New franchising code rules

A new Franchising Code of Conduct was introduced on 1 April 2025. Some of the new franchising code rules applied from 1 April 2025.

Other changes in the new code have a transition period and become mandatory from 1 November 2025. The transition period between April and November was to give franchisors time to comply with the new code obligations.

This page includes the main changes under the new code, with links for more information.

    On this page

    Code changes from 1 November 2025

    1. Significant capital expenditure disclosure

      Franchisors must disclose any significant capital expenditure that the franchisee may be required to incur in their disclosure documents. Franchisors must also discuss that expenditure with prospective franchisees.
    2. Specific purpose fund

      Additional obligations and disclosure of information are required when franchisees must contribute to a specific purpose fund.
    3. Reasonable opportunity to make a return on investment

      Franchisors must give franchisees a reasonable opportunity to make a return on their investment.
    4. Compensation for early termination

      In certain cases, franchise agreements must include clauses that provide compensation for early termination.
    5. Franchising agreement cooling-off period

      In limited circumstances, franchisees entering into a franchise agreement can opt out of the cooling-off period.

    Guidance document - 1 November 2025 changes

    Code changes from 1 April 2025

    1. Restraint of trade clause in franchise agreements

      Franchise agreements must not include a restraint of trade clause that applies if the franchise agreement expires, and franchisees seek to extend or renew the agreement. 

      Civil penalties apply to franchisors who enter into franchise agreements with these terms.
    2. Additional civil penalties

      Non-compliance with requirements under the code are now subject to additional civil penalties.

      This includes franchisors who include prohibited terms in franchise agreements and do not meet their obligations to give and receive required information.

    Actions franchisors may need to take

    There are actions that franchisors may need to take in response to the new franchising code.

    We’ve answered questions to help franchisors understand the actions they need to take.

    This guidance does not constitute legal or other professional advice. If you’re unsure about your obligations, we strongly recommend you seek advice from professionals with experience in franchising.

    Franchise agreements entered into before 1 April 2025

    If an existing franchise agreement is transferred, renewed or extended on or after 1 April 2025, it must comply with the new franchising code.

    Franchise agreements entered into, transferred, renewed or extended before 1 April 2025 do not need to be updated to comply with the changes to the franchising code.

    Franchisors do not have to update their existing disclosure document on 1 April 2025 when:

    • the disclosure document is only provided to existing franchisees, and
    • the franchisees are in a franchise agreement entered into, transferred, renewed or extended before 1 April 2025.

    However, if you give potential franchisees the disclosure document after 1 April 2025, the document must comply with the new franchising code.

    If you’re unsure about your disclosure document obligations, you should seek legal advice.

    The effect of the new code is that franchisors must maintain and update 2 disclosure documents to:

    • comply with the old code for franchise agreements before 1 April 2025, and
    • comply with the new code for franchise agreements after 1 April 2025.

    However, we will accept franchisors maintaining and updating one disclosure document that complies with the new franchising code. This includes not providing or updating the key facts sheet annually as required by the old franchising code.

    Franchise agreements entered into after 1 April 2025

    If a franchise agreement is entered into, transferred, renewed or extended between 1 April and 31 October 2025 it must comply with some of the new franchising code rules. 

    There is a transition period from 1 April to 31 October for franchise agreements to:

    • allow franchisees a reasonable opportunity to earn a return on their investment
    • provide for compensation for early termination in certain circumstances.

    From 1 November 2025 franchise agreements must comply with all the requirements under the new franchising code.

    Franchisors do not need to create and provide an updated disclosure document if:

    • the disclosure document was provided before 1 April 2025, and
    • the franchise agreement will be entered into, transferred, renewed or extended between 1 April 2025 and 31 October 2025.

    In this situation, having provided a disclosure document which complies with the old franchising code will be compliant with the new code.

    However, if you are providing the disclosure document to prospective franchisees on or after 1 April 2025 it must comply with the new franchising code.

    If you’re unsure about your disclosure document obligations, you should seek legal advice.

    Under the new franchising code, the annual update must be made within 4 months of the first day of the franchisor's financial year.

    If your financial year starts on 1 July, the annual update to the disclosure document is due by 31 October that year.

    Franchisors must update their disclosure document at other times.