Insight
Franchising Code 2025 Amendments: What to Know
10 Oct 2026
In short
The Australian Government has outlined significant amendments to the Franchising Code of Conduct, expected to take effect in 2025. These changes aim to enhance fairness and transparency in the franchising sector.
The Australian Government has announced forthcoming amendments to the Competition and Consumer (Franchising) Code of Conduct 2014 (the Franchising Code), with an anticipated effective date in 2025. These changes stem from the 2023 review of the Franchising Code, which identified areas requiring reform to improve fairness, transparency, and the overall operation of the franchising sector. Both franchisors and franchisees must prepare for these updates to ensure compliance and adapt their operations.
Why are the Franchising Code Amendments Happening?
The Australian franchising sector is a significant part of the economy, but it has faced scrutiny regarding power imbalances and dispute resolution effectiveness. The 2023 review aimed to address these long-standing concerns, particularly those affecting franchisees' rights and protections.
The amendments respond to recommendations from parliamentary inquiries and reviews, including the 2019 Joint Parliamentary Committee Report and the 2023 independent review. The core objective is to foster a more equitable operating environment, reduce disputes, and provide clearer guidance on acceptable conduct.
What are the Key Changes Proposed for 2025?
While the final legislative text is pending, the Australian Government has outlined several key areas of reform. These focus on improving information disclosure, enhancing dispute resolution, increasing transparency, and strengthening franchisee protections.
- Expanded Disclosure Requirements: Franchisors will likely face more stringent and detailed disclosure obligations. This includes clearer information about revenue streams, rebates, marketing fund usage, and supply chain arrangements. The aim is to provide prospective franchisees with a more complete and accurate picture of the franchise system.
- Cooling-Off Period Changes: The existing 14-day cooling-off period is expected to be modified. While the exact nature of the change is not yet finalised, proposals have included extending it or clarifying how it applies in various scenarios.
- Dispute Resolution Improvements: Enhancements to the mandatory mediation and conciliation processes are anticipated. This may involve greater access to low-cost dispute resolution mechanisms and clearer guidelines for parties involved in a dispute.
- Increased Transparency in Marketing Funds: There will be a greater emphasis on transparency regarding the collection and expenditure of marketing funds. Franchisors may be required to provide more detailed reporting and auditing of these funds to franchisees.
- Termination Rights and Obligations: The amendments are expected to clarify and potentially expand the circumstances under which a franchisee can terminate an agreement, and the processes involved in termination by either party.
- Supply Chain Transparency: New rules may compel franchisors to disclose commercial benefits received from suppliers to the franchise network. This aims to address concerns about franchisors profiting from mandated supplier arrangements without franchisee awareness.
- Increased Penalties for Non-Compliance: Consistent with other consumer protection legislation, the financial penalties for breaches of the Franchising Code are likely to increase significantly. This underscores the government's commitment to deterrence and compliance.
Who Will Be Affected by the New Amendments?
The amendments will impact all participants in the Australian franchising sector, both existing and prospective. Franchisors will need to review and update their disclosure documents, franchise agreements, and internal compliance procedures. Franchisees will benefit from enhanced protections and clearer information.
Key stakeholders affected include:
- Franchisors: Must revise their franchise agreements, disclosure documents, and operational manuals to align with new requirements. They will need to invest in training for their teams to understand and implement the changes.
- Prospective Franchisees: Will have access to more comprehensive information, enabling better-informed decisions before entering a franchise agreement. They should utilise the extended disclosure and cooling-off periods to conduct thorough due diligence.
- Existing Franchisees: May find new avenues for dispute resolution and greater transparency in areas such as marketing fund usage and supply chain benefits.
- Franchise Lawyers and Consultants: Will be crucial in guiding franchisors and franchisees through the transition and ensuring legal compliance.
What are the Practical Steps for Franchisors?
Franchisors should begin preparing for the upcoming changes now, even before the final legislation is published. Proactive engagement will minimise disruption and ensure a smooth transition.
- Monitor Legislative Developments: Stay informed of the precise wording of the amendments once they are released. The Australian Competition and Consumer Commission (ACCC) and the Department of Employment and Workplace Relations (DEWR) are key sources of information.
