Franchising in Australia has become one of the most attractive pathways for entrepreneurs and business owners who want to operate a business with an established brand, proven systems, and ongoing support. This complete guide to franchising explains the essentials of how a franchise works, what you should consider before entering into a franchise agreement, and the key rights and obligations under the franchising code of conduct.
If you’re looking for a clear and practical guide to franchising in Australia, this article will help you understand the opportunities, challenges, and legal requirements you must be aware of in 2025 and beyond.
Understanding What a Franchise Is
A franchise is a business arrangement where a franchisor grants a franchisee the right to operate a business using the franchisor’s intellectual property, systems, and established brand. This form of franchise allows the franchisee to sell goods or services under a recognised business name while following the franchisor’s business system.
The definition of a franchise is set out in Australian law, and the franchising code of conduct provides detailed rules that apply to franchise agreements entered across Australia. These rules cover disclosure requirements, franchise documents, dispute resolution, and the rights and obligations of both parties. In short, franchising is designed to create a structured and consistent franchise relationship, but it comes with legal requirements that must not be overlooked.
The Role of the Franchisor and Franchisee
At the core of every franchise system are two key players: the franchisor and the franchisee. The franchisor owns the intellectual property, business model, and brand, while the franchisee invests money and effort to operate a franchise outlet under that system.
When a franchise agreement is signed, the franchisor must also provide a disclosure document at least 14 days before the contract becomes binding. This disclosure outlines various expenses, fees, royalties, and the conditions of operation of the franchise. For the franchisee, this transparency ensures they understand the rights and obligations involved before making major business decisions.
The franchisor must also comply with the mandatory industry code and ensure the operation of the franchise follows both the Australian consumer law and the competition and consumer protections. Failure to do so can result in penalties for the franchisor for non-compliance.
Franchises in Australia
The franchising industry in Australia is one of the largest in the world, with more than a thousand franchise systems operating in Australia across a wide range of sectors. From hospitality and retail to professional services and gyms, franchises in Australia cover nearly every type of business model imaginable.
According to recent reports, franchising in Australia has continued to grow steadily into 2025, with new entrants and international players entering the Australian market. For prospective franchisees, this growth means more franchise opportunities but also more complexity when choosing the right brand to invest in.
Industry bodies such as the Franchise Council of Australia play a role in supporting education and compliance. Meanwhile, the Australian government has ensured that the industry code remains strong, with the new code applying updated disclosure and compliance requirements to protect franchisees.
Franchise Opportunities and Choosing the Right Sector
When looking to buy a franchise, one of the most important decisions is choosing the right sector. From food and beverage to retail, home services, and professional consulting, Australian franchising spans across many industries. Each sector carries its own advantages and disadvantages, investment levels, and growth prospects.
The franchise opportunities available in the Australian market in 2025 include both domestic and international franchise brands. Choosing wisely means aligning your background, goals, and financial capacity with the business model on offer. For many business owners, the appeal of a successful business system with ongoing training and support is what makes franchising attractive.
However, it’s vital to weigh the advantages and disadvantages of each model, including various expenses, marketing contributions, and the obligations that come with being part of a franchise network.
Key Legal Requirements in Australian Franchising
Franchise agreements entered in Australia must comply with strict legal frameworks. The franchising code of conduct is a mandatory industry code that applies to all franchise systems, setting out disclosure rules, cooling-off periods, and dispute resolution mechanisms.
The code applies to every form of franchise, and it ensures that franchisees are given a copy of the franchise agreement and disclosure materials. The code requires franchisors to provide financial details, past litigation, and contact information for other franchisees, so a prospective franchisee can make informed choices.
In addition, the code has been amended over time to strengthen protections. The version of the code currently in force in 2025 reflects the Australian government’s aim of protecting franchises must comply with fair business conduct and legal requirements.
Franchise Disclosure and Why It Matters
Franchise disclosure is one of the most important safeguards for any prospective franchisee. Before entering into a franchise agreement unless you fully understand the disclosure terms, you must review the document carefully.
The disclosure document sets out financial details, fees, tax requirements, and the franchisor’s past performance. This transparency gives you the chance to prepare a business plan and assess whether the initial investment required is achievable.
The disclosure is not just a formality. It is a legal requirement that provides insights into the operation of the franchise, past franchise agreements entered, and any history of legal disputes. For anyone considering a new franchise, taking time to analyse this document with expert legal advice is essential.
