The Franchising Code of Conduct is a mandatory industry code made under the Competition and Consumer Act 2010. It governs every franchise arrangement in Australia and is enforced by the ACCC. Get it wrong and the agreement can be voidable, the franchisor can be penalised, and individuals can be personally liable.
This article summarises the major obligations. It is not legal advice — for that, talk to franchise counsel.
Who the Code applies to
Anyone operating a franchise in Australia. The Code uses a functional test (see What is a Franchise?) — what matters is whether the three franchise elements are present, not what the document is called.
1. The Disclosure Document
Every prospective franchisee must receive a Disclosure Document at least 14 days before signing the franchise agreement (or paying any non-refundable money). The document is prescribed: contents, format, and order all set by the Code. It must include:
- Franchisor details and business experience
- Existing franchisees and former franchisees (with contact details where consent given)
- Intellectual property and territory rights
- Marketing fund — receipts, expenditure, audit
- Financial information (audited where required)
- Earnings projections (or a statement that none are made)
See Disclosure Document Explained for detail.
2. The Information Statement
A plain-English summary the franchisor must provide before negotiation begins. It alerts the franchisee to the major risks and obligations of franchising. Format is set by regulation.
3. Cooling-off period
The franchisee has 14 days after signing to terminate. The 2024 update extended this — historically it was 7 days. During cooling-off, the franchisor must refund all payments (minus reasonable costs).
4. Marketing fund obligations
If the franchisor collects a marketing fund contribution, the Code prescribes accounting, separate bank account treatment, and annual audit. Misuse of marketing fund money is one of the most common ACCC complaints.
5. Good faith
Both parties owe each other a statutory duty of good faith — in negotiation, performance, and dispute. This is a real obligation, not a platitude. Courts have voided clauses (and awarded damages) where franchisors acted in bad faith.
6. Restraint of trade
Restraints on the franchisee after termination must be reasonable in scope and duration. Overly broad restraint clauses are routinely struck down.
7. Dispute resolution
The Code mandates a process: written notice, then mediation (or conciliation) administered by the Australian Small Business and Family Enterprise Ombudsman. Court is the last resort.
8. Termination provisions
Strictly controlled. Termination for serious breach (insolvency, abandonment, criminal conduct) is one path. Termination for "less serious" breach requires notice, opportunity to remedy, and explicit grounds in the agreement.
What the 2024 update changed
The 2024 reform consolidated the Code with the Oilcode and introduced several material changes:
- Extended cooling-off period (from 7 to 14 days)
- Stricter restraint-of-trade limits
- Tougher marketing fund accounting
- Higher penalties (now up to ~AUD 10 million for serious contraventions)
- Clearer requirements around end-of-term arrangements
State-level overlays
Victoria has separate registration obligations for franchisors operating in Victoria. Other states largely follow the federal Code.
What this means for you
If you're a franchisor: the Code dictates what your documentation must contain, when you can use it, and how you must behave after signing. Get it wrong and the agreement is at risk.
If you're a franchisee: the Code is largely written to protect you. Read it, or have someone read it for you. The 14-day cooling-off is your friend, not a formality.
At ABC Franchise our legal practice drafts Code-compliant documentation for every mandate. For specific advice on your situation, get in touch.