How To Franchise Your Business In Australia

Franchising can be a powerful way to grow your business across multiple locations without managing every site yourself.

If you’ve built a brand that works, turning it into a franchise system could help you scale faster, attract motivated operators, and increase revenue through franchise fees and ongoing royalties.

That said, franchising in Australia is highly regulated. There are strict rules around disclosures, contracts, and ongoing conduct - and getting them wrong can be expensive.

In this guide, we’ll walk through what franchising actually involves, how to prepare your business, the legal steps to set up a compliant franchise system, and the documents you’ll need to protect your brand and support franchisees.

What Does Franchising Your Business Actually Mean?

At its core, franchising is a way of expanding your business by allowing independent operators (franchisees) to run their own outlets under your brand and system.

As the franchisor, you license your intellectual property (brand name, trade marks, know-how) and provide training, systems and support. Franchisees pay upfront and ongoing fees to use your model and benefit from your reputation and processes.

In Australia, franchising is governed by the mandatory Franchising Code of Conduct (part of the Competition and Consumer Act). The Code sets out what must be in your disclosures and how you must act before, during and at the end of the franchising relationship.

Importantly, if your arrangement has the hallmarks of a franchise (brand control, fees, system), it may be covered by the Code even if you call it a licence or distribution agreement. If you’re unsure whether your model crosses that line, it’s wise to get advice on accidental franchising before you roll it out.

Is Your Business Ready To Franchise?

Not every successful business is immediately ready to franchise.

Before you invest in legal documents and recruitment, step back and test your readiness:

• Proven, Repeatable Model: Can a third party replicate your product or service and achieve consistent quality with your guidance?
• Strong Unit Economics: Does a single outlet reliably turn a profit after paying reasonable rent, wages and your royalty/marketing fees?
• Protectable Brand and Know-How: Is your brand distinctive and your IP (logo, processes, recipes, software) documented and capable of protection?
• Training and Support Capacity: Can you onboard, train and support franchisees at scale without compromising standards?
• Supply Chain and Territory Strategy: Have you locked in reliable suppliers and a fair territory approach to avoid conflicts?
• Capital and Time: Franchising requires investment (documents, systems, recruitment) and ongoing involvement - especially early on.

If you can answer “yes” to most of these, you’re in a good place to take the next step.

Step-By-Step: How To Set Up A Franchise In Australia

1) Capture And Protect Your Intellectual Property

Franchising is powered by brand and know-how. Start by auditing what you own and what needs to be secured.

• Register your core brand name and logo as a trade mark. Formal registration gives you exclusive rights Australia-wide - a crucial foundation for a national network. You can begin with a single class and add classes as the network grows. If you’re ready, apply to register your trade mark.
• Document your systems: operations manual, training programs, supplier standards, and customer service procedures. This becomes the backbone of your franchise model.
• Lock down ownership of IP developed by contractors or staff (e.g. design, software, marketing assets) with clear assignment clauses and confidentiality obligations.

2) Choose Or Review Your Business Structure

Most franchisors operate through a company (often with a separate IP holding company that licenses the brand to the franchisor entity). A company structure provides limited liability and can make it easier to manage licensing and tax arrangements as you scale.

If you’re not already incorporated, consider setting up a company for the franchisor operations before you roll out your system.

3) Design Your Franchise Model And Fees

Decide how your network will work in practice and how franchisees will pay for access to your brand and support.

• Fees: Typically an upfront franchise fee plus ongoing royalties (percentage of turnover or fixed fee). Many networks also collect a marketing fund contribution.
• Territories: Grant exclusive territories or location-specific rights to avoid overlap and conflict.
• Term and Renewal: Commonly 5-year terms with options. Clarify renewal conditions, refurbishment obligations and exit processes.
• Suppliers: Nominate approved suppliers or centralised purchasing to maintain consistency and compliance.

4) Prepare Your Legal Suite (The Code Requires It)

Under the Franchising Code, you must provide prospective franchisees with a compliant suite of documents before they sign up. Your core legal pack should include:

• Franchise Agreement: This is the legal contract between you and each franchisee. It covers rights to use the brand, fees, territories, training, standards, termination, dispute resolution and more. A tailored, compliant Franchise Agreement is essential.
• Disclosure Document and Key Facts Sheet: You must give a disclosure document in the Code’s prescribed format (and a short Key Facts Sheet) that sets out detailed information about your business and the offer. If you need help keeping this current each year, see our Disclosure Document support.
• Information Statement: Provide the ACCC’s Information Statement to prospects as early as possible in your discussions.
• Operations Manual: While not filed with the contract, this is referenced in your agreement and is critical to enforce standards.

