New, small or established franchise systems: what the data says about risk

• Treasury (2023): three-quarters of franchisors have 16 or fewer franchisees, yet 80.4% of franchisees are in large or complex systems.
• ACCC (2023): one in four franchisors operates in only one state, and half have 20 or fewer franchisees.
• FranchiseScope's Register analysis (captured 19 August 2026, self-reported by franchisors): a median of 9 franchisees (n=1,142), with 12.8% listing none and 7.5% listing 100 or more.
• Brand churn: about 9% of the brands Griffith tracked stopped operating or franchising between its 2014 and 2016 surveys.
• The ACCC's 2023 checks of 10 newer franchisors, each with fewer than 40 franchisees, found potentially unfair terms in every agreement.

• Most are small. Register data analysed for the 2023 review showed three-quarters of franchisors had 16 or fewer franchisees.
• Most franchisees are in big systems. 80.4% dealt with a franchisor that had at least $100 million in income, over 200 employees, at least 100 franchisees or foreign ownership.
• In FranchiseScope's August 2026 analysis, 61.6% of 1,142 profiles reported 16 or fewer franchisees, 12.8% reported none and 7.5% reported 100 or more.
• Size varies by category (median franchisees, self-reported): beauty and health 5 (n=25), quick-service food 5 (n=196), education and tutoring 6 (n=52), home and trade services 9 (n=108), retail 18 (n=119), real estate 18 (n=49) and mortgage and finance 34 (n=20).
• Many franchisors are local: 32.0% of 1,121 profiles in FranchiseScope's analysis operate in a single state, compared with the ACCC's 2023 estimate of one in four.
• In 2016, Griffith found small brands (up to 50 units) held a median of 15 units and larger brands a median of 117.

These are potential benefits, not guarantees. Get anything you are promised in writing.

• More choice of territory and site, because fewer have been taken.
• Closer contact with the founders and a stronger voice in how the system develops.
• The chance to grow with the brand, including options on extra sites if the agreement provides them.
• Room to negotiate on some terms, although the ACCC's checks of newer franchisors found one-sided clauses were common.
• A say in shaping the operations manual and supply arrangements that later franchisees will inherit.

• Less evidence: fewer former franchisees to call, short churn records and little earnings history to test.
• Thinner support: a small franchisor's training, field support and marketing budget may be limited, and a marketing fund with few contributors has little to spend.
• One-sided contracts: in the ACCC's 2023 checks of 10 newer franchisors, 9 agreements let the franchisor terminate for breach of any term, however minor, and only 2 gave franchisees a matching right if the franchisor breached.
• Brand exits: of 1,214 brands Griffith tracked between 2014 and 2016, 48 stopped operating and 61 stopped franchising.
• Less regulator attention: the ACCC said in 2023 that most franchise matters don't meet its priority factors, including conduct confined to one or two states that affects few franchisees.
• Recourse risk: winning in court may not get you paid. Geowash signed 31 franchise agreements from 2013 to 2016; after the ACCC's case, its franchisees received no financial redress because the director and franchising manager declared bankruptcy.

• A longer record to test: years of item 6 churn figures and many current and former franchisees to call.
• More history behind the model: 60% of brands in Griffith's 2016 survey had been franchising for more than 10 years, and franchisors piloted their concept for a median of two years before franchising.
• Fewer open territories, so you may be buying an existing outlet rather than starting fresh.
• Size is no guarantee of compliance: Cash Converters and Mobile Travel Agents (June 2025) and the franchisor of OPSM and Laubman & Pank (March 2026) each paid infringement notices over alleged failures to keep their Register profiles up to date. Paying a notice is not an admission.
• Refits and upgrades: established brands may require significant capital expenditure, which the Code now requires to be disclosed and limits to four lawful routes.
• A power imbalance: the review said the concentration of franchisees in large systems means most experience an imbalance of power and resources with their franchisor.

1. Read its Register profile: years operating in Australia, outlet numbers, states, setup costs, and the answers on restraints, arbitration, convictions, judgments and insolvency.
2. Check the franchisor's experience in item 3 of the disclosure document, which summarises up to 10 years of relevant experience, including running the business and offering franchises.
3. Ask how long the concept traded before franchising, and for the pilot outlet's financial results.
4. Read the solvency statement and financial reports in item 21. If the franchisor hasn't existed for two financial years, it must instead give a statutory declaration of solvency and an independent audit report.
5. Call every current franchisee, not just those the franchisor suggests. Item 6 lists their business contact details, or those in your region if there are more than 50.
6. Ask how many people work in the support office and what training you will get before opening.
7. Have a lawyer check the agreement for one-sided variation, termination for any breach, restraint and set-off clauses.
8. Plan for the franchisor failing: find out what would happen to your right to trade, your supply and the brand.

• No Register profile. A franchisor must register at least 14 days before signing its first franchise agreement.
• Pressure to commit quickly. The franchisor can't sign until 14 days after you receive the disclosure document, the Code and the final agreement, and money paid in that window must be refunded on written request.
• No pilot outlet, or a very short trading history before franchising began.
• Earnings projections without stated assumptions.
• Rapid expansion without support. The ACCC warns that high turnover across a system may mean it has expanded too quickly or without a plan to make existing businesses successful, known as 'burning'.
• 'Yes' answers to the Register's insolvency, judgment or conviction questions without a clear explanation.
• Reluctance to put you in touch with current and former franchisees.

• Years operating and number of franchisees, from the Register.
• Three years of openings, transfers, closures and terminations, from item 6.
• The franchisor's financial position, from item 21.
• Earnings evidence: historical results from real outlets versus projections.
• The territory on offer, and your rights if the system grows around you.
• Contract terms on variation, termination, restraint and exit, checked by a lawyer.