Franchising Code of Conduct

What it means

The Code is not optional guidance; it is subordinate legislation that applies to virtually all franchise agreements in Australia. It sets the rules for what must be disclosed and when, requires both parties to act in good faith, mandates cooling-off rights, restricts certain franchisor conduct such as unfair restraint and cost-shifting, and provides a structured dispute-resolution process. Its terms cannot be contracted out of.

The current Code is the Competition and Consumer (Industry Codes—Franchising) Regulations 2024, which commenced on 1 April 2025 and replaced the 2014 Code. It largely re-enacted existing protections while adding new ones, including the Key Facts Sheet, stronger restraint-of-trade limits, expanded termination grounds and, significantly, much higher penalties. Some obligations were phased in, with a further set of changes taking effect from 1 November 2025.

The Australian Competition and Consumer Commission (ACCC) enforces the Code. Breaches can attract civil penalties, and the 2025 Code introduced a two-tier maximum: the most serious breaches, such as failing to disclose materially relevant facts or acting in bad faith on key matters, can attract penalties of the greater of $10 million, three times the benefit gained, or 10% of annual turnover, while other breaches carry penalties of up to 600 penalty units. The ACCC can also issue infringement notices.

In practice

For a franchisee, the Code is the safety net that guarantees information and time before committing, and a process for resolving problems without immediately going to court. Knowing the Code helps a franchisee recognise when a franchisor is doing something it is not allowed to do, such as shortening the disclosure period, imposing significant unforeseen capital expenditure, or attaching an overly broad post-term restraint.

For a franchisor, compliance is a continuous obligation, not a one-off task: keeping the disclosure document and Key Facts Sheet current, registering on the Franchise Disclosure Register, following the correct termination steps, and participating genuinely in dispute resolution. Given the size of the 2025 penalties, most franchisors treat Code compliance as a core legal-risk area.

A real example

A franchisee believes their franchisor terminated the agreement without giving a reasonable chance to fix a minor breach. Because the Code sets out the termination process and a mandatory dispute-resolution pathway, the franchisee lodges a dispute notice and the parties attend mediation, rather than the franchisor being able to end the arrangement unilaterally and without recourse.

Franchising Code of Conduct — FAQs