The first round of changes to the Franchising Code of Conduct have now come into effect. Here’s your guide to what has changed and what this might mean for your small business.
Across Australia there are more than 1,100 franchisors and 70,000 franchisees, with most of these being small businesses.
If your small business operates as a franchise or you are a franchisor, you probably know that changes have been made to the Franchising Code of Conduct. These changes apply to all franchise agreements entered into, renewed, extended or transferred on or after 1 April 2025. Additional changes will also come into effect from 1 November 2025.
About the Franchising Code of Conduct changes
An independent review of the Franchising Code of Conduct over 2023 and 2024 looked into the journey that franchisors and franchisees take, from entering into a franchise agreement, through the franchise relationship to the end of an agreement.
In line with this review, phased changes to the Code of Conduct are being implemented. Some changes have already come into effect, while others, particularly those requiring legal and regulatory updates will take longer to implement.
If you’re a franchisee, franchising can be a great way to build your business by leveraging an existing brand. It’s important to understand and keep up to date with your franchising agreements, contracts and other commitments, including the Franchising Code of Conduct.
Overall, the changes now in place offer simpler rules and formatting for franchise agreements, easier entry and renewal processes, faster responses for serious misconduct, better protections for franchisees and more ways to encourage good behaviour in franchise relationships.
Changes from 1 April 2025
Here is an overview of the changes:
- Civil penalties: There are new civil penalties in place for franchisors if they enter into an agreement with prohibited terms, don’t provide necessary information or don’t meet their obligations.
- Restraint of trade clauses: These clauses, in certain circumstances, can no longer be included in agreements, including where an existing franchisee seeks to extend or renew their agreement. See sections 42 and 67 of the Franchising Industry Code for more information.
- Faster termination for serious misconduct: This is now seven days if serious misconduct by the franchisee is proven.
- Opt-out provisions: If renewing an agreement with substantially similar terms, you can now opt out of disclosure requirements and the mandatory 14 day cooling off period.
- Name and shame mechanism: The Australian Small Business and Family Enterprise Ombudsman (ASBFEO) is now able to publicise the names of franchisors who withdraw from, or refuse to engage in, dispute resolution processes.
This is a summary of some of the changes. If you would like more details, please see further information about the key changes.
Upcoming changes from 1 November 2025
Further changes, which include protections designed to make franchising agreements fairer and easier to manage, will be introduced from 1 November 2025.
Some of the upcoming changes include the need for franchisors to comply with new disclosure document obligations, including the disclosure of significant capital expenditure and providing extra information and documents when franchisees pay into a specific purpose fund.
From 1 November, franchise agreements will also need to allow franchisees a reasonable opportunity to earn a return on their investment and provide compensation for early termination in certain circumstances.
Find out more about the upcoming changes.
Are you a franchisor?
If you’re a franchisor, you’ll need to know about the changes now in place – and the upcoming changes which will impact your obligations. For example, you’ll now need to complete new fields for your profile as part of your franchisor disclosure documents. You no longer need to provide a separate Key Facts Sheet to prospective franchisees, as this information is now included in the disclosure documents. Now is the perfect time to make sure your agreements are compliant and get professional independent advice on any updates you might need to make .
More information
The Australian Competition and Consumer Commission (ACCC) has a range of resources for franchisees and franchisors.
You might also like to explore our blog for more information about franchising and small business:
