Russell Kelly & Associates · Norwest NSW
Franchise Law
Franchise Lawyers for Franchisors and Franchisees
Entering into a franchise can involve a substantial financial and commercial commitment. Whether you are considering buying a franchise, already operate a franchised business, or are developing a franchise system, understanding the franchise agreement and your legal obligations is important.
Russell Kelly & Associates advises both franchisees and franchisors on franchise agreements, business transactions and the legal issues that arise throughout the franchising relationship.
Buying a Franchise in NSW
Buying a franchise is different from buying an independent business. In addition to assessing the financial and commercial viability of the business, a prospective franchisee needs to understand the franchise system, the franchise agreement, disclosure material and the obligations that will apply after the business is acquired.
Before entering into a franchise, legal due diligence can include reviewing:
- the franchise agreement
- the disclosure document
- initial and ongoing franchise fees
- royalties and other payments
- the proposed franchise territory
- restrictions on products and suppliers
- marketing or other specific-purpose fund contributions
- renewal and extension provisions
- transfer and sale restrictions
- termination provisions
- restraints applying during and after the franchise relationship
- any lease or occupancy arrangements associated with the premises
A franchise agreement can impose obligations that continue for many years. It is important to understand those obligations before committing to the transaction.
Reviewing a Franchise Agreement
The franchise agreement is the principal contract governing the relationship between the franchisor and franchisee.
It can deal with matters including the term of the franchise, fees and royalties, operating requirements, intellectual property, approved suppliers, territory, marketing, renewal, transfer, termination and dispute resolution.
We can review a proposed franchise agreement, explain its legal effect and identify provisions that may require further consideration or negotiation before you enter into the franchise.
Franchise Disclosure Documents
The Franchising Code of Conduct requires franchisors to prepare a disclosure document containing prescribed information about the franchise system.
Disclosure is intended to assist prospective and existing franchisees to make informed decisions about the franchise.
Depending on the circumstances, disclosure information can include establishment and operating costs, existing franchisees, litigation, intellectual property, supply arrangements, significant capital expenditure, specific-purpose funds, financial information and arrangements applying at the end of the franchise agreement.
A disclosure document should be considered together with the franchise agreement and the commercial and financial circumstances of the proposed business.
Legal Services for Franchisors
Establishing and operating a franchise system involves more than preparing a franchise agreement.
Franchisors need documentation and processes that reflect their business model while complying with the Franchising Code of Conduct and other applicable laws.
We can assist franchisors with matters including:
- franchise agreements and associated documentation
- disclosure requirements
- franchise renewals and extensions
- transfers and assignments
- variations to franchise arrangements
- business sale documentation
- commercial leasing issues
- contractual disputes
- termination and exit arrangements
The Franchising Code of Conduct
Franchising in Australia is regulated by a mandatory Franchising Code of Conduct.
The current Code commenced on 1 April 2025. Some additional requirements under the new Code apply from 1 November 2025.
The Code regulates important aspects of the relationship between franchisors, franchisees and prospective franchisees, including disclosure, good faith, franchise agreements, cooling-off rights, transfers, termination and dispute resolution.
The Code also contains requirements concerning matters such as significant capital expenditure and specific-purpose funds.
Compliance with the Code should be considered throughout the franchise relationship, not only when the original agreement is signed.
For current regulatory guidance, see the ACCC Franchising Code of Conduct guidance.
Important Changes Under the 2025 Franchising Code
The current Franchising Code introduced additional protections and obligations affecting franchise agreements entered into, renewed, extended or transferred under the new regime.
Depending upon the circumstances, these requirements can include:
- requirements concerning compensation where a franchise agreement is terminated early in certain circumstances;
- for franchise agreements entered into, renewed or extended on or after 1 November 2025, an obligation to provide franchisees with a reasonable opportunity to make a return on investment required by the franchisor during the term;
- additional requirements concerning specific-purpose funds;
- disclosure and discussion of significant capital expenditure that a franchisee may be required to incur;
- additional restrictions concerning certain restraints of trade after a franchise agreement ends; and
- changes affecting cooling-off rights in limited circumstances.
The provisions applying to a particular franchise can depend upon when the franchise agreement was entered into, renewed, extended or transferred.
Franchisors and franchisees should therefore obtain advice based upon the particular agreement rather than assuming that all franchise agreements are governed by identical transitional rules.
Buying, Selling or Transferring a Franchise
The sale or transfer of an existing franchise usually involves both a business sale transaction and the requirements of the franchise system.
The franchisor may need to approve the incoming franchisee, and the existing franchise agreement may contain specific procedures and conditions for a transfer.
The transaction may also involve a business sale agreement, assignment or new lease arrangements, transfer of assets and licences, employee matters and settlement requirements.
Legal advice early in the transaction can help identify the approvals, documents and timeframes required to complete the transfer.
Renewing or Ending a Franchise Agreement
A franchise agreement does not necessarily continue indefinitely.
Before the end of the franchise term, both franchisors and franchisees should understand the provisions dealing with renewal, extension, expiry, termination and post-termination obligations.
These provisions can affect matters such as the continued operation or sale of the business, intellectual property, equipment, premises, customer information and restraints after the franchise relationship ends.
Obtaining advice before an expiry or termination deadline can be important, particularly where a business sale or renewal is being considered.
Franchise Disputes
Disputes can arise over fees, disclosure, performance obligations, territory, supply arrangements, renewal, termination, transfers or the interpretation of the franchise agreement.
The Franchising Code of Conduct contains dispute resolution procedures, and the franchise agreement may contain additional contractual processes.
Early legal advice can help identify the relevant rights and obligations, available dispute resolution procedures and possible commercial solutions before a dispute escalates.
Getting Franchise Legal Advice
A franchise transaction combines contractual obligations with the commercial realities of owning and operating a business.
Russell Kelly & Associates can assist franchisees and franchisors with franchise agreements, disclosure documentation, business purchases and sales, transfers, renewals, disputes and related commercial matters.
Learn more about our Business Transaction services.
Learn more about Commercial Leases.
Learn more about Commercial Litigation.
This information is general in nature and does not constitute legal advice. Legal advice should be obtained about your particular circumstances.