The Australian Competition and Consumer Commission (ACCC) has issued a strong warning to franchisors, urging strict compliance with the Franchising Code of Conduct. The move comes after rising concerns about systemic breaches, unfair contract terms, and inadequate disclosure practices within the franchising sector.
The ACCC highlighted that some franchisors continue to impose misleading terms on franchisees, particularly around renewal rights, exit obligations, and profit-sharing expectations. Authorities stressed that such practices not only violate the Franchising Code but also erode trust in the franchise business model, which is a key driver of small business growth in Australia.
In its recent review, the regulator found recurring issues such as non-transparent disclosure documents, insufficient dispute resolution mechanisms, and hidden costs passed on to franchisees. The ACCC has made clear that enforcement actions, including penalties and public litigation, will be stepped up to hold non-compliant franchisors accountable.
Key Takeaways from the ACCC’s Warning
Franchising Code Enforcement: ACCC to increase monitoring of franchisors for potential breaches.
Unfair Contract Terms: Renewals, exits, and cost-sharing provisions under strict scrutiny.
Greater Transparency Required: Disclosure documents must be clear, accurate, and comprehensive.
Focus on Dispute Resolution: Franchisees should have access to fair and accessible resolution processes.
Penalties for Breaches: Franchisors found in violation risk fines and legal consequences.
Who Should Take Action – Specific Advice
Franchisors must immediately review franchise agreements, disclosure statements, and compliance frameworks to ensure adherence to the Code. Legal advisors should be engaged to audit contract terms and remove clauses that may be deemed unfair. Franchisees should carefully assess their agreements and seek advice before entering new contracts or renewals.
India Advocacy Insight
The ACCC’s warning is a clear reminder that transparency and fairness form the backbone of sustainable franchising. At India Advocacy, we advise businesses in India and abroad to maintain compliance discipline, as stricter enforcement of franchise regulations is becoming the global norm. Proactive compliance today ensures credibility and long-term growth tomorrow.
