Franchise Law glossary
Franchise law in Australia is governed primarily by the Franchising Code of Conduct (a mandatory industry code under the CCA) and general contract, consumer, and intellectual property law. This glossary covers 40 of the most commonly used terms.
This is a glossary of 40 key terms used in Australian franchise law. Each term has a plain-English definition and, where applicable, a reference to the Franchising Code of Conduct or the Competition and Consumer Act 2010 (Cth).
Definitions
ACCC
The Australian Competition and Consumer Commission, the regulator responsible for enforcing the Franchising Code and the CCA.
Associate
A person connected with a franchisor (for example, director, related body corporate). Disclosure obligations often extend to associates.
Churning
The practice of repeatedly selling failing franchises to new franchisees. Prohibited conduct under the Code's good faith obligation.
Code (Franchising Code of Conduct)
The mandatory industry code made under s 51AE of the CCA regulating the conduct of parties to franchise agreements in Australia.
Code compliance manual
Internal procedures franchisors use to ensure Code compliance across their network — disclosure timing, document retention, dispute handling.
Cooling-off period
The 14-day period after entering a new franchise agreement (or making a payment) during which a franchisee can terminate and recover most payments.
Disclosure document
The standardised document a franchisor must provide to prospective franchisees at least 14 days before entering an agreement. Prescribed by Annexure 1 to the Code.
Dispute resolution (Code)
The Code requires franchise agreements to include a dispute resolution procedure — with mediation and (from 2021) arbitration available.
End-of-term arrangements
The disclosure and conduct requirements when a franchise agreement is nearing its end — the franchisor must notify whether renewal is offered.
Exclusive territory
A territory within which a franchisor agrees not to grant competing franchises. Subject to competition law considerations.
Financial statements (disclosure)
Audited or director-signed franchisor financial statements required to be included in the disclosure document.
Franchise agreement
The contract between franchisor and franchisee granting the right to use the franchise system, trade marks, and operating manual.
Franchise fee
The initial fee paid by the franchisee for the right to operate the franchise. Must be disclosed in the disclosure document.
Franchise system
The entire system of trade marks, operating procedures, and IP licensed under a franchise agreement.
Franchisee
The party granted the right to operate a franchised business under the franchisor's system.
Franchisor
The party granting franchise rights under a franchise agreement.
Good faith obligation
Each party must act in good faith in respect of any matter under the agreement or Code. A central Code obligation since 2015.
Goodwill
The value of the reputation and customer relationships built by the franchisee during the term. Complex in franchising due to system goodwill overlap.
Greenfields site
A new location previously untested. Disclosure on a greenfields site differs from an established franchise resale.
Information statement
A short document the franchisor must provide to prospective franchisees before any other disclosure — highlights key risks and obligations.
Key facts sheet
A required summary (from 2021) of the most important features of the franchise, provided to the franchisee alongside the disclosure document.
Marketing fund
A fund into which franchisees contribute for collective marketing. Franchisor has fiduciary-like obligations to account annually.
Master franchise agreement
An agreement granting a master franchisee the right to grant sub-franchises in a territory. Subject to layered Code obligations.
Mediation (Code)
A mandatory dispute resolution step under the Code, administered by the Australian Small Business and Family Enterprise Ombudsman.
New franchise agreement
A franchise agreement entered for the first time (not a renewal). Triggers the 14-day disclosure and cooling-off rights.
Non-compete clause
A restraint preventing a former franchisee from competing within a specified area and time. Enforceable to the extent reasonable.
Operating manual
The confidential manual setting out franchise system procedures. Usually incorporated into the franchise agreement.
Prior conduct
The requirement that franchisors disclose certain prior conduct — litigation, insolvency, criminal convictions — in the disclosure document.
Prospective franchisee
A person considering entering a franchise agreement. Triggers information statement and disclosure document obligations.
Receipt (disclosure)
The signed acknowledgment from the franchisee that they received the disclosure document 14 days before entering the agreement.
Renewal
Extending the franchise agreement beyond its original term. The Code sets out notice and disclosure obligations.
Restraint of trade
A non-compete or non-solicit clause. Enforceable only to the extent reasonable to protect legitimate business interests.
Royalty
The ongoing fee paid by the franchisee, typically a percentage of gross revenue, for use of the franchise system.
Sub-franchisee
A franchisee whose agreement is granted by a master franchisee rather than the ultimate franchisor.
Termination for breach
The franchisor's right to terminate for franchisee breach — the Code requires notice, opportunity to remedy, and good faith.
Termination for special circumstances
Franchisor may terminate without notice for specified grounds — insolvency, criminal conviction, abandonment, fraud.
Territory
The geographic area in which the franchisee is permitted to operate. May be exclusive or non-exclusive.
Transfer
Sale of a franchised business by the franchisee. Franchisor consent is typically required; the Code regulates the process and grounds for refusal.
Unconscionable conduct
Conduct prohibited by ss 20, 21, and 22 of the ACL. The ACCC has successfully pursued franchisors for unconscionable treatment of franchisees.
Upfront payment
Any payment made by a prospective franchisee before entering a franchise agreement. Refundable during the cooling-off period (less reasonable expenses).
Research these terms in context
Quillio is purpose-built for Australian franchise practitioners. Use it to research these terms against current Code, ACCC guidance, and authority. See /practice-areas/commercial-lawyers or start a free trial.
These definitions are general explanations for educational purposes — not legal advice. Always verify against current legislation and case law before relying on them in a client matter.
Research these terms with citations.
Quillio gives you the term, the current authority, and a clickable citation — all in one place. The free trial requires no credit card and no sales call.
Start your free trial