The Code also sets strict timing - franchisees must receive the disclosure document, franchise agreement and key facts sheet at least 14 days before signing.

5) Set Up Your Marketing Fund (If You Have One)

If you collect a marketing fund, your Franchise Agreement should clearly explain contributions, what the fund can be used for, and how you’ll report to franchisees.

Each financial year you’ll need to prepare an annual statement for the fund, and in most cases have it audited (unless franchisees vote otherwise in line with the Code).

6) Recruit Carefully And Onboard Thoroughly

Finding the right franchisees is as important as the business model. Create an application and screening process that tests capability, alignment and financial readiness.

Provide comprehensive training and support during setup and launch. Your onboarding program should equip franchisees to meet brand standards from day one.

7) Comply With Cooling-Off And Payments Rules

New franchisees generally have a 14-day cooling-off period after signing the Franchise Agreement (or paying certain amounts) during which they can withdraw. Be ready to return payments as required by the Code if a franchisee cools off.

8) Keep Your Disclosures Up To Date

Franchisors must update their disclosure document annually, typically within four months of the end of the financial year, and whenever there’s a material change.

Have a process to track changes across your network (fees, disputes, marketing fund details, litigation) so your disclosures remain accurate.

9) Establish Ongoing Compliance And Support Systems

Implement a rhythm for site visits, audits, refresher training and performance check-ins. Consistency protects your brand and helps franchisees succeed.

Build procedures for handling complaints, end-of-term processes, transfers and terminations - all areas the Code touches.

10) Plan For Growth And Continuous Improvement

As you expand, refine your manual, training, supplier arrangements and tech to keep pace. A strong feedback loop with franchisees will surface opportunities to improve the system.

What Laws And Rules Apply To Franchisors?

Franchising sits at the intersection of several Australian laws. Here are the main areas to have on your radar.

Franchising Code Of Conduct

The Code is a mandatory industry code under the Competition and Consumer Act. It regulates pre-contract disclosure, cooling-off rights, marketing fund management, end-of-term processes, dispute resolution and more.

Key obligations include providing the Information Statement early, giving your disclosure document and Franchise Agreement at least 14 days before signing, maintaining updated disclosures, managing the marketing fund transparently, and following the Code’s processes for disputes and termination.

Australian Consumer Law (ACL)

Your marketing and recruitment of franchisees must be accurate and not misleading - and your dealings with customers must comply with consumer guarantees and fair trading rules. If you’re unsure how the ACL applies to your franchise sales process or customer terms, it’s worth speaking with a consumer law expert.

Intellectual Property Law

Protecting and licensing your brand properly is fundamental to franchising. Registering your marks and using a clear trade mark licence within your Franchise Agreement helps you control use and act quickly if there’s misuse. If you haven’t yet, consider filing to register your trade marks before you franchise.

Employment Law (Direct And Indirect Risk)

You’ll have normal employment obligations for your own staff. In addition, franchisors can face liability for certain workplace contraventions by franchisees if they exert significant influence or control and fail to take reasonable steps to prevent issues.

Mitigate this risk by setting clear standards in your system, running audits, providing training on Fair Work obligations, and encouraging the use of a compliant Employment Contract and workplace policies in each outlet.

Privacy And Data

Most franchise systems collect personal information about customers and franchisees. If you operate an online presence or loyalty program, you’ll likely need a clear, compliant Privacy Policy and good data-handling practices across the network.

Leasing And Property

Many franchise outlets operate from leased premises. Decide whether franchisees sign their own leases or you hold head leases and sublease. Either way, ensure your model addresses fit-out, signage and minimum standards for premises.

Tax And Financial Regulations

Work with your accountant on GST, payroll tax and the correct treatment of franchise fees and marketing funds. Your legal documents should align with your accountant’s guidance.

What Legal Documents Will I Need To Franchise My Business?

Here’s a checklist of the key documents most franchisors put in place. Not every system needs exactly the same set, but these are the usual building blocks.

