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# Franchising code lifts civil penalties and tightens disclosure
- URL: https://www.bushletter.com/franchising-code-lifts-civil-penalties-and-tightens-disclosure/
- Published: 2026-08-20T05:00:00.000Z
- Updated: 2026-08-20T04:59:59.000Z
- Description: Australia's Franchising Code of Conduct has regulated the relationship between franchisors and franchisees since 1993, sitting beneath the Competition and Consumer Act 2010.
- Author: Editor
- Tags: Legal, Australia, ACCC

![Jonas Valenti](https://res.cloudinary.com/dz77sb7j1/image/upload/v1774262594/bushletter/authors/jonas-valenti.png)

By **Jonas Valenti** · 2026-08-04

TLDR

Australia's remade Franchising Code of Conduct attaches civil penalties of 600 penalty units to obligations that previously carried none. Franchisors must now disclose significant capital spending and justify restraints that survive the end of an agreement. The ACCC has already issued infringement notices under the new rules.

KEY TAKEAWAYS

01Civil penalties of 600 penalty units now apply to good-faith, disclosure and prohibited-terms obligations under the remade code.

02From 1 November 2025, franchisors must detail the rationale, timing, amount and risks of any significant capital expenditure.

03Post-term restraint of trade clauses are banned where a franchise agreement expires after a renewal or extension request.

04HN Macgregor Franchisor paid $15,650 and Luxottica Franchising Australia paid $19,800 in penalties over alleged disclosure register breaches.

05Unresolved disputes must follow a written-notice process with a 21-day resolution window before referral to an external practitioner.

## The code that once lacked teeth now has them

Australia's Franchising Code of Conduct has regulated the relationship between franchisors and franchisees since 1993, sitting beneath the Competition and Consumer Act 2010\. For most of that history, key obligations carried no civil penalty, which meant a franchisor who failed to act in good faith or misled a prospective buyer about capital requirements faced little beyond reputational cost. The remade code that commenced on 1 April 2025 changes that, attaching civil penalties of 600 penalty units to obligations including the duty to act in good faith, proper disclosure and prohibited agreement terms.[\[1\]](https://www.legislation.gov.au/F2024L01605/2025-10-21/2025-10-21/text/original/pdf?ref=bushletter.com)

Six hundred penalty units is not a rounding error. At the Commonwealth rate in effect from 1 July 2023, one penalty unit equals $313, putting a single breach at roughly $187,800\. For a franchisor running dozens of agreements, multiple violations compound fast.

## What actually changed on 1 April 2025

The code was not amended, it was remade entirely as a standalone instrument: the Competition and Consumer (Industry Codes, Franchising) Regulations 2024\. The remake followed a 2023 independent review by Dr Michael Schaper, whose 23 recommendations targeted power imbalances, transparency gaps and overly complex pre-entry processes.[\[1\]](https://www.legislation.gov.au/F2024L01605/2025-10-21/2025-10-21/text/original/pdf?ref=bushletter.com) The structural change matters: obligations now sit inside regulations that carry their own penalty provisions, rather than being enforced only through the Competition and Consumer Act's catch-all provisions.

The duty to act in good faith is the most broadly applicable change. Each party to a franchise agreement, and any person proposing to become a party, must act in good faith in relation to both the agreement and the code itself, with a civil penalty of 600 penalty units for non-compliance.[\[1\]](https://www.legislation.gov.au/F2024L01605/2025-10-21/2025-10-21/text/original/pdf?ref=bushletter.com) That obligation bites in both directions: franchisors cannot act capriciously in renewals or territory decisions, and franchisees cannot manufacture disputes to extract a buyout.

## Expanded disclosure: capital expenditure in the spotlight

The disclosure obligations that took effect on 1 April 2025 were extended further from 1 November 2025, when a new capital expenditure regime commenced. From that date, franchisors must include in their disclosure document detailed information about any significant capital expenditure required of franchisees, covering the rationale, timing, amount, anticipated benefits and risks, and must discuss that information with prospective franchisees before an agreement is signed.[\[2\]](https://www.accc.gov.au/business/industry-codes/franchising-code-of-conduct/disclosing-significant-capital-expenditure-for-franchising?ref=bushletter.com)

Major fit-out costs, equipment mandates and technology upgrades have historically been disclosed in general terms, leaving franchisees to discover the true bill after signing. Under the new regime, a franchisor requiring a $400,000 café refit must say so in writing, explain why it is required and when, and walk the prospect through the numbers before any agreement is executed. The ACCC guidance accompanying the rule makes clear that vague or aggregate disclosures will not satisfy the obligation.[\[2\]](https://www.accc.gov.au/business/industry-codes/franchising-code-of-conduct/disclosing-significant-capital-expenditure-for-franchising?ref=bushletter.com)

The Franchise Disclosure Register, which requires franchisors to maintain an up-to-date public profile accessible to prospective franchisees, also sits within this disclosure framework. Failure to maintain the register carries its own penalty exposure, as two prominent franchisors have already discovered.

