Withholding the Franchise Manual? Why That Strategy Could Cost You

Published: 2 July 2025

By Bane Legal Services – Australia’s Trusted Legal Matchmaker

They weren’t new to franchising.

This franchise brand had expanded nationwide, built a strong reputation, and onboarded dozens of franchisees. The Franchise Agreement and Disclosure Document were issued on time. Everything looked compliant — on paper.

But one thing was missing: the Franchise Manual.

“We don’t share the manual until after signing. It contains IP, supplier lists, recipes, fit-out specs…”

Sound familiar?

This isn’t unusual. Plenty of Australian franchisors — even well-established ones — delay sharing the operations manual until after the franchisee signs on the dotted line. It’s not an oversight. It’s a deliberate move to protect intellectual property.

But here’s the problem: from a legal perspective, that strategy could backfire — hard.

When Holding Back the Manual Becomes a Liability

In one real-world example, a franchisor enforced performance targets 12 months into the agreement. The franchisee pushed back:

“These KPIs weren’t in the Franchise Agreement or Disclosure Document. And we never saw the manual before signing.”

The franchisor pointed to a clause saying the franchisee was “bound by the manual as updated from time to time.”

The franchisee pointed to their inbox — and the absence of the manual before signing.

It became a standoff. And while the parties eventually reached a private settlement, the franchisor had to offer concessions just to restore the relationship.

More importantly, the franchisee had now identified a critical compliance gap — and once that trust dynamic shifts, it’s hard to come back from.

The Legal Landscape: It’s Not Just “An Operations Manual”

If your Franchise Agreement incorporates the manual by reference, and the manual includes:

• KPI benchmarks or performance obligations

• Marketing levies or supply chain restrictions

• Fit-out or upgrade requirements

• Territorial rules

• Minimum stock or pricing obligations

...then that document isn’t just operational guidance. It’s part of the franchise contract.

Under the Competition and Consumer Act 2010 (Cth) — and by extension, the Franchising Code of Conduct — franchisors are required to disclose material facts that would influence a franchisee’s decision to sign.

If core business obligations are buried in a manual the franchisee never saw, you may be at risk of:

• Regulatory scrutiny (yes, the ACCC is watching)

• Legal disputes over enforceability

• Losing the right to rely on the manual altogether

But What About Confidentiality?

Many franchisors fear that releasing the manual too early could expose sensitive information like recipes, supplier contracts or tech IP.

We get it. And to be clear — you don’t have to share your trade secrets during the disclosure period. But you do need to disclose anything the franchisee is contractually obliged to follow.

That includes operational requirements tied to fees, performance, territory, or major financial obligations.

The good news? There’s a middle ground.

6 Risk Management Tips for Franchisors

Bane Legal Services regularly works with Australian franchisors to connect them with lawyers who understand these risks and how to manage them. Here are six practical risk-reduction strategies we’ve seen implemented by well-advised franchisors:

1. Audit your disclosure pack

   If your agreement makes the manual contractually binding, include relevant excerpts during the 14-day disclosure period.

   
   

2. Avoid vague clauses

   Language like “the franchisee agrees to comply with the operations manual as amended” may not hold up if key obligations weren’t disclosed beforehand.

   
   

3. Record your disclosure process

   Keep delivery records of what documents were shared, when, and that the franchisee received them. Precision counts.

   
   

4. Use confidentiality agreements

   Before releasing operational documents, require the franchisee to sign a confidentiality deed. Consider password-protected or read-only formats.

   
   

5. Separate sensitive IP from must-know info

   Your franchisee doesn’t need your full recipe book — but they do need to know what KPIs or marketing fees apply.

   
   

6. Think about what belongs in the agreement instead

   If a rule or obligation is truly critical, it may deserve a spot in the Franchise Agreement itself — not hidden in an undisclosed manual.

Final Thoughts

Franchising is built on clarity, transparency, and compliance. If your operations manual includes enforceable rules — and you expect franchisees to follow them — withholding that information during the disclosure period isn’t protecting your brand. It could be undermining your entire legal position.

You can’t enforce what wasn’t disclosed.

At Bane Legal Services, we’re not a law firm and we don’t give legal advice. But with over 30 years of commercial experience, we help franchisors avoid costly missteps by matching them with the right franchise and commercial lawyers — professionals who understand both the legal and operational realities of franchising in Australia.

Need a legal health check for your franchise documentation?

Let us connect you with a lawyer who knows the Franchising Code inside and out.

Contact Bane Legal Services — Your Trusted Legal Matchmaker for Australian Franchisors.