Franchising Code of Conduct

The Franchising Code of Conduct is contained in the Competition and Consumer (Industry Codes - Franchising) Regulations 2024 (Cth). It is a mandatory industry code made under the Competition and Consumer Act 2010. In practical terms, it sets baseline rules for many franchise relationships in Australia.

The Code is not limited to one stage of the relationship. It covers conduct before entry, during the life of the franchise, when a franchise is renewed, extended or transferred, and when the arrangement ends. It also deals with dispute resolution and the Franchise Disclosure Register.

For business owners, the key point is that the Code is part of the operating framework of a franchise system. It affects documents, timing, communications, approvals, record keeping and internal processes. It is not something that can be left only to the legal team at signing time.

The Code is most obviously relevant to franchisors and franchisees, but the legislation also shows that master franchisors can be brought into parts of the framework. The table of contents also makes clear that new vehicle dealership agreements have their own dedicated part, so operators in that sector need to check the specific dealership provisions rather than relying only on the general rules.

In practice, the businesses most likely to need this page are franchisors building or expanding a network, franchisees assessing a purchase or dealing with renewal or exit, and advisers preparing disclosure packs, agreement templates and register updates. Businesses that manage marketing, cooperative or other specific purpose funds also need to pay close attention because the Code includes financial statement and payment rules for those funds.

Before assuming the Code applies, or does not apply, a business should check whether the arrangement is a franchise agreement within the meaning used in the instrument and whether any exclusion applies. The legislation includes a section dealing with franchise agreements to which the Code does not apply, so scope should be checked carefully where the arrangement is unusual.

Many compliance problems happen because a business does not recognise the trigger point early enough. The Code is most likely to become immediately relevant when a franchise is being offered for sale, when a disclosure document is being prepared or updated, when a prospect is asked to sign or pay, when an agreement is being renewed or extended, when a transfer is proposed, when a specific purpose fund is being managed, when a dispute starts, or when termination is being considered.

The legislation structure is useful here. It separates pre-entry requirements, ongoing obligations, transfer rules, cooling-off rules, termination pathways, dispute procedures and register obligations. That means a business should not treat all franchise events as the same. Each event has its own process and timing issues.

A major part of the Code deals with what must happen before a person enters into, renews, extends or transfers a franchise agreement. The legislation text shows a structured sequence: a disclosure document must be created and updated, an information statement must be given by franchisors, documents must be allowed to be considered, and franchisors must receive statements about the disclosure document and independent advice.

That structure matters in practice. Compliance is not just about handing over a bundle of papers. It is about making sure the right documents exist, are current, are given in the right form and at the right time, and that the required steps occur before commitment. A franchisor that relies on old templates, informal emails or rushed signing processes can create avoidable risk.

For franchisees and prospects, this stage is where much of the useful information should be gathered. The disclosure document, information statement and proposed agreement should be read together. If the deal being offered does not match the documents, or if the documents appear outdated, that is a warning sign that should be investigated before signing or paying money.

The legislation also includes a schedule setting out the disclosure document content. The schedule headings show the breadth of information expected, including franchisor details, business experience, litigation, payments to agents, existing franchises, master franchises, intellectual property, site or territory issues, supply arrangements, online sales, significant capital expenditure, specific purpose funds, financing, unilateral variation, arbitration, early ending of the agreement, term and end-of-term arrangements, transfer amendments, earnings information, financial details, updates and receipt. That tells businesses that disclosure is intended to be detailed and practical, not a bare summary.

The Code includes an express obligation to act in good faith. That is important because franchise compliance is not only about forms and deadlines. It also regulates conduct across the life of the relationship.

In practical business terms, good faith can affect negotiations, operational decisions, responses to complaints, renewal discussions, transfer decisions and the exercise of contractual powers. A franchisor may have broad rights under the agreement, but the existence of a contractual right does not remove the need to act consistently with the Code.

For franchisors, this means staff behaviour matters. Sales staff, field managers and decision-makers should understand that legal risk can arise from conduct as well as from documents. For franchisees, it means concerns should be raised clearly and documented, because the way a dispute is handled can become just as important as the original issue.

The Code continues well after the agreement is signed. The legislation includes obligations about copies of leases and other agreements, financial statements for specific purpose funds, updated disclosure on request, disclosure of materially relevant facts and record keeping. It also regulates a number of agreement terms and practices, including legal costs, release from liability, dispute costs, restraints of trade, compensation for early termination, reasonable opportunity for return on investment, significant capital expenditure, retrospective variation, personal information of former franchisees and franchisee associations.

For franchisors, this means compliance cannot be reduced to a single agreement template. Your administration systems, reporting systems and document controls matter just as much. If your agreement says one thing, your disclosure says another, and your operations team follows a third practice, the mismatch can create disputes and enforcement risk.

