Earnings claim
What it means
An earnings claim, sometimes called a financial or earnings representation, is any statement that suggests what a franchisee could earn or turn over. Australian franchisors are not required to make earnings claims, but if they choose to give earnings information they must do so responsibly and be able to substantiate it.
Under the Franchising Code of Conduct 2025, earnings information provided in the disclosure document must have a reasonable basis and take reasonable account of relevant risks and expenses, so that any suggested return is realistic rather than a best-case headline. The Code also requires that franchise agreements give franchisees a reasonable opportunity to make a return on any investment the franchisor requires, and separately, the Australian Consumer Law prohibits misleading or deceptive conduct, which applies to earnings representations made at any stage.
The practical risk is a claim that looks precise but rests on unstated assumptions, such as top-performing sites, gross rather than net figures, or costs left out. Because a franchisor can lawfully decline to give any earnings figures at all, the absence of an earnings claim is not itself a red flag, but any figure that is given deserves close scrutiny.
In practice
When a franchisor gives earnings information, ask for the basis in writing: which outlets it is drawn from, the sample size and time period, whether figures are gross or net, and what costs are included. Have an accountant rebuild the numbers into a realistic budget for your specific site and cost base.
Keep records of any earnings representations made to you, including verbal ones, because misleading claims can breach the Australian Consumer Law. If a franchisor refuses to substantiate a figure or relies only on unnamed 'typical' stores, treat the number as unproven and forecast conservatively.
A real example
A franchisor's brochure states outlets 'turn over $600,000 a year'. On request, the franchisee learns this reflects the top three of twenty stores and is gross revenue before rent, wages, and royalties. The franchisee's accountant models a mid-ranked site, arriving at a far lower net figure, which reshapes the decision and the fee negotiation.
Earnings claim — FAQs
Must a franchisor provide earnings figures?
No. Earnings claims are optional in Australia. But if a franchisor does give earnings information, it must have a reasonable basis and account for relevant risks and expenses.
Are verbal earnings claims covered by the law?
Yes. Misleading or deceptive earnings representations can breach the Australian Consumer Law regardless of whether they are written or spoken, so keep a record of what you are told.
What should I check about an earnings claim?
Ask which outlets it is based on, the sample size and period, whether figures are gross or net, and what costs are included, then have an accountant test it for your site.
Is it a bad sign if there are no earnings claims?
Not necessarily. Many reputable franchisors decline to give figures for legal caution. What matters more is that any figure provided can be substantiated.
See the full franchise glossary, the Fee Index or our buyer guides.