Franchising Code 2025 amendments: what franchisors and franchisees need to know

1. New civil penalty regime

The most commercially significant change is the increase in civil penalties. Under the 2014 Code, most contraventions attracted 300 penalty units. Under the 2025 Code, serious contraventions — including breach of the good-faith obligation, failure to provide a compliant disclosure document, and unfair termination — attract up to 600 penalty units per contravention (roughly $198,000 at current penalty unit rates), or the greater of three times the benefit obtained and 10% of annual turnover for corporations.

This aligns the Code with the unfair contract terms and misleading conduct penalty regimes under the Australian Consumer Law. The ACCC is expected to be more active on franchising enforcement as a result.

2. Good faith — clarified and enforceable

The good faith obligation in section 6 of the 2014 Code is retained, and now sits alongside express examples of conduct that will not comply. Refusing to negotiate reasonable variations, imposing capital expenditure without meaningful consultation, or terminating without a genuine commercial reason are all conduct types that the ACCC has signalled will be tested under the new framework.

3. Disclosure — streamlined but sharper

The disclosure document has been reorganised and shortened, but the substantive obligations have not softened. New or expanded disclosure requirements include:

• Marketing fund contributions and expenditure — franchisors must provide audited financial statements for any marketing or cooperative fund within four months of the end of the financial year.
• Significant capital expenditure — cannot be required unless disclosed in the disclosure document, agreed in writing, necessary to comply with law, or approved by a majority of affected franchisees.
• Legal proceedings — expanded scope to cover judgments, orders and enforceable undertakings involving the franchisor, its associates and its officers.
• Key Facts Sheet — retained but updated to include prominent warnings about the risks of franchising and the value of independent advice.

4. Termination — tightened notice periods

For breach that is capable of remedy, the franchisor must give the franchisee at least 30 days' notice and a reasonable opportunity to remedy. For the "special circumstances" grounds — fraud, insolvency, endangering public health, operating illegally, abandoning the franchise — seven days' notice applies, and the franchisee retains a right to seek an urgent injunction from the Federal Court.

The new Code also requires the franchisor's notice of intention not to renew or extend to be given at least 12 months before the end of the term where the term is six years or longer (previously the trigger was 20 years).

5. Dispute resolution — mediation, conciliation and arbitration

The 2025 Code retains the mandatory pre-litigation ADR framework administered by the Australian Small Business and Family Enterprise Ombudsman (ASBFEO), and adds two features:

• Multi-party mediation — a franchisee can now request that other franchisees with substantially similar disputes join a single mediation. The franchisor cannot unreasonably refuse.
• Voluntary binding arbitration — parties may elect for binding arbitration administered by ASBFEO if mediation fails, keeping disputes out of the Federal Court.