- Review Current Documentation: Conduct a comprehensive review of your existing franchise agreement, disclosure document, and operations manual. Identify areas that will require amendment to comply with the new disclosure, dispute resolution, and termination requirements.
- Update Disclosure Procedures: Prepare to implement more detailed disclosure practices, especially concerning financial information, marketing fund management, and supply chain arrangements. Ensure internal systems can accurately track and report this information.
- Enhance Training: Provide training to your sales, legal, and operational teams on the updated Franchising Code provisions. Ensure they understand their obligations and the new rights of franchisees.
- Assess Dispute Resolution Processes: Review your current internal dispute resolution mechanisms and consider how they align with the anticipated enhancements to mandatory mediation and conciliation.
- Seek Legal Advice: Engage with legal professionals experienced in franchising law. They can provide tailored advice on compliance and assist in drafting necessary amendments to your legal documents.
What are the Practical Steps for Franchisees?
Franchisees, both prospective and existing, should also take steps to leverage the benefits of the new Code and protect their interests.
- Understand Your Rights: Familiarise yourself with the enhanced protections and disclosure requirements under the new Code. This will empower you during negotiations and when managing your franchise.
- Thorough Due Diligence: For prospective franchisees, utilise the potentially extended cooling-off period and the increased disclosure information to conduct even more rigorous due diligence. Do not rush into signing agreements.
- Review Agreements Carefully: Have an experienced business lawyer review any new or renewed franchise agreement in light of the updated Code. Pay close attention to clauses related to termination, dispute resolution, and financial obligations.
- Monitor Marketing Funds: Exercise your right to access detailed information regarding marketing fund expenditure. Question any discrepancies or lack of transparency.
- Engage in Dispute Resolution: If a dispute arises, understand the revised dispute resolution processes and use them effectively. Legal advice can be crucial in navigating these mechanisms.
How Do These Amendments Compare to Current Requirements?
The proposed amendments aim to build upon, rather than entirely replace, the existing framework. The focus is on strengthening weak points identified in the current Code.
| Area | Current Franchising Code | Anticipated 2025 Amendments |
|---|---|---|
| Disclosure | General disclosure of key information. | Expanded, more specific disclosure, e.g., revenue streams, rebates, marketing funds. |
| Cooling-Off Period | 14 days after agreement signing or payment. | Potentially extended or clarified. |
| Dispute Resolution | Mandatory mediation/conciliation. | Enhanced accessibility to low-cost options, clearer guidelines. |
| Marketing Funds | Annual statement required. | Increased transparency, detailed reporting, potential for auditing. |
| Penalties | Current penalty regime. | Significantly increased financial penalties for breaches. |
| Supply Chain | Limited specific disclosure. | Increased transparency on franchisor benefits from suppliers. |
The anticipated amendments reflect a continuing regulatory trend towards greater protection for small businesses and improved transparency across various commercial dealings. These changes will align the franchising sector with broader consumer protection principles enforced by the ACCC (see: ACCC Franchising Code of Conduct).
Frequently asked questions
When will the Franchising Code amendments take effect?
The amendments to the Franchising Code of Conduct are anticipated to take effect in 2025. The exact date will be confirmed once the legislative process is complete and the final regulations are gazetted by the Australian Government.
Will existing franchise agreements need to be updated?
Existing franchise agreements may require updates to align with the new Code provisions, particularly regarding disclosure obligations, dispute resolution mechanisms, and termination rights. Franchisors should review their agreements with legal counsel to ensure ongoing compliance.
What are the potential penalties for non-compliance with the new Code?
The amendments are expected to introduce significantly increased financial penalties for breaches of the Franchising Code. These penalties can be substantial, reflecting the government's commitment to deterring non-compliant behaviour and protecting franchisees. Further details will be available in the final legislation on legislation.gov.au.
Where can I find the official details of the proposed changes?
Official details and updates on the proposed changes are typically released by the Australian Government, specifically through the Department of Employment and Workplace Relations (DEWR) and the Australian Competition and Consumer Commission (ACCC). Regularly checking their official websites is advisable.
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