The ACCC has released new guidance materials outlining how it expects businesses to interpret and implement the changes to the Franchising Code of Conduct, which came into effect from 1 April 2025 and the upcoming changes to take effect on 1 November 2025.
The Australian Competition and Consumer Commission (ACCC) has published detailed guidance to help franchisors and franchisees understand how to comply with the new and upcoming changes to the Franchising Code of Conduct. These updates aim to improve fairness, transparency, and accountability within Australia’s franchising sector.
While not legally binding, the guidance gives a clear indication of how the ACCC intends to administer and enforce the new Code. Franchisors and franchisees are encouraged to review the materials carefully and ensure their systems and agreements are “Code ready” ahead of the upcoming reforms.
Read the ACCC’s full guidance here: ACCC – Guidance on changes to the Franchising Code of Conduct
Key takeaways from the ACCC’s guidance
The ACCC’s new materials provide important insight into how the regulator interprets the new provisions under the Franchising Code of Conduct, including the two major reforms taking effect from 1 November 2025.
Reasonable opportunity to make a return on investment
Franchise agreements must give franchisees a reasonable opportunity to make a return on any investment required by the franchisor during the term of the agreement.
The ACCC clarifies that a reasonable opportunity does not mean the franchisor guarantees profitability or success. However, franchisees must have a fair chance to recoup their upfront and ongoing capital investments during the life of the agreement.
The ACCC notes this depends on several factors, such as the length of the agreement, expected profitability, and associated capital costs.
Franchisors are encouraged to review their financial models and disclosure information to ensure projected returns are realistic and adequately supported.
Compensation for early termination
Agreements must include provisions requiring franchisors to compensate franchisees if the agreement is terminated early under certain circumstances, including where the franchisor:
exits the Australian market
rationalises its network in Australia
changes its distribution model in Australia
The ACCC emphasises that compensation should reflect the franchisee’s actual loss and that these rights should be clearly addressed in the Franchise Agreement.
Focus on fairness and compliance
The ACCC’s guidance clarifies how these obligations should be interpreted in practice and reinforces its continued focus on fairness, transparency, and good faith in franchise relationships.
While the guidance does not have legal force, it provides a clear indication of the ACCC’s approach and expectations.
Franchisors and franchisees should review the guidance closely to ensure agreements, disclosure documents, and commercial models align with the new Code.
In plain English
The ACCC has released guidance explaining how businesses should follow the new Franchising Code rules. The key message is that:
Franchisees must be given a fair chance to earn back what they invest in their business over the life of the franchise.
If a franchisor ends a franchise early for certain reasons — such as leaving the market or changing its business model — they’ll need to compensate the franchisee for their losses.
The ACCC expects franchisors to be open, fair, and realistic about financial projections, and to ensure their agreements and disclosure documents reflect these new rules.
Need tailored advice?
For further advice on how the ACCC’s position may affect your franchise system or compliance obligations, contact MST Lawyers’ Franchising and Business team.
