The New Franchising Code Is Here and the ACCC Is Watching: What Every Franchisor and Franchisee Must Do Now

From 1 April 2025, Australia entered a new era of franchising regulation. The new Franchising Code of Conduct is now in force and while some obligations kicked in immediately, the most significant changes become mandatory from 1 November 2025.

This transition period is not a grace period to “wait and see.” It is a countdown clock and the ACCC has made it clear: if you’re a franchisor, you must understand your new obligations and act now. If you’re a franchisee, you need to know your expanded rights and the protections now built into the law.

The message is simple:

Comply now, or face penalties later.

What’s Changing and Why It Matters

The ACCC has released new guidance outlining the obligations under the new Code. Here are the big-ticket items that apply from 1 November 2025:

Mandatory early-termination compensation clauses

In certain situations, franchise agreements must include provisions requiring franchisors to compensate franchisees for loss or damage caused by early termination.
This will fundamentally change dispute strategy, exit planning, and contract drafting across the sector.

A new requirement: Franchisees must have a reasonable opportunity to make a return on investment

This introduces a powerful, franchisee-friendly standard.
Franchisors will need to review:

• financial models
• pricing structures
• site selection processes
• system fee increases
• operational mandates

Failing to give franchisees a genuine opportunity to make a return may be both a Code breach and a misrepresentation risk.

Specific Purpose Funds: Greater transparency and obligations

Where franchisees must contribute to a marketing fund, refurbishment fund or any specific purpose fund, franchisors now face new disclosure obligations and ongoing reporting duties. This will require updated disclosure documents, revised agreements, and new internal reporting practices.

Capital expenditure disclosure requirements have expanded

Franchisors must now:

• disclose all significant capital expenditure, and
• discuss that expenditure with prospective franchisees before an agreement is signed.

Major restrictions on post-termination restraints of trade

The new Code narrows when and how franchisors can enforce restraints once a franchise ends. If franchisors don’t meet the new conditions, their restraint clauses may be unenforceable.

Limited opt-out from cooling-off

In specific circumstances, franchisees may opt out of the cooling-off period, allowing deals to proceed more quickly but only when strict requirements are met.

What the ACCC Wants You to Understand

The ACCC’s guidance is clear:

• These changes are not optional
• The ACCC will investigate breaches
• Non-compliance may lead to:
  • court-imposed penalties
  • infringement notices
  • administrative enforcement action
  • reputational damage at a national level

The government expects better behaviour. The ACCC intends to enforce it.

This means franchisors must urgently audit and overhaul their documents, systems, and practices, including:

• franchise agreements
• disclosure documents
• renewal/termination processes
• marketing and specific purpose fund governance
• restraint clauses
• financial and operational representations

Franchisees, too, should review their rights and be aware of new protections that apply automatically under the Code.

Don’t Wait Until It’s Too Late!

If you’re a franchisor:

✓ Update your franchise agreement
✓ Review all disclosure materials
✓ Audit your capital expenditure disclosures
✓ Prepare early-termination compensation clauses
✓ Assess whether your system gives franchisees a true ROI opportunity
✓ Update policies for marketing/specific purpose funds
✓ Reassess restraint clauses
✓ Train your executive and sales teams on the new rules

If you’re a franchisee:

✓ Understand the protections that now apply to you
✓ Review your agreement before signing
✓ Ask for full disclosure of capital expenditure
✓ Clarify how your investment is protected
✓ Understand your options if exiting

The Bottom Line

A new Code means a new compliance environment and the ACCC has explicitly positioned itself for active enforcement.

Whether you’re a franchisor or franchisee:

This is your moment to tighten compliance, update your documents, and protect yourself before it’s too late.

If you haven’t already reviewed your agreements, disclosure documents, or compliance systems, now is the time to act.

This guidance does not constitute legal advice… If you’re unsure of your obligations, seek FCW Lawyers. We are a national leader in franchising law, advising both franchisors and franchisees on compliance, disputes, disclosure, capital expenditure obligations, early termination clauses, and ACCC enforcement risk.

To ensure you are compliant and to protect your business from avoidable penalties contact FCW Lawyers’ specialist franchising team for tailored advice.