World Franchise Day is a good moment to look up from the day-to-day and take stock of what’s actually happening across the sector.
Here is the shift we’re seeing in 2026. The strongest franchise systems are no longer the ones with the best compliance alone. They’re the ones that can show their documents, systems, support and decision-making all work together in practice.
Put another way, the question for franchisors this year isn’t simply: “Are our systems and documents compliant?”
It’s “Does our system actually operate in a way that is clear, supportable and defensible?”
At MST Lawyers we act for franchise systems across food, fitness, education, property, retail and beyond – from established household names to specialist networks. That breadth shapes the four themes below.
1. Compliance has moved beyond the disclosure document
For years, compliance in franchising largely meant updating the disclosure document once a year and keeping up with the various iterations of the Franchising Code of Conduct (the ‘Code’). That era is over.
This isn’t just a change in mood.
The Franchising Code of Conduct now reaches across more than the franchise documents and touches on the whole franchise relationship.
The practical effect is that compliance can no longer sit in a file opened once a year. Franchisors must question whether the franchise agreement, disclosure document, operations manual, supplier arrangements and internal processes reflect how the franchise system actually operates and evolves as the system does. New suppliers, new technology and equipment may require updated disclosure. New technology may require additional fees that may not be able to be charged under existing documents.
When onboarding franchisees, franchisors must provide certain information about previous franchises conducted from the site or territory, the franchisor’s leasehold interest and any financial benefits or incentives and applicable end of term arrangements.
The annual update of the Disclosure Document is the minimum standard.
The Code requires ongoing disclosure of updated financial details and materially relevant facts such as changes in majority ownership or control of the franchisor or the franchise system, certain legal proceedings by a public agency, judgments in criminal/civil proceedings, franchisor or associate (administration/liquidation), changes in intellectual property material to the franchise system or its ownership/control.
Franchisors must on an ongoing basis:
- assess whether there is a reasonable opportunity for franchisees to make a return on investment
- discuss significant capital expenditure with franchisees before entering into, renewing or extending a franchise agreement
- keep appropriate records to prepare financial statements with sufficient detail for each specific purpose fund
- consider other applicable laws such as retail lease laws, unfair contract term laws, workplace laws, privacy laws and any changes that may impact the network and necessitate change to documents or process.
Further, liability for misleading and deceptive conduct under the Competition and Consumer Act 2010 (Cth) can arise from failing to tell a person something they should be told, even if that information is not strictly required by the Code.
One observation from recent client work is that franchisors are still not preparing specific purpose fund financial statements with sufficient detail of the fund’s receipts and expenses to give meaningful information about sources of income and expenses. Franchisors often scramble at Disclosure Document update time to regenerate and correct financial statements.
2. ‘Support’ is becoming part of compliance, not just relationship management
Supporting franchisees has always been good commercial practice. What’s changing is that providing good support is increasingly part of how franchisors manage legal, regulatory and reputational risk.
With the Code drawing attention to issues such as a reasonable opportunity to make a return on investment and significant capital expenditure, franchisors need to think carefully about how their decisions are explained, documented and implemented across the network.
Support is no longer just a relationship issue. It is becoming part of how a franchisor shows that its system is fair, workable and well managed.
|
How structured support enables franchisors to manage risk and accountability:
To illustrate, since the vulnerable workers regime came into effect, we have developed an audit process and conducted hundreds of workplace audits across franchise networks and franchisors have provided associated education and training to franchisees to support compliance with their employment law obligations. Where audits have identified non-compliance, we have worked with franchisors to ensure timely rectification — protecting both the individual business and the broader network from regulatory and reputational exposure. This program is an example of how structured, documented support operates not just as a service to franchisees, but as a demonstration that the franchisor is actively managing risk and accountability across the system.
An example of where systems have not been adequately established and documented, is a network that we have been working with, that was bought out by a new franchisor. The new franchisor inherited a system where the former franchisor had allowed franchisees over many years to develop their own websites, social media pages and local marketing systems, and even their own menu items. In some cases, the franchisees are doing it really well whereas others perhaps less so. The new franchisor is now trying to centralise and control many of these functions and are struggling to build the trust of the franchisees that a centralised website and social media will work as well for each of their locations.
If the former franchisor had invested in developing their website and social media and built franchisees’ trust that they could provide robust and responsive systems, the new franchisor would not be having these struggles with their franchisees.
