As franchise lawyers, we’ll say this upfront: the Franchising Code of Conduct is not an easy read.
It’s long.
It’s technical.
And it has been amended multiple times in recent years, often in ways that materially change franchisors’ obligations.
We regularly work with capable, commercial franchisors who are genuinely trying to do the right thing — but still fall into compliance traps simply because obligations are buried deep in the Code, poorly understood, or assumed not to apply.
To help franchisors start 2026 on a compliant footing, we’ve put together this practical checklist of common missteps we see across franchise networks, and the process changes that can materially reduce risk.
1. Are you having — and recording — capital expenditure discussions?
This obligation is still widely misunderstood.
Section 47 of the Code provides that a franchisor must not enter into, renew or extend a franchise agreement unless the franchisor and the franchisee or prospective franchisee have discussed:
“any significant capital expenditure disclosed in the disclosure document”; and
“the circumstances under which the franchisor considers that the franchisee or prospective franchisee is likely to recoup the expenditure, having regard to the geographical area of operations”.
This is not just a disclosure obligation.
It is a mandatory discussion requirement.
In practice, franchisors should be:
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actively raising significant capital expenditure with franchisees and renewing franchisees;
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explaining the assumptions around recoupment; and
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keeping a written record that the discussion occurred.
A short file note or follow-up email can be invaluable if compliance is ever questioned. Silence is no longer enough.
2. Do you genuinely believe your franchisees will make a return on investment?
Section 44 of the Code is one of the most talked-about amendments introduced last year.
It provides that a franchisor must not enter into a franchise agreement unless the agreement:
“provides the franchisee with a reasonable opportunity to make a return, during the term of the agreement, on any investment required by the franchisor”.
The provision is deliberately vague.
It has not yet been judicially tested.
And the Code does not prescribe financial modelling, assumptions, or a particular evidentiary standard.
That said, in our view as franchise lawyers, at a minimum this provision requires the franchisor to hold a well-founded belief that the franchisee has a reasonable opportunity to recoup its investment within the term.
That belief should not be theoretical.
It should be grounded in experience, data, or defensible assumptions.
If a franchisor cannot articulate internally why a return is achievable, defending that position externally will be difficult.
3. Are you actually giving earnings information — even if you say you aren’t?
Item 20 of the disclosure document deals with earnings information.
Across the industry, we most commonly see disclosure documents include the statement required by section 20(3):
“The franchisor does not give earnings information about a [type of franchise] franchise.
Earnings may vary between franchises.
The franchisor cannot estimate earnings for a particular franchise.”
That is not an automatic default under the Code — but it is a position widely adopted in practice.
The risk arises where that statement appears in the disclosure document, but earnings information is nevertheless provided elsewhere.
Section 20 defines “earnings information” very broadly. It includes:
“historical earnings data”;
“projected earnings and the assumptions on which those projections are based”; and
“any other information from which historical or future earnings information … can be assessed”.
We regularly see franchisors say “we don’t give earnings information”, only to later mention:
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financial modelling tools;
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corporate store financials;
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informal revenue examples provided to help franchisees obtain finance.
If earnings information is given, it must be disclosed properly and consistently.
If it is not given, it should not be given anywhere.
Consistency is critical.
4. Have you considered how lease documents affect the cooling-off period?
This is particularly important for fixed-premises franchisors.
Many assume the 14-day cooling-off period runs from the date the franchise agreement is signed. That is not always correct.
Section 50(3) of the Code provides that where a franchisee will lease or occupy premises through the franchisor or an associate, the franchisee may terminate within 14 days after:
“the day the franchisee receives … the first document setting out the terms of the proposed lease or occupancy right”; or
a later document containing materially different terms.
This can effectively reset or extend termination rights where lease documents are staged, revised, or negotiated after disclosure.
Document sequencing matters.
Timing matters.
Process matters.
5. Is your Franchise Disclosure Register profile accurate and up to date?
The Franchise Disclosure Register is no longer a “set and forget” obligation.
Under section 92, franchisors must provide prescribed information for inclusion in the Register at least 14 days before entering into a franchise agreement, including legal names, trading names, ABN, addresses, contact details and industry classification codes.
Under section 93, franchisors must then annually confirm or update that information no later than the 14th day of the fifth month following the end of each financial year.
We often see disclosure documents updated without corresponding updates to the Register.
The ACCC does not overlook this.
6. Are you using the correct version of the Code?
This sounds basic, but it is a common trap.
The Code was amended several times last year, with substantive changes commencing at different points. We still see franchisors relying on outdated versions saved locally or circulated internally.
From a compliance perspective, that is risky.
Disclosure documents and franchise agreements must align with the current version of the Code in force at the time disclosure is given and the agreement is entered into.
Our advice as franchise lawyers is simple: go to the source. Always download the Code directly from the Federal Register of Legislation – linked here for your convenience.
7. Are your documentation fees compliant?
Documentation fees are another area that changed last year and continue to cause issues.
Under the Code, documentation fees are now the only legal costs a franchisor can pass on to a franchisee in connection with entering into a franchise agreement.
Importantly, section 38(2)(c) now requires that the documentation fee:
“does not exceed the reasonable and genuine costs of the services”.
This raises two key issues.
First, reasonableness. Across the industry, documentation fees are typically around $3,000 + GST. We acted for a franchisee last year who was charged $6,500 + GST (!!!) for a standard franchise grant documentation fee where the franchisee already held the lease. That figure would be difficult to justify if challenged on the basis of reasonableness — and frankly in our view did not pass the pub test.
Second, the fee must genuinely reflect the cost of legal services incurred. In other words, it should broadly align with what your franchise lawyer charges you. There should be no “cream on top”.
It is also important to note that, properly construed, section 38 of the Code does not permit franchisors to charge documentation fees again on renewal. The permitted fee is limited to a fixed amount payable “before the franchisee starts the franchised business”, and must expressly exclude legal costs incurred after the agreement is entered into. This remains the case even where a renewal involves entry into the “then current” form of franchise agreement and fresh legal work is undertaken — those costs must be borne by the franchisor. We have seen even large, well-established franchise brands get this wrong, often unintentionally, but with potentially significant compliance consequences.
Conclusion
Franchise law is complex. The Code is detailed. And compliance expectations continue to rise.
But with the right processes — and the right franchise lawyer in your corner — franchisors can enter 2026 with confidence.