(And why staying compliant is more complicated than it looks)
If 2025 taught franchisors anything, it’s this: running a franchise network has never been more regulated, more scrutinised, or more complex. Between a brand-new Franchising Code, increased ACCC enforcement, heightened wage compliance risk and evolving privacy and leasing laws, franchising well now requires far more than a strong brand and good systems.
The good news? With the right advice, these risks are manageable. Below are our top legal takeaways for franchisors coming out of 2025 — and what franchise lawyers are advising networks to prioritise heading into 2026.
1. The New Franchising Code Is Not Optional — and Two Sections Caused the Most Headaches
The new Franchising Code of Conduct fundamentally changed the compliance landscape for franchisors in 2025. While most networks updated their documents, two provisions in particular generated significant debate (and no shortage of drafting angst).
The first is section 44, which requires a franchise agreement to provide the franchisee with a reasonable opportunity to make a return on their investment during the term. This sounds sensible — but the legal implications are far from simple. Franchisors must now carefully consider:
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what capital expenditure they require franchisees to incur;
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how and when that expenditure is likely to be recouped; and
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whether the term (including options) realistically supports a return.
This obligation interacts directly with disclosure requirements, meaning franchisors must ensure their disclosure documents clearly explain the circumstances in which expenditure may be recovered. It is no longer enough to say “commercial risk applies”.
The second flashpoint is section 43, which requires franchise agreements to provide for compensation if the franchisor:
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withdraws from the Australian market;
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rationalises its network; or
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changes its distribution model.
The agreement must not only provide for compensation, but specify how it will be calculated, including reference to lost profits, unamortised capital expenditure, loss of goodwill and wind-up costs. It must also deal with buy-back or compensation for stock and essential equipment that cannot be repurposed.
Unsurprisingly, franchise lawyers have seen a wide range of approaches emerge across the market — from highly prescriptive formulas to more principles-based drafting. What matters most is that franchisors understand these obligations and ensure their documents genuinely comply. The penalties for getting this wrong are significant.
2. The ACCC Is Actively Enforcing the Franchise Disclosure Register
If the Franchise Disclosure Register once felt like an administrative afterthought, 2025 firmly put that idea to rest.
The ACCC has made it clear that failure to lodge, update or maintain accurate disclosure information is a serious compliance breach. Several well-known franchise brands — including Cash Converters — have faced enforcement action and penalties for failures relating to disclosure obligations.
For franchisors, this means disclosure is no longer just about handing documents to prospective franchisees. It requires:
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accurate and timely register lodgements;
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consistent alignment between agreements, disclosure documents and register entries; and
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proper internal systems to ensure updates are made when circumstances change.
From a franchise lawyer’s perspective, disclosure compliance is now a live risk area that needs ongoing attention — not a once-a-year exercise.
3. Vulnerable Workers Laws Are a Real Risk for Franchise Brands
The vulnerable workers laws are no longer theoretical. They are actively enforced, and they directly affect franchisors whose networks employ frontline workers.
High-profile cases (including Bakers Delight) show that franchisors can be held liable for franchisee underpayments where they knew, or ought reasonably to have known, about non-compliance and failed to take reasonable steps.
What constitutes “reasonable steps” depends on the size, resources and sophistication of the network — but courts and regulators increasingly expect franchisors to:
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provide clear workplace compliance guidance;
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offer training and support;
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require use of reputable payroll or employment advisory services; and
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respond promptly and seriously to complaints.
Franchise lawyers are now routinely advising franchisors to treat workplace compliance as a brand protection issue, not just a franchisee problem.
4. Wage Underpayment Remains a Major Threat — and the Woolworths Case Raises the Bar
The Federal Court’s decisions involving Woolworths and Coles in 2025 sent a clear message about wage compliance — and franchise networks should be paying close attention.
The Court rejected reliance on annualised salary and set-off arrangements that failed to ensure award entitlements were met in each pay period. Overpayments in one period cannot offset underpayments in another. Accurate record-keeping is mandatory, even for salaried staff.
While these cases involved corporate employers, the flow-on effect for franchise systems is obvious. Many franchisees rely on templated employment contracts or payroll practices. If those systems are flawed, franchisors may face exposure — particularly under the vulnerable worker regime.
This reinforces the need for franchisors to stay across wage law developments and ensure franchisees are not unknowingly adopting non-compliant practices.
5. Privacy Law Can No Longer Be an Afterthought
Many franchisors still underestimate how much personal information flows through their networks — customer data, employee records, loyalty programs, marketing databases and shared systems.
In 2025, privacy reforms and enforcement activity highlighted the risk of inconsistent, fragmented approaches to data protection. Franchisors increasingly need a network-wide privacy framework, not just a policy sitting on a website.
From a franchise lawyer’s perspective, the key issues include:
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clarity around who controls and accesses data;
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consistent privacy compliance across franchisees; and
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ensuring systems and contracts reflect how data is actually used.
Privacy compliance is now firmly part of franchise governance.
6. Retail Leasing Laws Are Changing — and Franchisors Can’t Ignore Them
Retail leasing reforms, particularly in NSW, continued to evolve in 2025. These changes affect disclosure, rent review mechanisms, relocation rights and termination processes — all of which directly impact franchise models.
Franchisors who remain head lessees, grant licences to occupy, or coordinate site roll-outs must ensure their franchise documents and operational practices align with current leasing laws. Misalignment creates risk — not only with landlords, but with franchisees as well.
This is an area where early advice from a franchise lawyer can prevent costly disputes later.
Final Thoughts
If 2025 felt legally intense for franchisors, that’s because it was. The regulatory net around franchise systems is tightening, and expectations on franchisors continue to rise.
The upside? Franchisors who invest in strong compliance frameworks, clear documentation and proactive advice are better positioned to grow confidently and sustainably.
Franchising has never been simple — but with the right franchise lawyer in your corner, it doesn’t have to be overwhelming.