Specific purpose funds are a common example. The Code includes financial statement obligations and payment rules for these funds. If franchisees contribute money, the fund should be managed in a way that is transparent, documented and consistent with the Code and the franchise documents.

The legislation also identifies civil penalty provisions. The practical takeaway is simple: these are not merely aspirational standards. A business that ignores them can face more than just a contractual complaint.

The Code has detailed rules for transfer of franchise agreements, cooling-off periods and termination. These are commercially sensitive moments because they affect whether a franchisee can exit, whether a buyer can step in, what repayments may be required and how a franchisor can bring the relationship to an end.

The legislation includes provisions for requests for consent to transfer and franchisor consent to transfer. It also includes cooling-off rules for new franchise agreements and transferred franchise agreements, plus repayment provisions following cooling-off termination. Separate termination pathways are listed for franchisee-proposed termination, termination by franchisor for breach, termination by franchisor where there is no breach, and termination on grounds that may or may not allow the franchisee to notify a dispute.

For business owners, the practical lesson is that these events should never be treated as routine paperwork. A renewal or extension after 1 April 2025 may bring the new Code into play. A transfer request should be handled through the Code process, not just by commercial preference. A cooling-off termination may trigger repayment obligations. A proposed termination should be checked carefully against the relevant pathway before notices are sent or operational steps are taken.

The Code includes a structured dispute framework. The legislation refers to internal complaint handling, resolving disputes, notification of dispute, similar disputes involving multiple franchisees, ADR processes, arbitration by agreement, confidentiality requirements and the role of the Australian Small Business and Family Enterprise Ombudsman.

For franchisors, this means disputes should be managed through a documented process rather than improvised emails or operational pressure. For franchisees, it means concerns should be raised promptly and in a way that fits the Code process. Delay, informality and poor record keeping can make a dispute harder to resolve.

The legislation also states that the right to bring proceedings is unaffected by the dispute part. So the Code dispute process is important, but it does not replace the need to understand the broader legal position.

The Code includes a dedicated part dealing with the Franchise Disclosure Register. The legislation provides for the keeping and content of the Register, correction and updating powers, initial obligations to provide information for inclusion, annual obligations to update or confirm information, redaction of certain information from documents, and the ability for agents to provide or give information.

For franchisors, this is an operational compliance task that needs a clear owner inside the business. It should be diarised and supported by source documents so that updates and confirmations can be made accurately and on time. A missed register task can become a compliance issue even if the franchise agreement itself is otherwise well drafted.

For franchisees and prospective franchisees, the Register is an important information source. It should not be treated as a substitute for the disclosure document or the proposed agreement, but it is a useful cross-check. If the Register information, disclosure pack and commercial pitch do not line up, that inconsistency should be investigated before commitment.

The legislation includes a separate chapter for application, saving and transitional provisions. This is critical because the answer to which Code applies may depend on the date and nature of the relevant event.

The instrument states that it applies to agreements entered into, renewed, extended or transferred on or after 1 April 2025. It also preserves the old regulations for agreements existing on 1 April 2025. In addition, there are transitional arrangements for certain disclosure documents given before 1 April 2025 and for certain specific purpose funds that are marketing or other cooperative funds. There are also saving provisions for related instruments and determinations.

In practical terms, businesses should avoid broad statements such as "all our agreements are under the new Code" or "our old documents are still fine" without checking the exact facts. The right questions are: when was the agreement entered into, renewed, extended or transferred; when was the disclosure document given; what kind of fund is involved; and is the issue about conduct, documents or ongoing administration. Different answers may apply to different franchisees in the same network.

If you are unsure which regime applies, do not rely on old templates or assumptions. Transitional questions are often where otherwise careful businesses make mistakes.

This page is a practical guide, not a substitute for checking the instrument itself against your facts. Before acting, a business should confirm the exact agreement event, the relevant dates, the current version of the legislation, whether the arrangement is in scope, and whether any special rules apply to master franchisors or new vehicle dealership agreements.

Franchisors should also check that their disclosure document, information statement process, agreement template, dispute procedure, fund administration and Register workflow all align. Franchisees should compare the disclosure document, the proposed agreement and any Register information, and should question any mismatch before signing or paying money.

Businesses often want a simple answer to whether the new Code applies, what needs to be updated first, and whether the Register can be treated as enough disclosure. The legislation supports a more careful approach.

If you are a franchisor, the safest starting point is to map the event you are dealing with. Is it a new sale, a renewal, an extension, a transfer, a fund reporting issue, a dispute, or a termination step? Then check the date of that event and whether any transitional rule changes the answer. If you are a franchisee, do not assume that receiving a disclosure document alone means the process has been handled correctly. The Code structure shows that timing, statements and other steps matter as well.

The Register is important, but it is only one part of the picture. It should be used as a cross-check against the disclosure document and the proposed agreement. Likewise, the existence of civil penalty provisions means businesses should not treat Code obligations as optional or merely technical. If a process is required, it should be built into the way the network actually operates.