Franchise termination on 7 days' notice: the grounds you can and can't dispute

• The franchisor can use these grounds only if your agreement gives it power to terminate on them. The Code then controls the notice.
• The notice must be in writing and state the ground (s57(2) and s58(2)).
• If the agreement allows it, the franchisor can direct you in writing to stop operating all or part of the business while the notice period runs (s59).
• Under clause 29 of the 2014 Code, every one of the older grounds could be disputed. The no-dispute category, and the Fair Work and Migration Act grounds, are new.
• Terminating without the required notice, or too early, can attract up to 600 penalty units, which is $218,400 for conduct from 1 July 2026.

For these seven grounds, the franchisor must give 7 days' written notice of the proposed termination and the ground. You can't notify a dispute under the Code to hold it off.

1. You no longer hold a licence you must hold to carry on the franchised business.
2. You become bankrupt, an insolvent under administration, or a Chapter 5 body corporate, a Corporations Act term that broadly covers companies under external administration. The Code notes that s451E of the Corporations Act may affect termination on this ground.
3. Your company is deregistered by ASIC.
4. In proceedings about a Fair Work serious contravention of a civil remedy provision, a court is satisfied that you committed it.
5. In civil penalty proceedings, a court is satisfied that you contravened s245AAA, 245AAB or 245AAC of the Migration Act 1958, which deal with coercing non-citizens to work in certain circumstances.
6. You're convicted of a serious offence. The Code's definition broadly covers an offence punishable by at least 5 years' imprisonment on first conviction, or a contravention of the Corporations Act (s6).
7. You're convicted of an offence against s245AAA, 245AAB or 245AAC of the Migration Act.

For these three grounds, the franchisor must give written notice of the proposed termination and the ground. What happens next depends on you.

• The grounds: you voluntarily abandon the business or the franchise relationship; you run the business in a way that endangers public health or safety; or you act fraudulently in connection with running it.
• If you don't give a written dispute notice within 7 days, the franchisor can terminate once the 7 days end (s58(3)(a)).
• If you give a dispute notice within 7 days, the franchisor can't terminate until 28 days after the day you gave it (s58(3)(b)).
• Mediation is fast-tracked: you can refer the dispute to a mediator or conciliator without the usual 21-day wait if you can't promptly agree how to resolve it, and if you can't promptly agree on who, ASBFEO must appoint one as soon as practicable when either side asks (s58(4)).
• If both of you ask, ASBFEO must also appoint an arbitrator as soon as practicable.
• The dispute notice goes under s72(1) or the matching clause in your agreement: state the nature of the dispute, the outcome you want and the action you think would resolve it.

Yes, if your agreement allows it. Section 59 lets a franchisor act before the termination date in limited cases.

• It applies only where the agreement provides for the franchisor to stop you operating all or part of the business on a s57 or s58 ground.
• The direction must be a written notice to you, tied to that ground.
• It can cover the whole business or just part of it.
• A stop-trading direction doesn't end the agreement, and the 7-day and 28-day limits on termination still apply.
• Keep records of lost trade, staff costs and stock. They may matter if the termination is later found to be wrongful.

• Under clause 29, seven grounds allowed termination on 7 days' written notice: licence, insolvency, deregistration, abandonment, serious offence, public safety and fraud.
• Under clause 29, a franchisee could dispute any of them, which held off termination for 28 days and fast-tracked mediation.
• The current Code splits the list. Licence, insolvency, deregistration and serious offence moved into the no-dispute category (s57).
• The Fair Work and Migration Act grounds are new, and they can't be disputed under the Code either.
• Abandonment, public safety and fraud remain disputable (s58).
• If your agreement hasn't been renewed, extended or transferred since 1 April 2025, clause 29 of the 2014 Code still applies to it.
• Treasury's key changes table notes that a franchisor can still give more time to address a ground, and that a franchisee can still take legal action if it believes the termination is wrong.

1. Read the notice closely. Does it state a ground, and does your agreement allow termination on that ground?
2. Work out which list the ground sits in. Abandonment, public safety and fraud can be disputed; the others can't be disputed under the Code.
3. Check which Code governs your agreement. Under the 2014 Code, every ground can be disputed.
4. If the ground is disputable and you disagree, give a written dispute notice within the 7 days, stating the dispute, the outcome you want and what would resolve it.
5. Get urgent legal advice. For a s57 ground, court action is the main way to challenge a termination you believe is wrong.
6. If insolvency is involved, speak to your insolvency practitioner or administrator straight away, given the Corporations Act note in the Code.
7. Comply with any written stop-trading direction while you challenge it, and keep a record of everything.
8. Contact ASBFEO for help with the dispute process, and plan for your staff, lease, suppliers and customers.

• Confirm the agreement gives you power to terminate on the ground. The Code regulates the notice; it doesn't create the power.
• Hold the evidence, such as the licence cancellation, ASIC deregistration record, court finding or conviction. The Fair Work and Migration Act grounds need a court finding or conviction, not an allegation or investigation.
• Give written notice that states the proposed termination and the ground, and diarise the 7 days.
• For s58 grounds, watch for a dispute notice. If one arrives in time, don't terminate until 28 days after it.
• Use s55 for other breaches, such as unpaid fees. They need a breach notice and a reasonable time to fix, which need not exceed 30 days.
• Consider whether more time is appropriate. Good faith applies (s18), and Treasury notes the rules don't stop you giving more time.
• Keep records. Documents you give under the Code must be kept for at least 6 years (s37).

• Does the notice state the ground, and does the agreement allow termination on it?
• Is it a s57 ground (no Code dispute) or a s58 ground (dispute within 7 days)?
• Which Code governs the agreement?
• If the ground is disputable, has a written dispute notice been sent within 7 days?
• Is there a written stop-trading direction, and does the agreement allow one?
• Have you had urgent legal advice, and contacted ASBFEO if you're disputing?