challenge or event format;
- digital content, videos or course materials under a content licence agreement;
- a studio name for limited use;
- merchandise designs; or
- software, booking tools or member resources under a software licence agreement.
A licence may also suit you if the other business already has its own brand and customer base, and you don't want to be heavily involved in how it runs day to day.
For example, you might licence a 12-week strength program to independent gyms across Australia. You might require them to use the program correctly and protect your IP, but you don't control their pricing, staff uniforms, member contracts, fit-out, local marketing or whole business system.
That said, a licence isn't a magic workaround. If you add enough control, branding and system requirements, you can drift into franchise territory.
A good licence agreement should make the boundaries clear. It should say exactly what the licensee can use, what they can't use, how quality is controlled, what fees apply, and what happens if they misuse your brand or content.
What Should Your Fitness Brand Agreement Cover?
Your agreement should match your expansion model, protect your brand and make the day-to-day relationship clear.
Templates often miss the fitness-specific details that cause real problems later, especially around class delivery, instructor standards, member data and brand reputation.
Whether you choose a franchise or licence model, think through these areas.
Brand And Intellectual Property
- Who owns the trade marks, logos, class names, training materials, photos, videos and manuals, and what copyright licence terms apply?
- Has your brand been registered as a trade mark with IP Australia?
- What can the operator use, and for how long?
- Can they use your brand on Instagram, TikTok, Google Business Profile and local ads?
- What happens to social media accounts when the agreement ends?
Studio Standards And Quality Control
- What must the studio look and feel like?
- What equipment must be used?
- What instructor qualifications or training are required?
- How are workouts updated?
- Can you audit classes, member feedback or safety processes?
Fees And Payments
- Is there an upfront fee?
- Are there ongoing royalties, licence fees or software fees?
- Are marketing contributions payable?
- Are fees based on gross revenue, net revenue, member numbers or a fixed monthly amount?
- What happens if payments are late?
Territory And Competition
- Does the operator get an exclusive suburb, postcode or radius?
- Can you sell online memberships in their area?
- Can you open another studio nearby?
- Can the operator run competing classes or another fitness brand?
Member Contracts, Privacy And Data
- Who owns member data, and do you need a data licence agreement?
- Who is responsible for privacy compliance under the Privacy Act 1988?
- How will sensitive health information be collected and stored?
- Who deals with direct debit issues, cancellations and refunds?
- How will you comply with the Australian Consumer Law when advertising memberships and handling complaints?
Leases, Fit-Out And Local Compliance
- Who signs the commercial lease?
- Who pays for the fit-out and equipment?
- Who gets council or building approvals if needed?
- Who manages work health and safety obligations?
- Who arranges music licensing, insurance and local permits?
The clearer these points are upfront, the easier it's for your operators to succeed without constant back-and-forth.
How Do You Choose The Right Expansion Model?
You should choose the model that matches the amount of control you need, the way you want your brand to grow, and the legal obligations you're ready to manage.
A licence can be attractive because it's usually simpler and more flexible. But if your customer experience depends on tight consistency, a licence may not give you enough control.
A franchise can be powerful because it lets you replicate your business format across locations. But it comes with disclosure, compliance and relationship management obligations that need to be built properly from day one.
Ask yourself:
- Do you want customers to feel like every location is the same brand experience?
- Do you need to control fit-out, programming, pricing, staff training and marketing?
- Will the other operator trade under your brand name?
- Will they pay ongoing royalties or brand fees?
- Are you providing an operations manual or detailed business system?
- Do you want to approve suppliers, software, equipment and promotions?
- Are you ready to prepare franchise disclosure documents and keep them updated?
If most answers are yes, you may be looking at a franchise model rather than a simple licence.
If you only want to monetise one program, course or brand asset, and the other business stays genuinely independent, a licence may be enough.
There's no one-size-fits-all answer. The right structure depends on your brand, your growth plans, your risk appetite and the level of support you want to provide.
Key Takeaways
- A franchise vs licence agreement isn't decided by the title of the document. The real question is how the arrangement works in practice.
- A fitness studio licence agreement can still be a franchise if it involves your brand, your business system, your control and fees paid for those rights.
- If franchise law applies, you need to comply with the Franchising Code of Conduct, including the Information Statement, disclosure, execution timing and cooling-off rules.
- A licence may suit a narrower arrangement, such as licensing a workout program, class format or training content to an independent operator.
- Your agreement should clearly cover IP, brand standards, fees, territory, member data, privacy, consumer law, leases, fit-out and termination.
- Getting the structure right early can make your expansion smoother and help avoid expensive disputes later.
If you'd like help with choosing between a franchise and licence model, preparing your fitness brand agreement, protecting your trade marks or setting up your franchise disclosure documents, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.
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Alex SoloCo-Founder