3. Cyber and data are now a network issue, not an IT issue
Cyber and data risk may be one of the most underestimated legal risks in franchising — and the latest national data tells a story that should concern franchisors specifically.
In its January to June 2025 figures, the OAIC reported that malicious or criminal attacks remained the largest source of data breaches, at 59%. But the more revealing number for franchise networks is human error, which rose to 37% of all breaches, up from 29% the previous period. Franchise systems — made up of independently operated sites with varying staff and training — are exactly the environment where human-error breaches could occur.
The OAIC also reinforced a point that maps directly into franchising: organisations remain responsible for the actions of third-party providers when they outsource personal information handling. Franchise networks rely heavily on shared platforms — booking systems, loyalty programs, POS, CRMs and external vendors — so a weakness anywhere in that chain can quickly become a brand, privacy and network problem.
The proactive gap: where franchise networks are most exposed
Franchisors over-invest in reactive tools such as insurance, incident response, security and antivirus, and under-invest in the front-end prevention work that actually reduces exposure in the first place.
The proactive gap runs across three areas: 1) data collection and minimisation (who collects the data and not collecting or retaining more than necessary – “you cannot lose data you do not hold”), 2) vendor due diligence (treating third-party relationships as security relationships from the outset, not just commercial ones) and, 3) embedding cybersecurity obligations into franchise agreements before a breach occurs rather than scrambling to allocate liability after.
The conversation needs to shift from “are you covered if something goes wrong” to “have you structured the system to reduce the likelihood of something going wrong in the first place”.
4. The strongest systems protect what they change
Franchise systems don’t stand still. New products, technology, ordering channels, customer data and supplier arrangements all create value, but they also create gaps.
When a system evolves, the legal and operational framework has to keep up. Documents that made sense three years ago may not reflect how the business runs today. The strongest franchisors keep agreements, operations manuals, IP protections, technology terms and franchisee obligations aligned with how the system actually operates — and they do it early, when it’s cheaper and simpler to get right.
|
When legal architecture fails to keep pace with commercial rollout:
A common example of this gap is a franchisor introducing a new app or delivery channel without updating their agreements. A good real-world illustration is the rapid rollout of third-party delivery platforms such as Uber Eats across quick-service restaurant franchise networks during COVID-19.
Franchisors implemented these in their networks at speed to maintain revenue, but the underlying franchise agreements and operations manuals had no provisions addressing use of the platforms, territorial encroachment, ownership of the customer data collected.
The franchisee was the contracting party with the delivery platform but the franchisor owned the brand and, in most cases, the customer data. The gap was not in the technology itself but in the legal architecture failing to keep pace with the commercial rollout.
The best of franchising: brands giving back
One of the things we admire most about the sector is how it connects national brands with local communities. The strongest networks use their footprint for more than commerce.
Bakers Delight’s long-running Pink Bun campaign is a standout example of a national network using its local bakeries to support a major cause. Jellis Craig’s Foundation shows how community contribution can be built into the way a network operates. These initiatives show franchising at its best — a recognised brand delivered by people who are genuinely part of the communities they serve.
A final thought
World Franchise Day is ultimately a celebration of the people behind franchising — the franchisors building systems, the franchisees running businesses, and the teams supporting them every day.
It’s also a reminder that, in 2026, strength comes from alignment: the documents matching the system, the support matching the promise, and the legal framework keeping pace as the brand evolves. The systems that can prove that alignment are the ones built to last.
Get in touch
MST Lawyers’ Franchise Law team works with franchisors and franchise networks across a range of industries. If your system would benefit from a review of its documents, compliance processes, supply arrangements or network strategy, please contact us.
Quick check: is your system keeping pace?
Five questions worth asking before the next financial year.
- ☐ Do our agreement, disclosure document and operations manual still match how the business actually runs?
- ☐ Have we reviewed what the new Franchising Code changes mean for us — not just at sign-up, but across renewal, termination and capital expenditure?
- ☐ Do we know who holds customer data across our network, and what happens if a franchisee or supplier has a breach?
- ☐ Are our decisions — especially the hard ones — explained and documented in a way we’d be comfortable standing behind?
- ☐ When we introduced our last new product, app or channel, did we update the agreements to match?
If any of these gave you pause, it may be worth a conversation.
Sources (verified 2 June 2026)
