Franchising is one of the best-known ways to grow or start a business — buy into a proven brand and system as a franchisee, or turn your own successful business into a franchise to expand. But it’s also one of the most misunderstood and, in Australia, one of the most heavily regulated. With a new Franchising Code of Conduct now in effect and the ACCC increasing its enforcement, understanding how franchising actually works — and what protections and obligations apply — matters more than ever in 2026. Whether you’re thinking of buying a franchise or franchising your own business, knowing the essentials is vital.
This guide explains what franchising is, its pros and cons, how it’s regulated, and what to consider — written in plain, practical terms for Australian owners. It’s general information, not legal advice, so seek professional advice on your specific situation.
WHAT IS FRANCHISING?
Franchising is a business arrangement where one party (the franchisor) grants another (the franchisee) the right to operate a business using the franchisor’s brand, system and know-how, usually in return for fees. The franchisee runs their own business, but within the franchisor’s established model and rules.
There are two sides to franchising. As a franchisee, you buy into a proven brand and system rather than starting from scratch. As a franchisor, you grow your successful business by licensing your model to others, expanding faster than you could alone. Both sides have real appeal — and real complexity.
THE PROS AND CONS
Franchising offers genuine advantages but also significant trade-offs. For a franchisee, the appeal is buying into something proven — an established brand, a tested system, training and support — reducing some of the risk of going it alone. The trade-off is less independence, ongoing fees, and having to operate within the franchisor’s rules rather than your own way.
For a franchisor, it enables faster growth and expansion using others’ capital and effort, without running every location yourself. The trade-off is the complexity of building and supporting a franchise network, significant legal and compliance obligations, and reliance on franchisees to uphold your brand. Understanding these trade-offs is essential before entering the arrangement from either side.
HOW FRANCHISING IS REGULATED IN AUSTRALIA
A defining feature of the sector in Australia is that it’s governed by a mandatory Franchising Code of Conduct, which sits under competition and consumer law and is enforced by the ACCC. This is a serious regulatory framework, not an optional guideline, and it places real obligations on franchisors and offers real protections to franchisees. A new Franchising Code came into effect in 2025, with some provisions phased in over a transition period, updating and strengthening the rules. The Code covers key areas such as disclosure — franchisors must give prospective franchisees a detailed disclosure document with important information before they commit — along with rules on the franchise agreement, cooling-off rights, dispute resolution, and restrictions on certain conduct. Importantly, the ACCC has increased its focus and enforcement on franchising, so compliance matters more than ever for franchisors. For anyone entering the sector, this regulation is central: franchisees gain important protections and information rights, while franchisors carry significant obligations to disclose, act in good faith and follow the Code. Getting professional advice on these obligations is essential, because the rules are detailed and the consequences of getting them wrong are real.
WHAT TO CONSIDER
1. Do thorough due diligence
Research the franchise, brand and system carefully before committing. Franchising decisions deserve genuine investigation.
2. Read the disclosure document
Study the required disclosure document closely for the full picture. It exists to inform your franchising decision.
3. Understand the full costs
Know the upfront fees, ongoing fees and all obligations involved. The true cost of franchising goes beyond the entry price.
4. Get legal and financial advice
Seek professional advice before signing any franchise agreement. Given the stakes, expert input on franchising is essential.
5. Be realistic about independence
Accept that franchising means operating within someone else’s system and rules. Know what you’re trading for the proven model.
THINKING OF FRANCHISING YOUR OWN BUSINESS?
For successful business owners, turning your own business into a franchise can be an appealing growth path — expanding your brand across new locations using franchisees’ capital and effort rather than opening every site yourself. But it is a major undertaking, not a simple next step. You need a business model proven and systemised enough for others to replicate, the systems and support to help franchisees succeed, and the willingness to take on substantial legal and compliance obligations as a franchisor under the Franchising Code. You’re also, in effect, entering a new business — running a franchise network is quite different from running the original operation, requiring recruitment, training, support and ongoing management of franchisees. Done well, it can grow a strong brand far faster than organic expansion; done poorly or prematurely, it can create legal exposure, unhappy franchisees and reputational damage. This is why it warrants careful strategic thought and proper professional advice before you commit — it’s a significant decision with significant obligations, and the new regulatory environment makes getting it right even more important.
COMMON FRANCHISING MISTAKES TO AVOID
- Skipping due diligence. Entering the arrangement without thoroughly researching the brand and system is a serious risk.
- Not reading the disclosure document. The disclosure document exists to inform you, so ignoring it defeats a key protection.
- Underestimating obligations. It carries significant fees, rules and compliance duties that must be understood upfront.
- Not getting advice. Given the regulation and stakes, going in without legal and financial advice is dangerous.
Making smart, well-considered growth decisions is core ACS Consulting work. The Strategy & Business Planning service helps you weigh franchising against other growth paths and think it through properly, while the Operations & Process Improvement service builds the systemised, replicable model that franchising your business requires, and the SME Data Analysis & Power BI service brings rigour to the numbers behind the decision. The free Perth SME Operational Audit Checklist helps you assess whether your business is ready to scale. For authoritative guidance, the ACCC on the Franchising Code of Conduct, the Australian Government’s business planning resources, and the Australian Small Business and Family Enterprise Ombudsman are useful references. As this isn’t legal advice, seek professional advice on your specific franchising situation.
FREQUENTLY ASKED QUESTIONS
What is franchising?
It is a business arrangement where a franchisor grants a franchisee the right to operate a business using the franchisor’s brand, system and know-how, usually for fees. The franchisee runs their own business within the franchisor’s established model. You can be a franchisee (buying into a proven system) or a franchisor (licensing your model to grow).
What are the pros and cons of franchising?
For a franchisee, the pros are a proven brand, tested system and support, reducing some startup risk; the cons are less independence, ongoing fees and operating within the franchisor’s rules. For a franchisor, it enables faster growth using others’ capital, but brings complexity, legal obligations and reliance on franchisees to uphold the brand.
How is franchising regulated in Australia?
Franchising is governed by a mandatory Franchising Code of Conduct under competition and consumer law, enforced by the ACCC. A new Code came into effect in 2025. It covers disclosure obligations, the franchise agreement, cooling-off rights, dispute resolution and conduct rules — giving franchisees protections and franchisors significant obligations. Professional advice on these rules is essential.
Should I franchise my own business?
Only after careful thought and advice. Turning your business into a franchise can grow your brand fast using franchisees’ capital, but it’s a major undertaking requiring a proven, systemised model, the systems to support franchisees, and substantial compliance obligations as a franchisor. Running a franchise network is a different business from the original, so it warrants proper strategic and professional input.
CONCLUSION
Franchising is a powerful way to grow or start a business — buying into a proven system as a franchisee, or expanding your own model as a franchisor — but the arrangement is complex and, in Australia, heavily regulated. Do thorough due diligence, read the disclosure document, understand the full costs, get professional advice, and be realistic about the trade-offs.
With a new Franchising Code in effect and the ACCC increasing enforcement, understanding the obligations and protections around franchising matters more than ever. Approached carefully and with proper advice, franchising can be a genuine growth path; approached carelessly, it carries real risk. As this isn’t legal advice, seek professional advice on your specifics.
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