Franchise glossary

The language of Australian franchising, defined plainly. Every definition is written to be quoted verbatim and links to the concepts around it.

Cooling-off period: The cooling-off period is the 14 days after signing a franchise agreement during which a franchisee can terminate and receive a refund of payments made, less the franchisor's reasonable expenses. It is a statutory right under the Franchising Code 2025.
Disclosure document: A disclosure document is the standardised information pack a franchisor must give a prospective franchisee at least 14 days before signing, covering fees, franchise numbers, litigation, and existing franchisee contacts. It is the single most important document in franchise due diligence.
Drive-time isochrone: A drive-time isochrone is the area reachable within a set driving time from a point — for example, everywhere within a 10-minute drive of a proposed site. It is used to define a realistic trade area rather than a simple radius.
Establishment cost: Establishment cost is the total up-front investment to open a franchise, including the initial fee, fit-out, equipment and working capital. It is the 'all-in' figure a buyer should budget against — not the franchise fee alone.
Exclusive territory: An exclusive territory is a territory in which the franchisor agrees not to open or license another outlet of the same brand. The scope and any carve-outs (such as online or institutional sales) are set out in the franchise agreement.
Franchise agreement: A franchise agreement is the legally binding contract between a franchisor and a franchisee that grants the right to operate a business under the franchisor's brand and system in exchange for fees. In Australia it is governed by the Franchising Code of Conduct 2025.
Franchise Disclosure Register: The Franchise Disclosure Register is a public register maintained by the ACCC on which Australian franchisors must lodge and keep current their disclosure information. A missing or stale entry is a due-diligence warning sign.
Gross sales: Gross sales is the total revenue a franchise generates before any expenses are deducted. Franchise royalties and marketing levies are almost always calculated on gross sales, so they are payable regardless of the franchisee's profit.
Initial franchise fee: The initial franchise fee is the one-off, up-front payment for the right to join a franchise system, commonly $25,000–$55,000 in Australia. It covers the licence, initial training and onboarding — but not the fit-out or working capital.
Marketing levy: A marketing levy (or marketing fund contribution) is an ongoing fee, typically 2–3% of gross sales, that a franchisee pays into a pooled fund the franchisor uses for national and regional brand marketing. It is separate from the royalty.
Resale: A resale is the sale of an existing franchised business by its current franchisee to a new buyer, as opposed to opening a new (greenfield) site. Resales often carry a goodwill premium but can reduce fit-out cost and ramp-up risk.
Royalty: A royalty is an ongoing fee a franchisee pays the franchisor, usually calculated as a percentage of gross sales, in exchange for the continued right to use the brand and system. In Australia royalties commonly range from about 5% to 9% depending on the category.
Territory: A territory is the defined geographic area in which a franchisee is granted the right to operate, sometimes exclusively. Territory availability is one of the few live data points a competitor directory cannot fabricate.
Trade area: A trade area is the geographic zone from which a site draws most of its customers, usually defined by drive-time isochrones rather than a straight-line radius. Competitor density is measured within the trade area, not the whole suburb.
Working capital: Working capital is the cash a new franchisee needs to cover wages, stock, rent and other running costs before the business becomes cash-flow positive. Underestimating it is the most common cause of early franchise failure.