Franchising Code of Conduct 2024 Update: What Changed From 1 April 2025

What the 2024 Franchising Code replaced and when

The Competition and Consumer (Industry Codes—Franchising) Regulations 2024 commenced on 1 April 2025. These Regulations replace the Franchising Code previously outlined in the 2014 Regulations. This change ensures the franchising sector operates under a current and relevant framework, aligned with consumer protection principles such as those relating to ACL misleading and deceptive conduct.

The previous Franchising Code, as detailed in the 2014 Regulations, continues to apply to franchising agreements that were entered into before 1 April 2025. This means these agreements remain governed by the older rules until they are renewed, extended, or transferred. Agreements that pre-date this date do not require updates to comply with the new Code, except in circumstances of transfer, renewal or extension.

It’s important to note that some specific rules within the 2024 Regulations will not take effect until 1 November 2025. The Australian Competition and Consumer Commission (ACCC) has released supporting materials including guidance, an updated Information Statement, and a model disclosure document to assist with understanding and implementing the new Code.

Disclosure, cooling off and termination changes

The updated Franchising Code of Conduct includes changes to disclosure, cooling-off and termination processes. Prospective franchisees will continue to receive a disclosure document and the Code’s Information Statement, with a minimum of 14 days required before signing the franchise agreement.

A new cooling-off period has been introduced. Franchisees now have a 14-day cooling-off period following either the signing of the franchise agreement or the payment of any non-refundable money, whichever occurs first. This period also extends to restraint of trade clauses when transferring a franchise.

Termination grounds, marketing fund disclosure rules and dispute resolution requirements remain largely consistent with the 2014 Code, although refinements have been made. Importantly, franchisors are now prohibited from including restraint-of-trade clauses that operate if a franchisee seeks to renew or extend an expiring agreement, and breaches of this provision will attract civil penalties.

Penalties under the new Code

The Franchising Code of Conduct now includes provisions for penalties related to breaches. Many obligations under the Code carry civil penalties of up to 600 penalty units per contravention. The Australian Competition and Consumer Commission (ACCC) may also issue infringement notices for alleged breaches of specific Code provisions.

For serious breaches, designated as 'extra serious', the maximum civil penalty is substantial. This is the greater of $10 million, three times the benefit derived from the breach, or 10% of the franchisor’s annual Australian turnover. These penalties reflect the importance of compliance and the potential impact on franchisees. Unfair contract terms 2026 penalties may also be relevant in assessing the severity of certain breaches.

Furthermore, franchisors who induce false or misleading statements during the disclosure process are subject to civil penalties under the Competition and Consumer Act 2010. The Code’s good faith obligations are also now enforceable through court action, applying to all stages of the franchise relationship.

Practical compliance steps for franchisors

To ensure compliance with the Franchising Code of Conduct from 1 April 2025, franchisors must undertake several practical steps. A key requirement is a thorough audit of all template franchise agreements. This audit should specifically identify and remove any clauses that constitute prohibited restraints of trade, prior to any agreement renewal or transfer.

Disclosure document updates are also essential. Franchisors are required to update all disclosure documents to the 2024 Code template, ensuring the inclusion of the new Information Statement. Furthermore, review of marketing fund financial statement and audit requirements is necessary to align with the updated Code’s timing rules.

Finally, franchisors must implement training for franchise sales staff. This training should focus on the 14-day cooling-off periods and the prohibition on inducing waivers. Maintaining separate records of franchise agreements executed before 1 April 2025 is also critical, allowing for the correct application of either the old or new Code obligations upon renewal.