Most franchisors have already reviewed and updated their franchise agreements and disclosure documents for the 1 April 2025 Franchising Code of Conduct reforms. But another set of significant changes takes effect from 1 November 2025 and they will directly impact every new, renewed or extended franchise agreement in Australia.
Recap: April 2025 Updates You Should Already Have Made
The April 2025 Franchising Code changes required franchisors to adjust their documents and processes to comply with new disclosure rules, including:
• Former franchisees’ contact details and consent before disclosure;
• Workplace compliance reporting, including Fair Work and Independent Contractors Act matters;
• Territory competition disclosure, clarifying if franchisees may face competition from non-franchised outlets; and
• Enhanced Disclosure Register information, such as convictions, insolvency, or arbitration clauses.
If those updates are complete, you’re halfway there. The next step is ensuring your documents capture the November 2025 changes, which bring new obligations for compensation, investment return, and fund reporting.
Key Questions Franchisors and Franchisees Are Asking
1. Who must comply?
All franchisors operating in Australia. The new requirements apply to any franchise agreement entered into, renewed, extended, or transferred on or after 1 November 2025.
2. Do franchisees need to do anything?
Yes — prospective franchisees should make sure their franchise lawyer confirms the agreement includes the new protections for compensation, return on investment, and fund transparency before signing.
3. What if I already updated for April 2025?
You’ll still need to make additional amendments. The April updates focused mainly on disclosure and consent. The November changes affect core agreement clauses.
4. What happens if I don’t update?
Entering into a non-compliant franchise agreement can expose a franchisor to civil penalties (up to 600 penalty units per breach, currently $198,000) and regulatory action by the ACCC.
1. Compensation for Early Termination
Franchisors must not enter into a franchise agreement unless it provides for the franchisee to be compensated if the franchisor terminates early because it:
- withdraws from the Australian market;
- rationalises its network; or
- changes its distribution model.
The franchise agreement must explain how compensation is calculated, covering lost profit and goodwill, unamortised capital expenditure, loss of opportunity to sell goodwill, and business wind-up costs. It must also include stock and equipment buy-back terms where items can’t be reused. This extends protections previously limited to new vehicle dealership franchises to all new franchises.
Every franchisor will need a detailed compensation framework in its standard franchise agreement.
2. Reasonable Opportunity for Return on Investment
Every new franchise agreement must give franchisees a reasonable opportunity to make a return on any investment required by the franchisor, both at entry and during the term. Franchisors must also discuss and document how and when major capital expenditure is likely to be recouped.
This ensures franchisees can recover fit-out, refurbishment, or technology costs before the agreement ends.
Franchisors should review capital expenditure, renewal, and refurbishment clauses to confirm they’re commercially realistic.
3. Specific Purpose Funds
Marketing and cooperative funds are now grouped under one category: specific purpose funds, which also covers IT, training, or conference funds.
Franchisors must disclose the percentage of total income spent on each fund’s purpose and on administration, and include detailed explanations in the Disclosure Document.
Franchisors have until 1 November 2025 to ensure all fund clauses and reporting templates align with the new specific purpose fund rules.
4. Disclosure of Significant Capital Expenditure
Franchisors must include in their Disclosure Document the amount, rationale, and timing of any significant capital expenditure; expected benefits and risks; and when and how the franchisee is likely to recover that investment.
This greater transparency strengthens due diligence and supports the new “reasonable return” requirement.
5. Transitional Period
Franchise Agreements: Changes apply to any new, renewed, extended, or transferred agreement from 1 November 2025.
Disclosure Documents: Must also be updated by that date, aligning with most franchisors’ 30 June EOFY review cycle. Early adopters will avoid the last-minute compliance rush.
What Franchisors Should Do Now
- Review your franchise template: add compliant compensation, ROI, and specific-purpose fund provisions.
2. Update your Disclosure Document: especially capital expenditure and fund sections.
3. Plan your compliance timeline: have all updates finalised before 1 November 2025.
4. Train your team and advisors: ensure your recruitment, accounting, and operations teams understand the new rules.
Need Help Updating Your Franchise Documents?
Rise Legal has already prepared a fully updated 2025-compliant franchise suite covering both the April and November Code changes. If you’re a franchisor, advisor, or franchisee needing to confirm compliance, we can review your current documents or prepare updated versions ready for use.
✅ Book a chat with our team today – Free Discovery Call
Disclaimer: This blog post 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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