• Franchise Agreement: The core contract granting rights to operate under your brand, setting fees, standards, training, reporting, termination and dispute terms. A tailored Franchise Agreement is critical for risk management.
• Disclosure Document + Key Facts Sheet: A Code-compliant disclosure that presents financial, legal and commercial details about your offer. Keep this updated annually - our Disclosure Document service can support ongoing updates.
• Information Statement: A prescribed ACCC document that must be given early in the process to prospective franchisees.
• Operations Manual: The practical “how-to” of running the outlet: brand standards, customer experience, suppliers, HR basics, safety, and reporting. Refer to it in your agreement so standards are enforceable.
• Trade Mark Licence: Often embedded within the Franchise Agreement, this sets the boundaries for use of your brand and what happens if the agreement ends.
• Territory Deed or Schedule: Defines the franchisee’s territory (exclusive or otherwise) and how changes are managed.
• Marketing Fund Deed/Clause: Explains contributions, allowable spend, reporting and audit of the fund.
• Supply Agreements: Contracts with key suppliers or approved supplier terms to control quality and pricing stability.
• Non-Disclosure Agreement (NDA): For early-stage discussions with prospects or partners, an NDA helps protect your confidential information before you disclose your playbook.
• Website Terms and Customer Terms: If you run a group website, ensure the customer-facing terms and policies support the network model and ACL compliance.
• Employment Contracts and Policies: For your head office team - and recommended templates franchisees can adopt to lift compliance standards at the outlet level. Start with a strong Employment Contract.

Depending on your model, you may also need agreements for master franchisees, area developers or multi-unit operators. Your legal pack should be tailored to the way you plan to grow.

Common Pitfalls (And How To Avoid Them)

1) “We’ll Just Use A Licence” (But It’s Really A Franchise)

Many businesses try to expand with a “licence” to avoid the Code’s rules - but if your arrangement includes brand control, fees, and a system for operating the business, it may still be a franchise in the eyes of the law.

This can expose you to significant penalties and contract risk. If in doubt, check your model against the Code and get advice on accidental franchising before signing anything.

2) Thin Or Outdated Disclosures

Your disclosure document must be accurate and updated annually. Failing to disclose key facts (e.g. litigation, marketing fund details, changes in fees) can lead to disputes or ACCC action.

Build an internal process to refresh disclosures every year and after major changes.

3) Weak IP Foundations

Trying to franchise without registered trade marks and clear IP ownership invites copycats and undermines your leverage. File to register your trade marks early and use consistent brand guidelines system-wide.

4) Inadequate Support And Oversight

Franchisees rely on your training and support. Light-touch onboarding, rare audits and inconsistent guidance often lead to brand drift and performance issues.

Schedule regular check-ins, audits and refresher training so standards stick.

5) Poor ACL And Privacy Hygiene

From marketing claims to refunds and data handling, system-wide compliance matters. Review your customer-facing materials against the ACL, and publish a clear, compliant Privacy Policy on your website and franchisee sites.

Licensing Vs Franchising: Should You Consider Another Path?

In some cases, a straightforward IP licence or distribution arrangement may be more suitable than a franchise - for example, where you’re simply licensing software or content without controlling how the licensee runs their business.

However, if you charge upfront and ongoing fees, require the licensee to operate under your brand, and set detailed methods of operation, it’s likely a franchise. Calling it something else won’t avoid the Code.

If your goal is lower control and fewer obligations, work with a lawyer to confirm whether a licence or distribution agreement genuinely fits - and to avoid inadvertently creating a franchise.

Practical Tips To Set Your Franchise Up For Success

• Pilot First: Test the model in one or two company-owned or tightly supported sites before recruiting widely.
• Recruit Slowly: Be selective. The wrong franchisees create outsized headaches.
• Standardise Early: Lock down core suppliers, tech platforms and brand assets so support is repeatable.
• Invest In Training: Great training reduces support calls and lifts performance.
• Communicate Often: Regular updates, webinars and a clear calendar of marketing activity keep the network aligned.
• Build Feedback Loops: Encourage franchisees to share insights - many of your best improvements will come from the field.

Key Takeaways

• Franchising lets you scale your business by licensing your brand and systems to independent operators, but it comes with strict obligations under the Franchising Code of Conduct.
• Make sure your model is franchise-ready: proven unit economics, protectable brand, documented systems and the ability to train and support franchisees.
• Put the essentials in place early - a tailored Franchise Agreement, a compliant disclosure document and key facts sheet, and a robust operations manual.
• Protect your IP from day one by filing to register your trade marks and embedding clear licensing terms.
• Stay compliant across the board: ACL in your marketing and customer terms, Fair Work oversight, and a published Privacy Policy for data handling.
• Avoid accidental franchising - if your “licence” looks and behaves like a franchise, the Code likely applies.
• Update disclosures annually, manage your marketing fund transparently, and invest in ongoing training and audits to keep standards high.

If you’d like a consultation on how to franchise your business in Australia, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.