Independent advice statements: legal, business and accounting sign-offs before signing
Before a new franchise agreement is signed, the franchisor must hold a signed statement for each of legal, business and accounting advice. The Code doesn't force buyers to take advice, but it does force a record either way.
What independent advice statements does the Franchising Code require?
- Section 27 applies to new agreements only; it doesn't apply to renewals or extensions (s27(3)).
- Section 26 applies whenever a franchisor enters into, renews, transfers or extends an agreement, or agrees to do so.
- The Code doesn't make buyers get advice. It makes them sign a statement either way.
- A franchisor can require the adviser-signed version of the s27 statement (s27(4)).
- Each rule carries up to 600 penalty units, which is $218,400 per contravention from 1 July 2026.
- In 2019, reporting on a compliance review of 12 food franchisors, the ACCC said nearly half of prospective franchisees got no independent professional advice before buying.
The statements, one by one
- Receipt form (Schedule 1 item 23): the last page of the disclosure document must include a form for acknowledging receipt. The ACCC recommends dating it the day the document arrives, because it shows when the 14-day period began.
- Disclosure statement (s26): a written statement that the buyer has received, read and had a reasonable opportunity to understand the disclosure document and the Code. A repeat franchisee who opted out of receiving them gives the written opt-out notice instead. The ACCC recommends keeping this separate from the receipt form.
- Legal advice statement (s27(2)(a)): signed by an independent legal adviser saying they advised the buyer about the proposed agreement or business, or signed by the buyer saying they were advised, or that they know they need that advice but have decided not to get it.
- Business advice statement (s27(2)(b)): the same three options, for an independent business adviser.
- Accounting advice statement (s27(2)(c)): the same three options, for an independent accountant.
When does each statement apply?
- New franchise agreement: the receipt form, the s26 statement and all three s27 statements.
- Renewal: the s26 statement, but not s27 (s27(3)(a)).
- Extension of the term or scope: the s26 statement, but not s27 (s27(3)(b)).
- Transfer: s26 applies expressly. Whether s27 applies depends on how the transfer is structured, such as whether the buyer signs a new agreement, so check with your lawyer.
- Repeat franchisee who opted out of disclosure (s23(4)): the opt-out notice satisfies s26, but s27 still applies to a new agreement because it has no opt-out.
- Agreements to agree: s26 also applies before signing an agreement to enter into, renew, transfer or extend a franchise agreement.
For franchisors: collecting the statements properly
- Add every statement to your pre-signing checklist, next to the 14-day consideration period, so nothing is signed early.
- Use neutral templates that follow the Code's wording, with the buyer's options clearly separated. Never pre-tick the option to decline advice.
- Don't discourage advice or suggest skipping it to save time. Parties, and people negotiating to become parties, must act in good faith (s18).
- If you want adviser-signed statements, say so early (s27(4)) so the buyer can brief advisers and budget for them.
- The Code doesn't define 'independent', so avoid anything that undermines it, such as steering buyers to one adviser who also acts for you.
- Check the dates: the s26 statement shouldn't predate receipt of the documents, and advice statements should follow the buyer's chance to review them.
- Keep every statement for at least 6 years (s37(1)).
What does the data say about independent advice?
- August 2019: reporting on a compliance review of 12 food franchisors, the ACCC said nearly half of prospective franchisees got no independent professional advice before buying a franchise.
- October 2023: in the Schaper review's franchisee survey, more than 68% of respondents said they received independent professional advice before entering their agreement, a figure the review called encouraging.
- That survey was self-selected (381 respondents, 173 of them car dealers), so it isn't a random sample of franchisees.
- Stakeholders told the review that advice can seem expensive for low-cost franchises, and that reviewing several sets of documents limits how many opportunities buyers take advice on.
- The same survey put franchisees' average self-rated knowledge of the Code at 6.3 out of 10.
- The current Code still lets buyers decline advice, as long as they sign a statement saying they know they need it.
