Franchisee’s Guide To Ongoing Responsibilities & Obligations (2025 Updated)

Contents

Buying a franchise in 2025 is exciting news. Yes, it can be an involved and sometimes complicated process, but the prospect of running your own business while enjoying the support of an established franchisor is undeniably appealing.

Once the agreement is signed and the champagne cork has been popped, what’s next?

The Franchise Background

If everything has been ticked off along the journey so far, then you’ll have a broad understanding of what is involved in running your franchise. All of this should be laid out in your Franchise Agreement and the operations manual provided by the franchisor. It’s important to review these documents carefully – for more insight on reviewing legal documents, take a look at our Legal Documents You Need For Franchising guide.

As no two franchises are alike, you will have scrutinised the agreement with a fine-tooth comb to familiarise yourself with your legal obligations. However, you might not have yet had the full context to consider the wider implications of some of the clauses. Remember, franchising law has evolved, and as we move further into 2025, ensuring your compliance with updated regulatory standards is more important than ever.

Similarly, while you may have diligently read through the operations manual, it’s not until you’re running your franchise day-to-day that the practical details truly come to life.

A franchise agreement allows you, the franchisee, to operate your business under the business name, branding, business systems and intellectual property of the franchisor. Understandably, the franchisor is keen to see you succeed – after all, their business name and reputation are on the line. That’s why so much effort is put into establishing the right support, training, structures and processes to help you achieve success. For additional information on setting up a business structure that protects your interests, check out our Sole Trader vs Company resource.

Trust and goodwill are the cornerstones of a strong franchise relationship that nurtures a growing, successful business. Both you and your franchisor must share the same goal – a thriving business built on honesty and transparency.

So, it’s essential that you uphold your side of the bargain.

Your Ongoing Obligations

Broadly, your obligations include:

Acting in good faith
Complying with the franchise business model as set out in your contract documentation
Meeting your financial commitments
Running your business lawfully and ethically
Following the dispute resolution process where necessary

Let’s look at those in more detail.

Acting In Good Faith

Trust and goodwill are vital components of any franchise relationship. Both you and the franchisor invest heavily in this venture – you through your time, effort and finances, and the franchisor through robust support systems and safeguarding their brand reputation. Since the statutory obligation to act in good faith was introduced in 2015, this requirement continues to underpin successful franchise relationships in 2025. It means you must always act honestly, cooperatively, and with the commercial interests of the business at heart, without any hidden agendas.

Much like any successful partnership, a positive, transparent attitude benefits the entire team. By promoting and protecting the business name and its reputation, you set the stage for mutual success. For more guidance on maintaining a healthy business relationship, have a look at our article on Non-Compete Agreements which can sometimes tie into these broader issues of trust and commitment.

Compliance With The Business Model

The franchisor has designed the business model based on extensive research, experience and proven success strategies. Considerable time and money have likely been invested – on legal advice, accountants, and critical infrastructure – to craft a system that offers the greatest chance of success. While you might have your own ideas for improvements, there can sometimes be a disconnect between what is best for your individual outlet and what benefits the franchise as a whole.

For instance, the franchisor may require the use of a specified supplier to secure bulk discounts, even if you have preferences for another provider. All these details are outlined upfront in writing so that you have the opportunity to assess the pros and cons before joining the franchise. Familiarise yourself with these obligations in your Franchise Agreement and ensure you consult our detailed Industry Regulations Guide for the latest updates.

The agreement will specify crucial aspects such as:

The range of products or services you may offer
Approved suppliers and sourcing requirements
Marketing strategies and spatial branding guidelines
The fees payable to the franchisor, including royalties and contributions to marketing funds
Your ongoing reporting and operational obligations
Consent or notification protocols for certain operational changes
Maintenance requirements for any equipment or premises

If you have any questions or concerns about adhering to these guidelines, it is vital to address them promptly before any issues escalate.

An operations manual is typically supplied by the franchisor – and it is often incorporated as part of your legally binding contract. This manual offers even more granular details about the daily operations of your business, covering topics such as:

Specifics regarding the goods or services offered
Designated suppliers to be used
Detailed advertising strategies
Approved software systems or programmes
Operational procedures that must be followed

It is essential that any uncertainties regarding these procedures are clarified prior to signing the agreement, and any subsequent queries should be raised promptly.