Entering Into a Franchise Agreement
When entering into a franchise agreement, both the franchisor and the franchisee must carefully review the terms. The code provides a minimum of at least 14 days cooling-off period, allowing the franchisee to seek legal advice before committing.
A franchise agreement unless reviewed properly can expose you to risks. That’s why the franchisor must also provide a copy of the franchise agreement early enough for the franchisee to fully understand it. These agreements typically cover the use of intellectual property, business structure, marketing requirements, and the obligations of both parties.
The code sets out that a franchise agreement is signed only after the disclosure and cooling-off requirements are met. For a master franchisee or anyone involved in a master franchise agreement, the stakes are even higher, as the operation of the franchise extends across multiple territories.
The Franchise Journey in 2025 and Beyond
Starting your franchise journey in 2025 means understanding not only the opportunities but also the risks and responsibilities. The franchise industry has matured, but new entrants must still tread carefully. From ensuring compliance with the franchising code to managing various expenses, a prospective franchisee cannot afford to overlook any step.
For foreign franchisors entering the Australian market, the rules are strict. A foreign franchisor must comply with the provisions of the code, ensure disclosure requirements are met, and protect the intellectual property that forms the basis of their brand.
Across Australia, including New South Wales, Western Australia, and South Australia, franchising laws apply equally. The code contains protections that apply to all franchises, regardless of size or business structure. This ensures that business owners investing in franchise systems operating in Australia know their rights and obligations.
Advantages and Disadvantages of Franchising
Like any business model, franchising has both advantages and disadvantages. For many, the support of a franchise system, the strength of the brand, and the proven processes make it an appealing choice. Joining a franchise business gives access to training, marketing, and operational guidance that independent businesses often lack.
On the other hand, disadvantages include ongoing fees, limits on autonomy, and reliance on the franchisor. A franchise owner must weigh these carefully before signing. Every form of franchise comes with rules, and not every franchise agreement, unless carefully reviewed, will suit your goals.
This is where seeking expert legal advice becomes crucial. A law firm experienced in franchising can provide the clarity needed to ensure you make informed business decisions and protect your investment.
Conclusion: Your Next Steps in the Franchise Journey
The world of franchising in Australia is thriving in 2025, but success depends on preparation, awareness, and compliance. From reviewing the disclosure document to understanding your rights and obligations, each step of the franchise journey matters.
The most important things to remember are:
- Every franchise agreement is legally binding and must be reviewed with care.
- The franchising code of conduct protects you but also requires strict compliance.
- Choosing the right franchise system and sector is key to long-term success.
If you’re considering franchising, don’t navigate this complex process alone. Reach out to TFC today for expert advice on your franchise documents, disclosure requirements, and business strategy. Protect your future as a franchisee or franchisor by working with specialists who understand the franchising industry in Australia.
Reach out to TFC today and let our experts guide you toward the right franchise opportunity.
FAQS
The franchising sector is a major contributor to the overall business in Australia, employing thousands of people and generating billions in revenue. It provides a structured pathway for entrepreneurs to operate under established australian franchise systems, giving them access to proven methods of selling goods and services. Because the sector is highly regulated, it offers a level of security and consumer protection that makes franchising an attractive option for many investors.
A franchise operation involves more than simply opening the doors and selling goods and services. Franchisees must follow the franchisor’s procedures for marketing, customer service, staffing, and compliance with both financial and workplace law obligations. Depending on the industry, australia may also require additional licences or permits to ensure the operation of the franchise meets local regulations.
Australian franchise systems are governed by the franchising code of conduct and Australian Consumer Law, which ensure fairness and transparency in franchise relationships. Unlike some international frameworks, Australia places strong emphasis on disclosure and compliance with workplace law. This means anyone investing in business in Australia benefits from higher levels of protection, even when franchises must adapt global models for the local market.
Yes, many Australian franchise systems allow franchisees to sell both goods and services, depending on the business model. For example, a fast-food franchise focuses on goods, while a consulting or cleaning franchise focuses on services. In some cases, franchise operation blends the two, offering products alongside ongoing service contracts. The flexibility of franchising means business in Australia can thrive across diverse industries.
Franchisees must comply not only with the franchising sector rules but also with broader areas of law such as workplace law, tax, and consumer protection. For instance, failure to meet fair employment standards could impact the franchise operation. Australia may impose additional requirements depending on the state, such as occupational health and safety or licensing conditions for certain types of goods and services. Understanding these obligations is essential for running a compliant and successful business in Australia.