Franchise Agreement Review for Franchisees

Before you sign, the Franchising Code gives you a protected window to have the documents looked at. We review the franchise agreement and the franchisor’s disclosure document together, and put the answer in writing.

  • From $2,200 + GST for a single-unit franchise. Larger, multi-site and master franchise agreements are quoted once we have seen the documents.
  • The franchise agreement and the disclosure document are reviewed together, not separately.
  • Includes a written letter of advice, 1 round of amendment requests to the franchisor, and assistance with execution.
  • Acting for franchisees anywhere in Australia. The Franchising Code is federal law and applies in every state and territory.
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The basics

What a Franchise Agreement Is

A franchise agreement is the contract that lets you run a business under someone else’s brand and system, on their terms, for a fixed period.

It is not a partnership, and it is not a business you own outright. You are buying the right to operate. The franchisor keeps the brand, the operating system, and usually a large say in your suppliers, your pricing, your site and who you can sell to when you want out.

Franchising in Australia is regulated by the Franchising Code of Conduct, a mandatory industry code made under the Competition and Consumer Act. The Code does not make the agreement fair or balanced, and it does not set the fees. What it does is set the process: what the franchisor has to give you, how long you must have it before you can sign, and what rights you keep once you have signed.

Corporate Legal provides legal services only - not financial, taxation, accounting or business advice. Whether the franchise is a sound commercial decision, and whether the numbers work for you, are matters for you and your accountant.
Not sure whether the pack you have been sent is complete? Send it through and we will tell you

Before you sign

What the Franchisor Has to Give You

The Code sets a minimum pack of documents and a minimum amount of time to read them. If any of this is missing, or the clock has not run, that is worth knowing before you commit.

An information statement

A short plain-English document about the risks and rewards of franchising. It has to come within 7 days of you showing serious interest, and before any of the other documents.

The franchise agreement

In the form you are actually expected to sign. A draft that keeps changing does not start the clock, and the final version is what the 14 days run on.

The disclosure document

The franchisor’s own profile: fees and set-up costs, supply restrictions and rebates, capital expenditure it can require, contact details for current and former franchisees, a solvency statement, and its history of legal proceedings.

A copy of the Code

So the process can be checked against the rules rather than taken on trust.

Leases and related agreements

Where you will occupy a site, or the franchisor holds the head lease and grants you occupation under it. Confidentiality and loan agreements come with the pack as well.

14 days to read it

Once you have the documents in final form, no franchise agreement can be entered into for 14 days. That window exists so the documents can be reviewed properly. It is the cheapest part of the whole transaction.

Already inside your 14 days?

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The review

What We Look At

The agreement tells you what you must do. The disclosure document tells you who you are doing it with. They only make sense read together, which is why both are covered by the one fee.

1

Term, renewal and the end of the term

How long you have, whether you get a further term or only the chance to ask for one, what conditions attach, and what you are left holding when it finishes. Fit-out you paid for, a site you cannot keep and a customer list you do not own are common outcomes.

2

Territory and exclusivity

Whether your area is exclusive or simply the area you were pointed at, whether the franchisor can open nearby, and whether it can sell into your territory online or through another channel.

3

Fees, levies and the marketing fund

The initial fee, ongoing royalties, marketing and technology levies, training and renewal charges, and how far each of them can be increased during the term. Also what the marketing fund is actually spent on and what you are told about it.

4

Supply, purchasing and capital expenditure

Who you must buy from and at what price, what rebates the franchisor receives from those suppliers, and what refit or capital spend it can require of you mid-term.

5

The personal guarantee

Most franchise agreements are backed by a personal guarantee from the directors, and it usually survives the end of the term. We set out exactly what is being guaranteed, by whom, and for how long, so the exposure is understood before it is signed rather than after.

6

Termination, restraint and transfer

What the franchisor can terminate for and how quickly, what you are restrained from doing afterwards and for how long, and what it takes to sell the business, including the franchisor’s consent and any transfer fee.

The process

How It Works

Franchise documents vary enormously in size, so we quote on what you actually have rather than on a guess.

1

Email the documents

The franchise agreement, the disclosure document, and any lease, licence, confidentiality or loan agreement that came with them. If you are not sure whether the pack is complete, send what you have.

2

We confirm the fee in writing

Before any work starts. Once you accept it the fee does not move unless the scope of the work genuinely changes, and if that happens we tell you and re-quote first.

3

A written letter of advice

Going through what matters clause by clause in plain terms, with the commercial risk flagged and the position measured against what is standard in franchising rather than against a perfect contract.

4

1 round of amendment requests

We put the points worth pressing to the franchisor, and tell you honestly which are likely to move and which are not. Franchisors hold most terms constant across the network, but site, territory, fit-out contribution, training fees and the guarantee are the areas where movement is sometimes available.