Meeting Your Financial Obligations

The appeal of a franchise model in 2025 largely rests on the benefits afforded by an established system – you pay for a proven business blueprint, its training programmes, branding, and national or even international marketing efforts. In return, you receive access to ongoing operational support and a recognised brand.

These fees might include:

The initial buy-in or purchase price
Royalty or on-going fees, usually calculated as a percentage of sales
Contributions to a marketing fund or specific marketing outlays
Costs associated with maintaining or upgrading the premises or equipment provided
A potential renewal fee at the start of a new contract period
Expenses related to mandatory training programmes

While the franchisor’s success is tied to your financial performance, it is ultimately your responsibility to manage your budget, maintain accurate records, and meet any audit or reporting requirements. Engaging a qualified accountant or bookkeeper can be invaluable. Also, note that although you must contribute to designated funds, you typically do not dictate how these funds are spent – a frequent source of dispute that underscores the importance of understanding your financial obligations.

Running Your Business Lawfully

Each franchise is unique, and depending on the industry, you may be subject to various laws that require ongoing compliance. In 2025, it remains crucial to ensure that your business operations align with the relevant legal frameworks. For example:

If you employ staff, you must comply with the Fair Work Act 2009, which outlines your obligations regarding salaries, working hours, leave, and other employment entitlements.
Work Health and Safety laws specify requirements to ensure a safe working environment for your employees.
If you operate within the food industry, strict food safety and hygiene standards must be adhered to.
Licencing requirements may also affect your business operations – for instance, licences are required to sell alcohol or certain medications.
If you collect personal information about customers or staff, you must comply with contemporary privacy laws; our Privacy Policy resource provides updated guidance.
Furthermore, adherence to accounting and taxation laws is essential for lawful operation.
If you have leased premises, ensure that all obligations under your lease are met.

To ensure you remain compliant, it’s wise to seek periodic legal and accounting advice. Staying above board not only protects your business but also saves money in the long run.

Following The Dispute Resolution Process

If you enter into your franchise with the right intentions and uphold your obligations – acting in good faith, complying with the business model, meeting your financial commitments and ensuring lawful operation – you lay a solid foundation for a successful franchise relationship that benefits both you and the franchisor.

However, challenges can arise for various reasons. To mitigate disputes, educate yourself about your obligations, be mindful that the franchisor’s profitability matters too, and be proactive in disclosing any issues that may adversely affect the franchise.

If a dispute does occur, the Franchise Code outlines a mediation process. For instance, if the franchisor believes you are breaching the agreement, they can issue a written notice specifying the breach and the steps required to rectify it. Should you fail to resolve the issue within the stipulated timeframe, the franchisor may have the right to terminate the agreement. Conversely, if you believe the franchisor is not upholding their contractual duties, you can similarly issue written notice and, if necessary, refer the matter to mediation through the Australian Competition and Consumer Commission (ACCC), which now in 2025 continues to wield enforcement powers such as fines or injunctions.

Always stay updated with the latest franchising legislation and industry best practices. In 2025, the franchising landscape continues to evolve, so routinely reviewing your franchise agreement and operations manual is crucial. Our Industry Regulations Guide can help you navigate these changes effectively.

Franchising Resources

Laws around franchising can be quite dense, and this area often calls for expert legal support. We have a range of resources to guide you through various stages of the franchising process, such as:

Need Help?

If you’re embarking on the exciting venture of running a franchise business in 2025, ensuring you fully understand your ongoing obligations is paramount. It may seem daunting, but we’re here to help guide you every step of the way.

Reach out to our team for a free, no-obligation chat at team@sprintlaw.com.au or call 1800 730 61.

Sarah Voysey

Sarah is a content and copy writer with a background in merchant banking. She has a passion for putting technical language into plain English and is a contributing writer for Sprintlaw.

Do you need legal help?
Get in touch now!

We'll get back to you within 1 business day.