How to franchise your business in Australia

Franchising is not a shortcut for a struggling business. It works when you have a genuinely successful, systemised model that someone else can run and profit from, and the appetite to support a network for the long term.

Before spending a dollar on franchising, test your business against the traits that make a system work:

• Proven profitability: your own outlets make money, consistently, not just in one lucky location.
• Replicability: the results come from the system, not from you personally or one rare site.
• Documented processes: how you operate can be written down and taught, not carried in your head.
• A margin that supports two businesses: enough profit for a franchisee to earn a living and pay you a royalty.
• A defensible brand and know-how worth licensing.

1. Pilot: run one or more company outlets long enough to prove and refine the model.
2. Systemise: write the operations manual, brand standards, training and supply arrangements.
3. Get advice: engage a franchise lawyer and an accountant experienced in franchising.
4. Build the legal framework: the franchise agreement and a Code-compliant disclosure document.
5. Register: create your Franchise Disclosure Register profile before you enter any agreement.
6. Recruit and support: attract quality franchisees, train them, and stand up field support.

Expect real up-front investment: legal fees for the agreement and disclosure document, an operations manual, brand and marketing assets, recruitment, and the field-support capability to look after franchisees. Underinvesting in support is a common early mistake, franchisees who feel abandoned churn, and churn is the number one signal that scares off future buyers.

Model franchising as its own business line with its own P&L. Royalty income builds slowly as the network grows, while your support costs are real from the first franchisee.

Becoming a franchisor means accepting the duties in the Franchising Code, which carry civil penalties for breaches. In summary you must:

• Give prospective franchisees the ACCC's information statement within 7 days of their application or expression of interest, then the disclosure document, a copy of the Code and the agreement in the form it will be signed. Don't sign until 14 days after they receive them, and refund any payment made in that window within 14 days of a written request.
• Keep a current, accurate disclosure document and Franchise Disclosure Register profile.
• Administer any marketing or specific-purpose fund separately and account for it annually.
• Act in good faith at every stage, from recruitment to termination.
• Tell franchisees of materially relevant facts, generally within 14 days.
• Keep records for six years and follow the Code's dispute-resolution process.

See our guides on the disclosure document and Code compliance, and take your own legal advice before you start.