Can my franchisor make me refurbish? The four lawful routes to forced capex

• There is no dollar threshold. The ACCC says spending is likely to be significant if it is large compared with your investment, profits or turnover, goes beyond normal maintenance, or threatens your solvency.
• Refurbishments and fit-outs, relocations, rebranding, and equipment, software or technology upgrades are all likely to count (ACCC, October 2025).
• Before you sign, renew or extend, the franchisor must discuss any disclosed significant capital expenditure with you, including how you are likely to recoup it in your area (s47).
• Disclosure documents created from 1 November 2025 must say whether significant capital expenditure will be required, with its rationale, amount, timing, benefits and risks.
• Agreements still under the 2014 Code follow its clause 30, which has the same four routes for agreements made from 1 July 2021.

The ACCC's information statement warns buyers that a franchisor can make them pay for new equipment or a refurbishment if certain conditions are met. Those conditions are the four routes in s60, and if none applies, the franchisor must not require the spending (s60(1)).

1. Disclosed before you committed. The spending was disclosed, as s20(4) requires, in a disclosure document given to you before your most recent entry into, renewal or extension of the agreement (s60(2)(a)). Section 20(4) calls for as much detail as practicable on the rationale, amount, timing, nature, benefits and risks.
2. System-wide and majority-approved. The spending is to be incurred by all or a majority of franchisees and is approved by a majority of those franchisees (s60(2)(b)). The Code doesn't say how the vote must be run, so ask for the process and the result in writing.
3. Required by law. The spending is incurred to comply with legislative obligations (s60(2)(c)). Brand standards and franchisor policies aren't legislation.
4. You agree. The spending is agreed by you (s60(2)(d)). Signing a refit plan, an approval or a variation may amount to agreement, so read before you sign.

The Code doesn't set a dollar threshold. The ACCC's October 2025 guidance gives three tests, with worked examples.

• Large compared with your initial investment, profits or turnover. The ACCC's example: a $100,000 refurbishment every 5 years on a franchise that cost $500,000 is likely to be significant.
• Beyond normal repairs, maintenance, end-of-life replacement or normal stock requirements.
• Enough to make it hard to stay solvent or profitable. The ACCC's example: $200,000 of specialised equipment, equal to 60% of the business's annual turnover.
• Types likely to count: major refurbishments and fit-outs, relocations, rebranding, and equipment, software or technology upgrades.
• Common triggers: system-wide changes such as rebrands and IT upgrades, scheduled refits such as every 5 years, and events such as a lease renewal, a performance review, damage or relocation.
• The ACCC's rebrand case study: a gym network rebrand within 12 months, covering the website, signage, uniforms and marketing material, is likely to be significant, and the franchisor should give reasonable written notice of the timing and proposed cost and consult franchisees.
• Some spending may be required by your landlord under the lease rather than by the franchisor.

• Whether the franchisor will require significant capital expenditure during the term (item 14(1A)).
• As much information as practicable: the rationale; the amount, timing and nature; the anticipated outcomes and benefits; and the expected risks (item 14(1B)).
• If details aren't known, the ACCC expects franchisors to say the spending is possible, what could trigger it, examples of similar spending, and a reasonable high and low range.
• Whether any of it will be paid from a specific purpose fund, which the ACCC says franchisors should state, plus that fund's details (item 15).
• Whether the franchisor will take significant capital expenditure you have made into account in end-of-term arrangements, and whether it has done so for franchisees in the last 3 financial years (item 18).
• Documents created before 1 November 2025 didn't have to include items 14(1A) and 14(1B), so check the date of the document you received (s97(7)).

Under s47, a franchisor must not enter into, renew or extend an agreement unless you have discussed the disclosed expenditure and the circumstances in which the franchisor considers you are likely to recoup it, having regard to your area. Use that meeting well.

1. Ask for the expected cost of each item, with a high and low estimate.
2. Ask when each item will be required, and what would trigger it.
3. Ask how the franchisor expects the spending to pay back in your area, using local sales rather than network averages.
4. Compare the payback period with the time left in your term. For agreements from 1 November 2025, the agreement must give you a reasonable opportunity to make a return, during the term, on investment the franchisor requires (s44).
5. Ask whether any cost is shared, subsidised or paid from a fund.
6. Write up what was said and send it to the franchisor, so both sides have a record.

1. Ask in writing which of the four s60 routes the franchisor relies on.
2. Test the answer: find the disclosure document you received before signing, renewing or extending; ask for the vote result and how many franchisees must do the work; or ask which law requires it.
3. Don't sign a refit plan, quote approval or variation until you have decided. Your agreement is itself one of the routes.
4. Check for backdating. A franchisor can't vary your agreement with retrospective effect without your written consent (s62).
5. If you disagree, give written notice of the dispute, the outcome you want and what would resolve it (s72). After 21 days, either side can refer it to mediation, and ASBFEO must appoint a mediator within 14 days of a request.
6. Get legal advice before refusing an instruction outright, since the franchisor may treat a refusal as a breach, and consider reporting the conduct to the ACCC.
7. Keep your receipts. If an agreement from 1 November 2025 ends early because the franchisor withdraws from Australia, rationalises its network or changes its distribution model, compensation must account for unamortised capital expenditure it requested (s43).

• Agreements entered into before 1 April 2025, and not renewed, extended or transferred since, stay under the 2014 Code.
• For those entered into, extended or renewed from 1 July 2021, clause 30 has the same four routes, and clause 30A required disclosure and a pre-signing discussion of the expenditure.
• For agreements entered into before 1 July 2021 and not renewed or extended since, an earlier version of clause 30 applies. According to the ACCC, it also permits significant capital expenditure the franchisor considers necessary as a capital investment, justified by a written statement to each affected franchisee of the rationale, amount, anticipated outcomes and benefits, and expected risks.
• Once an older agreement is renewed, extended or transferred on or after 1 April 2025, s60 of the current Code applies instead.
• Whichever Code applies, ask for the franchisor's reasons and figures in writing before you commit any money.

• What significant capital expenditure will I have to fund during the term, and when?
• What is the high and low estimate for each item?
• Which spending is triggered by events, such as a lease renewal or a performance review?
• Has a refit, rebrand or equipment upgrade been required in the last 3 years, and what did it cost franchisees?
• Is there a refit or technology fund, and what does it pay for?
• Does my term give me enough time to recoup the spending?
• Will spending I make count at the end of the term, for example in renewal or buy-back decisions?