Imagine this—you’re running a successful food franchise, everything is going smoothly, then suddenly, you’re hit with a lawsuit. In the U.S., Starbucks was recently ordered to pay $50 million in damages after a delivery driver suffered severe burns when a lid wasn’t properly secured. While that’s an extreme case, it highlights a critical truth: legal issues in food franchising can escalate quickly if not properly managed. From food safety to consumer protection, privacy laws, and even trade promotions, there’s a lot to consider beyond the Franchising Code of Conduct. That’s why having an experienced franchising lawyer on your side is crucial to identifying risks, ensuring compliance, and protecting your business from costly disputes. Just some of the other legal issues of which franchisors need to be aware are explored in this article.
Privacy Laws
If your franchise collects customer data—whether for online orders, loyalty programs, or marketing—you must comply with privacy laws. The Australian Privacy Act and Australian Privacy Principles (APPs) govern how businesses handle personal information. This includes obtaining consent, ensuring data security, and providing clear policies on how information is used. Failure to comply can lead to penalties and damage to your brand’s reputation.
Australian Consumer Law (ACL)
Food franchises must ensure their advertising, promotions, and product representations comply with the Australian Consumer Law. Misleading advertising—such as inaccurate claims about portion sizes, ingredients, or nutritional benefits—can lead to legal action. Additionally, unfair contract terms and consumer guarantees apply to the sale of food and beverages, meaning customers have rights if a product is not of acceptable quality or as described.
Food Safety Standards and Labelling
Food franchisors must comply with the Food Standards Code, which sets requirements for food safety, hygiene, and labelling. This covers allergen declarations, ingredient lists, nutritional information, and expiration dates. Non-compliance can result in product recalls, fines, or even criminal liability. Implementing clear policies, staff training, and compliance audits can help mitigate risks.
NSW Food Act and Mandatory Nutritional Display Laws
State based nutritional display laws are also relevant. In New South Wales, for example, food businesses classified as ‘standard food outlets’ must display kilojoule (kJ) information at the point of sale. This applies to menus in-store, online, and in promotional materials. The requirement helps consumers make informed choices, but franchisors need to ensure consistency across locations. Failing to comply can result in fines and reputational damage.
Retail Leasing Laws
Most food franchises operate from leased premises, making retail leasing laws crucial. Different states have specific regulations governing lease agreements, rent increases, and landlord-tenant disputes. Understanding key lease terms—such as exclusivity clauses, outgoings, and renewal rights—can prevent costly disputes. A franchising lawyer can help review lease agreements and negotiate better terms for franchisees.
Common Law Negligence
Franchisors can be held liable for negligence if they fail to implement adequate safety measures. This includes food safety, workplace safety, and customer safety. Slip-and-fall incidents, foodborne illnesses, and even injuries from hot beverages can lead to personal injury claims. Systematising training, safety procedures, and compliance checks can help reduce liability.
Trade Promotion Laws
Running competitions, giveaways, or promotional discounts? Trade promotions are subject to strict regulations. Depending on the state, permits may be required for competitions involving chance (e.g., lotteries and prize draws). Terms and conditions must be clear, and misleading promotions can breach Australian Consumer Law. A franchising lawyer can ensure promotional campaigns comply with legal requirements.
Why a Franchising Lawyer is Essential
Navigating these legal complexities requires expertise. A franchising lawyer can help franchisors identify potential risks, develop compliance frameworks, and implement policies that protect both the business and its franchisees. From privacy laws to food safety, trade promotions, and leasing, having the right legal support can mean the difference between smooth operations and costly legal battles.
By staying proactive and systematising compliance, food franchisors can minimise risks, enhance brand reputation, and create a more secure business environment for everyone involved.