By Helen Kay, Franchise Lawyer & Principal, Rise Legal
Franchising continues to be one of the most popular ways for Australians to enter business ownership—with the promise of brand recognition, systems, and support. But joining a franchise system isn’t just buying a business—it’s entering into a long-term legal relationship that comes with significant rights and responsibilities.
I’ve advised hundreds of franchisees across Australia and the UK over the past 20 years, and one thing is clear: the most successful franchisees are those who take the time to understand what they’re getting into before they sign. If you're considering becoming a franchisee, here's what you need to know to make an informed decision and protect your investment.
It All Starts with the Right Information
When you first express interest in a franchise, the franchisor must provide you with an Information Statement. This is a standard document published by the ACCC and is designed to help you understand the risks and responsibilities involved in joining a franchise system.
It’s not a sales brochure. It’s an educational resource—and one you should read carefully before anything else. It includes key questions to ask, factors to consider, and guidance on what it really means to be part of someone else’s brand.
Receiving this document early in the process is a legal requirement. If a franchisor skips this step or tries to rush you ahead without it, that’s a red flag. Take it as a sign to slow down and reassess.
The Disclosure Document Is Long for a Reason
The Disclosure Document is your window into how the franchise system actually works. It's packed with important details and while it may feel overwhelming, it’s absolutely essential reading.
Inside, you’ll find information about:
- The business experience of the franchisor and its directors
- Start-up and ongoing fees
- Training and support provided
- Restrictions on your operations
- How marketing funds are used
- Whether you’ll have an exclusive territory
- Your renewal and exit options
- Contact details for current and former franchisees
- Any history of litigation or insolvency
This document should answer most of your commercial questions—and raise a few more. Don't skim it. Read it slowly, highlight areas you're unsure about, and keep a list of questions to raise with the franchisor and your lawyer.
By law, you must be given at least 14 days to review the Disclosure Document and franchise agreement before you’re asked to sign or pay anything. Use that time well.
Call Other Franchisees—And Ask the Right Questions
One of the most valuable steps you can take is to speak to current and former franchisees. Their contact details will (or should) be included in the Disclosure Document.
Ask them:
- What has their experience been like?
- Have the franchisor’s promises matched the reality?
- Are they making money? How long did it take?
- What kind of support do they get day-to-day?
- Would they do it again?
Former franchisees, in particular, can offer important insights about why they left the system—and whether they’d recommend it to others.
Just keep in mind that everyone’s experience is different. A struggling franchisee might be in a poor location or may not have followed the system. But consistent feedback from multiple sources will help you spot patterns and identify real risks.
Don’t Underestimate the Franchise Agreement
The Franchise Agreement is a legally binding document that governs the entire relationship between you and the franchisor. It’s not like signing a regular business contract or lease. These agreements can be highly detailed, and they’re often written to favour the franchisor’s interests.
That’s not a bad thing—franchisors need to protect their brand—but it does mean you need to fully understand what you're agreeing to. Common areas of concern include:
- Territory: Do you have exclusivity, or could another franchisee be placed nearby?
- Termination: In what circumstances can the franchisor end the agreement early?
- Restraints: What are the restrictions on your ability to operate a similar business later?
- Renewal: Is there an automatic right to renew, or does the franchisor have discretion?
- Exit: Can you sell your business? What’s involved in the transfer process?
- Fees: Are the marketing and admin fees fixed or percentage-based?
It’s vital to have a franchise lawyer review this document. Don’t rely on general legal advice—a lawyer who doesn’t understand franchising may miss key issues that could affect you down the line.
Franchising Is a Relationship—Not Just a Business Deal
Many franchisees assume that buying a franchise is like buying a ready-made business. But franchising is really a long-term relationship. You’re buying into a brand, but also submitting to its rules, systems, and expectations.
That can be great—if the brand is strong, the support is real, and the communication is open. But it can also feel restrictive if you're entrepreneurial or want to make changes to suit your local market.
Make sure your personality and values are a good fit for the system. Speak with the franchisor and get a sense of how decisions are made and how franchisees are supported. Some systems are highly collaborative; others are more top-down.
Be Realistic About Costs and Timeframes
Franchising is often sold as a “business in a box,” but it still requires hard work, capital, and time to get established.
Ask the franchisor for realistic financial performance data. What are the average earnings for a franchise in your category? What are the startup and working capital requirements? How long before most franchisees break even?
Then ask your accountant to review the financial model. Does it stack up? Can you afford the setup costs and still have enough cash flow to support yourself?
Also consider your lifestyle. Some franchises require 60+ hours a week in the early stages. Others are more flexible but demand high sales skills. Understand what’s required, and whether it aligns with your goals.
A Few Hours with a Franchise Lawyer Can Save You Years of Regret
One of the most common mistakes I see is franchisees who invest heavily into a business—but skip the specialist legal advice to cut corners on cost.
It’s a false economy.
A good franchise lawyer won’t just explain the agreement—they’ll help you understand the commercial risks, assess whether the system is right for you, and make sure the contract reflects what you’ve been told.
They may also be able to negotiate small but meaningful changes to clarify terms or protect your interests. Even if no changes are made, having that independent legal review gives you peace of mind—and strengthens your position if issues arise later.
Final Thoughts
Franchising offers an incredible opportunity to be in business for yourself, but not by yourself. But don’t be fooled into thinking it’s a shortcut to success.
Approach it like any major investment—do your due diligence, ask questions, get advice, and take your time.
No reputable franchisor will rush you. If you feel pressured, that’s a sign to pause. A successful franchise relationship is built on mutual trust, transparency, and clear expectations—from the very beginning.
Helen Kay, is an accomplished business and franchise lawyer with over two decades of legal expertise. As the founder of Rise Legal, Helen specialises in delivering strategic and practical commercial and franchise legal solutions. Her exciting career has seen her in pivotal roles at prestigious law firms, consistently offering exceptional legal counsel. Her unique combination of hands-on experience and visionary leadership positions her as an invaluable asset in the realm of commercial law and franchise expertise, assisting franchisors and franchisees in safeguarding their business through comprehensive commercial legal support.
Rise Legal Gold Coast | Perth | Sydney
T: 1300 064 707 | E: [email protected] | https://riselegal.com.au
Disclaimer: This article is intended for informational purposes only and should not be considered legal advice. Consult with a qualified commercial lawyer for personalised advice related to your specific circumstances.
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