Fair Work Act (and franchisor liability)
What it means
The Fair Work Act governs pay, conditions and workplace rights. Franchising has a specific dimension: provisions can hold a responsible franchisor liable for underpayments and other contraventions by its franchisees, where the franchisor had significant influence or control and knew, or reasonably should have known, about the breaches.
For franchisees, it is a reminder that employing staff carries strict legal obligations, minimum wages, awards, records, that sit outside the franchise agreement but are non-negotiable.
In practice
As a franchisee-employer, get payroll and award compliance right from day one, franchisors increasingly audit this because they can share liability. As a prospective franchisor, build compliance support into the system.
A real example
After a chain of underpayments across several outlets, the franchisor is found to have been a responsible franchisor entity under the Fair Work Act and shares liability for the franchisees' underpayments.
Fair Work Act (and franchisor liability), FAQs
Can a franchisor be liable for a franchisee underpaying staff?
Yes. Under the Fair Work Act, a responsible franchisor can be liable for a franchisee's workplace contraventions where it had significant influence or control and knew or should have known about them.
Do employment laws apply on top of the Franchising Code?
Yes. The Fair Work Act applies to any franchise that employs staff, independently of the Code. Award and minimum-wage obligations are strict.
See the full franchise glossary, the Fee Index or our buyer guides.