Franchise Law Shake-Up: Avoid 2025 Code Penalties Before It’s Too Late

The franchising landscape in Australia changed dramatically on 1 April 2025. With the introduction of the new Competition and Consumer (Industry Codes—Franchising) Regulations 2024, franchisors are now facing stricter compliance obligations — and tougher penalties for getting it wrong.

If you're a franchisor and haven’t updated your franchise agreements or disclosure documents yet, time is running out. The final deadline looms on 1 November 2025. Here’s what franchisors need to know — and why acting now could save your business from serious legal and financial risk.

Note: Bane Legal Services is not a law firm and does not provide legal advice. However, we can connect you with the right franchise lawyer to ensure your documents and systems comply with the new Code.

The New Franchising Code: What’s Changed in 2025?

The updated Franchising Code of Conduct is the most significant overhaul of Australian franchise laws in over a decade. As of 1 April 2025, new rules apply to all franchise agreements entered into, renewed, extended, or transferred from that date.

A second wave of major compliance obligations kicks in on 1 November 2025, giving franchisors just a few months to get their house in order.

Key Changes Franchisors Must Understand

1. Civil Penalties Have Increased Sharply

All franchisor obligations under the Code now carry civil penalties of up to 600 penalty units — that's over $198,000 per breach as of July 2025.

Now more than ever, franchisors must ensure full compliance with the Code.

2. Goodbye, Key Facts Sheets

Franchisors are no longer required to create or provide Key Facts Sheets. These have also been removed from public view on the Franchise Disclosure Register.

You can stop preparing these — but make sure your other documents are compliant.

3. Mandatory Compensation Clauses by 1 November

From 1 November 2025, franchise agreements must include provisions that deal with compensation for early termination (excluding motor vehicle dealership agreements).

If your agreements don’t yet include this, now is the time to act.

4. Franchisees Must Be Given a Reasonable ROI

For agreements entered into after 1 November, franchisors must ensure the franchisee has a reasonable opportunity to earn a return on investment during the term of the agreement.

This requirement — previously limited to car dealerships — now applies across all franchise sectors in Australia.

This means:

• Reviewing franchise fees and costs

• Stress-testing profit margins

• Documenting the basis for your financial model

5. Experienced Franchisees Can Opt Out of Disclosure

Franchisees who are renewing or signing additional agreements with the same franchisor may now opt out of receiving the Disclosure Document and cooling-off period, under certain conditions.

This change can speed up multi-unit expansion — but requires careful implementation.

6. New Disclosure Obligations for Franchisors

The 2025 Code has raised the bar on transparency. New requirements include:

• Specific Purpose Funds: Disclosure of admin and auditing costs for marketing, IT, conference, or co-op funds

• Significant Capital Expenditure: Must include rationale, timing, expected benefits and risks

• Legal Proceedings: Any legal matters under workplace relations laws must be disclosed

• Restraint of Trade Clauses: New restrictions apply, and breaches may trigger penalties

7. Public Exposure Through ASBFEO

The Australian Small Business and Family Enterprise Ombudsman (ASBFEO) can now publicly name franchisors who refuse to engage in dispute resolution.

Franchisors must adopt a collaborative, good-faith approach to conflict resolution — or risk reputational damage.

Don’t Forget the Franchise Disclosure Register

As of 1 April 2025, franchisors can no longer upload Disclosure Documents or Key Fact Sheets to the Register.

Instead, you must update your Register profile with:

• Information about serious offences, insolvency, or civil judgments

• Whether your agreement provides for arbitration

If you haven’t done this yet, it’s a compliance breach.

Franchise Compliance Checklist: What to Do Right Now

If you’re a franchisor and haven’t yet completed the following, you're behind — but it’s not too late (yet):

Immediate Actions

• Review current franchise agreements for 1 April changes

• Update your Franchise Disclosure Register profile

• Train staff on new obligations and penalty risks

• Connect with a franchise lawyer for an urgent review

Before 1 November 2025 (Less Than 4 Months Left!)

• Update all franchise agreements to include:

  • Early termination compensation clauses

  • ROI opportunity for franchisees

• Review and update Disclosure Documents

• Ensure fund disclosures and capital expenditure are covered

• Document ROI calculations for future audits

Franchise agreements entered into after 1 November without the required clauses will be in breach — and you may face serious penalties.

The Upside for Compliant Franchisors

While these reforms bring new challenges, they also create opportunities:

• No more Key Facts Sheets

• Faster multi-site expansion with experienced franchisees

• A more consistent legal framework across the sector

• Improved transparency and accountability industry-wide

Need Help? We’ll Match You with the Right Franchise Lawyer

At Bane Legal Services, we don’t provide legal advice — but we know how important it is to get it.

With over 30 years of business and franchising experience, we’ll connect you with the right franchise lawyer to review your agreements, update your disclosure documents, and ensure you’re fully compliant before 1 November.

Whether you're a fast-growing food brand, a national services network, or a new franchisor entering the market — we’ll match you with the legal support you need to protect your brand and grow with confidence.

Talk to us today for a no-obligation consultation with our legal matchmaking team.

Disclaimer

 This blog provides general information only. It is not legal advice. Always seek advice from a qualified legal professional before making legal or commercial decisions.