Electronic signing platforms such as DocuSign and Adobe Sign have become standard tools in franchise transactions. They make document execution faster, reduce administrative burden and allow parties in different locations to complete deals quickly. For franchisors rolling out new sites or finalising transfers, electronic execution can significantly streamline the process.
However, while electronic signing has made things easier, it has not eliminated the legal formalities that apply to franchise transactions. In practice, we still regularly see issues arise where documents are incorrectly executed, witnessed improperly or signed in the wrong order. These errors can create delays or, in some cases, require documents to be re-signed entirely. As such, it remains important for franchisors and franchisees to understand the practical rules that still apply.
Not all documents can be signed electronically
While most modern franchise agreements now expressly permit electronic execution, not every document involved in a franchise transaction can necessarily be signed electronically. In particular, lease documentation remains an area where state-based requirements may still require traditional “wet-ink” signatures.
For example, in Queensland certain lease instruments intended for registration may still need to be physically signed. Similar practical issues can arise where landlords, financiers or land registries require original signatures before processing documents. This means that even where the franchise agreement itself is signed electronically, associated documents — such as leases, deeds of assignment or landlord consents — may still require physical execution.
Accordingly, it is always important to confirm the execution requirements of each document in the transaction rather than assuming electronic signing will be acceptable.
Who can witness a signature?
Many franchise documents, including guarantees and certain statutory declarations, require a witness. In practice, there are two different categories of witnesses that may apply.
The first is a general witness, which simply requires an adult independent person to observe the signature and confirm that it was made by the signatory. In many cases, this can be a colleague, friend or neighbour who is over 18 and not a party to the document.
The second is a prescribed witness, which is required for certain documents or declarations under legislation. Prescribed witnesses are usually members of specified professions, such as lawyers, justices of the peace, police officers or notaries. These witnesses may also have additional obligations, such as verifying identity or recording details of the execution.
Where a document specifies that a prescribed witness is required, it is important that the correct category of witness is used. A document witnessed by the wrong type of person may need to be executed again.
How witnessing should occur
Although electronic signing platforms allow witnesses to apply signatures remotely, the fundamental rule of witnessing remains the same: the witness must observe the signatory signing the document.
In practice, this means the signatory should sign first while the witness observes the process. The witness should then sign shortly afterwards to confirm that they observed the execution. Importantly, both signatures should occur within the same general timeframe or “execution window”.
While technology has made witnessing more flexible, the core purpose of witnessing — confirming that the correct person signed the document voluntarily — remains unchanged.
Identity verification and record keeping
For some documents, particularly where prescribed witnesses are involved, the witness may be required to verify the identity of the signatory. This typically involves reviewing identification such as a driver’s licence or passport.
In these situations, it is good practice for the witness to retain a record of the identification reviewed and the circumstances of the execution. While this may not always be mandatory, maintaining a record can assist if the validity of the document is ever questioned.
Execution order matters in franchise transactions
Finally, the order in which franchise documents are executed is often important.
Under the Franchising Code of Conduct, franchisors must provide prospective franchisees with certain disclosure documents and allow a minimum period before the agreement is entered into. In practice, franchisees will typically sign the franchise agreement first, along with any advice certificates confirming they have received legal and financial advice (or elected not to do so).
Only once those requirements are satisfied will the franchisor countersign the franchise agreement and related documents. This sequence ensures that the franchisor complies with the Code’s disclosure and cooling-off requirements.
Electronic execution platforms can sometimes obscure this process by circulating documents to all parties simultaneously. For this reason, it is important that franchisors ensure documents are released for signature in the correct order.
Convenience should not replace compliance
Electronic execution has undoubtedly improved the efficiency of franchise transactions. However, convenience should not replace compliance with the legal requirements that still apply to many franchise documents.
By confirming which documents can be signed electronically, ensuring the correct witness is used, observing proper witnessing procedures and maintaining the correct execution order, franchisors and franchisees can avoid unnecessary delays and ensure their agreements remain legally effective