For buyers: how to choose your three advisers
- Franchise experience: ask how many franchise agreements and disclosure documents they have reviewed recently, and in which sectors.
- Independence: choose advisers who act only for you, even if the franchisor suggests names.
- Scope in writing: the agreement, disclosure document, lease, related agreements such as guarantees, any earnings information, and your financial model.
- Fees: ask for a fixed fee or a written estimate before work starts.
- Lawyer: the agreement's terms, including termination, restraint, renewal, compensation and unfair contract terms, plus the lease and any personal guarantees.
- Accountant: your cash-flow forecast, break-even point, financing and structure, and the franchisor's financial details in item 21.
- Business adviser: the operating model, such as site, staffing, marketing and local competition.
- Timing: book them before the disclosure document arrives, so you can use the 14-day consideration period properly.
What happens if you decline advice?
- You sign a statement that you know you need that kind of advice and have decided not to get it, and the franchisor keeps it for at least 6 years.
- Your other protections don't change: the franchisor still can't sign until the 14-day consideration period ends, and a new agreement usually comes with 14 days' cooling-off.
- A franchisor still can't make you sign a general release of its liability or a waiver of representations it made to you (s39).
- If cost is the issue, ask advisers for a limited-scope review of the biggest risks rather than going without.
- Each kind of advice is separate: you can get legal and accounting advice and decline a business adviser, for example.
Checklist: advice and disclosure statements
- The receipt form is dated the day the disclosure document arrived.
- The s26 statement was signed after the buyer had read the documents.
- There is one s27 statement for each of legal, business and accounting advice.
- No option was pre-ticked, and nothing discouraged advice.
- Signing happened only after 14 days, with every statement in hand.
- Copies are kept for 6 years by the franchisor, and in the buyer's own files.
Sources
- Franchising Code of Conduct: Competition and Consumer (Industry Codes, Franchising) Regulations 2024, Federal Register of Legislation
- ACCC: ACCC finds food franchisors not disclosing critical information (27 August 2019)
- Treasury: Independent Review of the Franchising Code of Conduct, final report (December 2023)
- ACCC: Franchising model disclosure document guidance (April 2025)
- Penalty unit value from 1 July 2026 (F2026N00424), Federal Register of Legislation
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Frequently asked questions
Is a franchise legal advice certificate compulsory?
Not in the sense of forcing you to get advice. Section 27 requires the franchisor to receive, for each of legal, business and accounting advice, either a statement signed by the adviser, or one signed by you saying you got the advice or chose not to. A franchisor can insist on the adviser-signed version (s27(4)).
Can the franchisor's lawyer sign my advice statement?
The Code refers to an independent legal adviser. A lawyer acting for the franchisor on the deal isn't independent of it, so use your own. The same goes for the accountant and business adviser: choose people who act only for you and have franchising experience, even if the franchisor suggests names.
Do I need advice statements to renew my franchise?
No. Section 27 doesn't apply to renewals or to extensions of the term or scope (s27(3)). You still give the s26 statement that you received, read and had a reasonable opportunity to understand the disclosure document and the Code, unless you opted out of receiving them as a repeat franchisee.
What's the difference between the receipt form and the s26 statement?
The receipt form on the last page of the disclosure document (item 23) records when you received it, which fixes the start of the 14-day consideration period. The s26 statement confirms you received, read and had a reasonable opportunity to understand the documents. The ACCC recommends keeping the two separate.
Can I sign the advice statements before the 14 days are up?
Yes. The Code doesn't fix a date for the statements. It says the franchisor can't enter into the agreement until it has received them, and can't sign until the 14-day consideration period has ended (s23(6)). In practice, statements are often collected during those 14 days, once you've had time to take advice.
What if I didn't get advice and now regret it?
If you're within 14 days of entering into a new agreement, and didn't opt out of cooling-off, you can terminate it and get a refund, less any reasonable expenses the agreement sets out (s50 and s51). After that, get legal advice promptly about the agreement and your options.
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