AI in franchising: what buyers should ask about tech, data and costs

• Technology funds follow the same rules as marketing funds: a statement within 4 months of year end, given to you within 30 days, and an audit unless 75% of contributing franchisees vote to waive it (s31).
• The ACCC lists equipment, software or technology upgrades among spending likely to be significant capital expenditure, which must be disclosed and discussed before you sign (items 14(1A) and 14(1B), and s47).
• Most small businesses with annual turnover of $3 million or less aren't covered by the Privacy Act, but some are regardless of turnover, including health service providers and child care centres.
• The OAIC recommends, as best practice, not entering personal information, particularly sensitive information, into publicly available generative AI tools.
• From 10 December 2026, organisations covered by the Privacy Act that use personal information in automated decisions that could affect people's rights or interests must explain this in their privacy policies.

Look for technology in every part of the operation, and ask who chooses it and who pays.

• Ordering and sales: point-of-sale systems, online ordering, delivery integrations, kiosks and loyalty apps.
• Rostering and payroll: tools that forecast demand and build rosters, which still have to apply the correct award rates.
• Marketing: AI-generated ads, social posts and local campaigns, which may be run centrally and paid from a marketing fund.
• Customer service: chatbots and call handling for bookings and enquiries.
• Stock and supply: automated ordering from approved suppliers, which sits inside the supply rules in item 10 of the disclosure document.
• Performance monitoring: dashboards comparing outlets and, in some systems, automated alerts or decisions about targets and compliance.
• Pricing: centrally set or dynamic prices, which affect your margins directly.

• Specific purpose funds include technology funds. The ACCC's guidance lists technology, refurbishment, training, marketing, environmental or sustainability, and group project funds.
• For each fund, the disclosure document must state its purpose, who contributes, how much you pay and whether others pay a different rate, who controls it, what it can be spent on, and whether it pays the franchisor or an associate for goods or services (item 15).
• Fund money must sit in a separate bank account, and company-owned outlets must contribute on the same basis as franchisees (s61).
• A fund can pay only for disclosed or legitimate expenses for its purpose, or expenses a majority of contributing franchisees agree to, plus reasonable administration and audit costs (s61).
• The ACCC treats a pro-rata software subscription to manage the fund as a reasonable cost, but licensing costs for whole-of-business systems unrelated to the fund's purpose as likely to be unreasonable.
• The rules for funds other than marketing and cooperative funds apply from 1 November 2025, as does the capital expenditure disclosure in disclosure documents created from that date.
• A franchisor can require significant capital expenditure only if it was disclosed before you signed, renewed or extended, is incurred by all or a majority of franchisees and approved by a majority of them, is needed to comply with the law, or you agree to it (s60).
• Before a new agreement, renewal or extension, the franchisor must discuss disclosed significant capital expenditure with you, including how you are likely to recoup it in your area (s47).
• If costs are uncertain, the ACCC says franchisors should still disclose that the spending is possible, what could trigger it, examples, and a reasonable high and low range.

The Franchising Code doesn't allocate ownership of customer data, so the agreement, the operations manual and any software terms decide it.

• Ask who owns the customer database, loyalty data and online reviews for your outlet, during the term and after it ends.
• Ask whether you can export your data, and in what format, if you leave or sell.
• Check whether confidentiality or restraint clauses treat customer lists as the franchisor's confidential information after you exit.
• Ask who can see your outlet's sales, staff and customer data, and how it is used to set targets or assess performance.
• Ask whether the franchisor's AI vendors can use data from your outlet to train or improve their products. The OAIC says to review whether a product's terms give the developer access to data you input or generate.
• Related agreements you must sign, such as software or intellectual property licences, must be given to you at least 14 days before signing if they are available (s30).
• Item 12 of the disclosure document must say whether the franchisor or other franchisees sell online into your territory, and describe any profit-sharing arrangements for online sales.

• Most small businesses with annual turnover of $3 million or less aren't covered by the Privacy Act. Regardless of turnover, it covers health service providers, businesses trading in personal information, contractors under Commonwealth contracts and businesses related to a covered business, among others.
• The OAIC counts allied health professionals, complementary therapists, child care centres and private schools as health service providers.
• A small business can opt in to the Privacy Act, and your franchise agreement may require privacy standards even where the Act doesn't apply.
• If you are covered and put personal information into an AI system, APP 6 generally limits its use to the purpose you collected it for, unless the person consents or would reasonably expect a related secondary use.
• Before adopting an AI product, the OAIC expects due diligence on whether it suits your use, how people will oversee it, the privacy and security risks, and who can access the information.
• Covered organisations must notify affected individuals and the OAIC of a data breach that is likely to result in serious harm.
• From 10 December 2026, covered organisations that use personal information in automated decision-making that could affect people's rights or interests must describe this in their privacy policies.

1. What technology must I use, what does each system do, and who supplies it?
2. What will I pay for it: upfront, monthly, per transaction and through any technology fund (items 14 and 15)?
3. Is there a technology fund, what did it pay for last year, and can I see its latest statement (item 15)?
4. What upgrades do you expect during my term, with amounts and timing (items 14(1A) and 14(1B))?
5. Who owns the customer data from my outlet, and can I take it with me if I sell?
6. Do any tools make automated decisions about my business or my customers, such as targets, pricing or approvals?
7. What data do your AI vendors receive, and can they use it to train their products?
8. What happens when a system fails: who pays for lost sales, and what is the backup?
9. Can you change the required systems during my term, and do you consult franchisees first (item 17)?
10. What training and support come with each system, and at what cost?

• List every required system, its supplier and its full cost to you, including fund contributions.
• Read item 15 for each fund, along with the latest fund statement.
• Check items 14(1A) and 14(1B) for planned upgrades, and note what the franchisor says in the capital expenditure discussion.
• Confirm who owns and controls customer data, and what happens to it when you exit.
• Work out whether the Privacy Act applies to your business, and what your franchisor requires anyway.
• Set a rule for staff on what information can go into public AI tools.
• Get important tech and data commitments written into the agreement or a signed variation.