5

Signing

The signed statement of independent legal advice your franchisor requires, and assistance with execution of the agreement and any related documents.

Ready to have the documents looked at?

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Fees

What It Costs

From $2,200 + GST for a single-unit franchise. Master franchise, area development and multi-site agreements are priced on application - email the documents through and we will confirm a fixed fee before any work starts.

Included in the fee

The documents: the franchise agreement and the franchisor’s disclosure document, reviewed together.
The advice: a written letter of advice you can keep and re-read.
The negotiation: 1 round of amendment requests to the franchisor.
The signing: the statement of independent legal advice your franchisor requires, and assistance with execution.

Quoted separately

The site: the lease, licence or occupancy agreement for your premises - see commercial leasing and retail leasing.
An existing franchise: buying a franchised business from an outgoing franchisee is a business purchase as well as a franchise review.
Your entity: setting up the company or trust that will hold the franchise.
Finance: loan, security and guarantee documents given to a lender.
Other: trade marks and intellectual property, and tax or duty advice.
Franchisor-side work: preparing a franchise agreement, disclosure document or network documents is a separate and larger engagement.

Every published fee is on one page.

See Our Pricing
Related services

Franchising usually arrives with a site, an entity and a set of commercial documents attached. We handle those too.

See alsoCommercial LeasingRetail LeasingLicence AgreementsPricingContact

Franchise Questions, Answered

Can a franchise agreement actually be negotiated?
Some of it. Franchisors keep most terms constant across the network, and the disclosure document has to say whether the agreement can be changed, so a blanket refusal is not unusual and is not a sign of bad faith. Where movement is sometimes available is on the site and territory, the fit-out contribution, training and set-up fees, the scope of the personal guarantee and occasionally the restraint. The fee includes 1 round of amendment requests, and we tell you which points are worth pressing rather than sending a long list that will be refused.
What is the 14-day period before signing?
Once you have been given the franchise agreement, the disclosure document and a copy of the Code in final form, no franchise agreement can be entered into for 14 days. If the documents change materially, the period runs again on the new version. The window exists so the documents can be reviewed, and it costs nothing to use.
Do I have a cooling-off period after I sign?
Yes. A franchisee generally has 14 days from entering the agreement to terminate it. If you are leasing or occupying premises from the franchisor, there is a further 14-day window that runs from when you are given the proposed or final lease terms. If you terminate in that period the franchisor has to repay what you have paid within 14 days, though it can retain reasonable expenses if the agreement sets them out. Cooling off can only be given up in narrow circumstances, broadly where you already hold a substantially similar agreement with the same franchisor. Cooling off is a safety net, not a substitute for reading the documents first - the money you have already committed elsewhere is usually not refundable.
Do I have to give a personal guarantee?
Almost always, if you are taking the franchise through a company or a trust. The franchisor wants a person behind the entity. What is negotiable is sometimes the scope: which obligations are guaranteed, whether a spouse who has nothing to do with the business is included, and whether the guarantee ends when the term does. We set out what is actually being guaranteed so the decision is made with the exposure in front of you.
Why does the disclosure document matter as much as the agreement?
Because the things that decide whether the franchise works are mostly in it, not in the agreement. Set-up costs, supply restrictions and the rebates the franchisor receives from those suppliers, capital expenditure it can require of you later, a solvency statement, its history of legal proceedings, and contact details for current and former franchisees are all disclosure document material. Reviewing the agreement without it gives you half the picture, which is why both are covered by the one fee.
Do you act for franchisors as well?
We act for franchisees on the review work described on this page. Franchisor-side work - preparing a franchise agreement, a compliant disclosure document, or the documents for a network you are building - is a separate and larger engagement, priced on application.
I am buying an existing franchise from another franchisee. Is that the same job?
No, it is two jobs. There is the purchase of the business from the outgoing franchisee, and separately your entry into a new franchise agreement with the franchisor, which usually needs the franchisor’s consent and a transfer fee. Both are quoted, and the business purchase is a published fixed fee on our pricing page. Note that on a transfer the cooling-off period runs to the earlier of 14 days after you become the franchisee or the day you take possession of the business.
How much does it cost?
From $2,200 + GST for a single-unit franchise, covering the agreement and the disclosure document, the letter of advice, 1 round of amendment requests and assistance with execution. Franchise documents vary enormously in size, so master franchise, area development and multi-site agreements are priced on application. Email the documents through and we will confirm a fixed fee in writing before any work starts.

Something here not covered?

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Use the 14 Days

Send us the franchise agreement and the disclosure document and we will confirm a fixed fee before we start. A review inside the window costs a fraction of what it takes to get out of an agreement afterwards.

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