## Restraint of trade: the clause franchisors can no longer rely on

One of the more consequential prohibited-terms provisions targets post-term restraint of trade clauses. Under the remade code, a franchisor cannot enter into a franchise agreement that contains a restraint of trade clause operating after the agreement expires, if that expiry follows a renewal or extension request from the franchisee.[\[1\]](https://www.legislation.gov.au/F2024L01605/2025-10-21/2025-10-21/text/original/pdf?ref=bushletter.com) A civil penalty of 600 penalty units applies for any contravention.

Franchisors have historically used post-term restraints to prevent departing franchisees from opening competing businesses nearby. Where a franchisee sought a renewal that the franchisor declined, the departing operator could still be locked out of their own trade area. The new rule removes that leverage in renewal and extension scenarios, shifting negotiating power toward franchisees who have built a location over years.

Franchisors with boilerplate restraint clauses in their standard agreements need to review them now. Any agreement entered into after 1 April 2025 that contains a non-compliant clause is not merely unenforceable; it attracts active penalty exposure.

## The regulator is already enforcing

The ACCC did not wait for the code to bed in before issuing infringement notices. On 4 August 2025, HN Macgregor Franchisor Pty Ltd, a Harvey Norman franchisor entity, paid a $15,650 penalty after the ACCC issued an infringement notice alleging it had failed to include mandatory information on the Franchise Disclosure Register before entering a franchise agreement. Paying an infringement notice is not an admission of liability.[\[4\]](https://www.accc.gov.au/media-release/harvey-norman-franchisor-pays-penalty-for-alleged-breach-of-franchising-code?ref=bushletter.com) ACCC Deputy Chair Catriona Lowe said the register's reliability depends on franchisors meeting their obligations.

"A franchisor's failure to publish up-to-date information on the disclosure register undermines transparency for prospective franchisees, and the reliability and integrity of the register," Lowe said.[\[4\]](https://www.accc.gov.au/media-release/harvey-norman-franchisor-pays-penalty-for-alleged-breach-of-franchising-code?ref=bushletter.com)

A second enforcement action followed. Luxottica Franchising Australia, the entity behind the OPSM and Laubman and Pank brands, paid a $19,800 penalty on 30 March 2026 over an alleged failure to maintain an up-to-date franchise profile on the register.[\[3\]](https://www.accc.gov.au/media-release/opsm-and-laubman-pank-franchisor-pays-penalty-for-alleged-breach-of-franchising-code?ref=bushletter.com) ACCC Deputy Chair Mick Keogh said the register exists so that prospective franchisees can make informed decisions.

"It is important that interested businesses and individuals can access clear and reliable information about a franchise so they can make informed business decisions, including whether they should enter into a franchise agreement with a franchisor," Keogh said.[\[3\]](https://www.accc.gov.au/media-release/opsm-and-laubman-pank-franchisor-pays-penalty-for-alleged-breach-of-franchising-code?ref=bushletter.com)

Both cases involved the disclosure register rather than the good-faith or capital expenditure provisions. The harder-to-detect obligations have not yet generated public enforcement action. That gap is unlikely to last.

## Dispute resolution: structured process, real penalties

The code mandates a formal dispute-resolution sequence that replaces the informal processes many franchisors previously relied on to slow-walk legitimate grievances. A dispute must first be notified in writing, after which the parties have 21 days to reach a resolution between themselves.[\[1\]](https://www.legislation.gov.au/F2024L01605/2025-10-21/2025-10-21/text/original/pdf?ref=bushletter.com) If no resolution is reached within that window, either party may refer the matter to an Alternative Dispute Resolution practitioner or, where permitted, an arbitrator.

Refusing to participate in the process, or obstructing it, carries civil penalties. A franchisor who declines to engage with a franchisee's written dispute notice, or a franchisee who refuses to attend an ADR session, is not simply being difficult; they are creating a penalty exposure that the ACCC can act on. For smaller franchisees who have historically felt unable to force a response from their franchisor, the written-notice trigger and the mandatory timeline are a material improvement in their practical position.

## What to do now

For prospective franchisees, the practical checklist starts with the Franchise Disclosure Register. Before approaching a franchisor directly, search the register to confirm the profile is current and complete; if it is not, that is itself a compliance signal. When a disclosure document is provided, the capital expenditure section warrants line-by-line scrutiny, and any figure listed as indicative or subject to change should be questioned in writing, with the franchisor's responses kept on file.

Prospective franchisees should also check for any restraint of trade clause and confirm whether it purports to apply after the agreement's expiry in a renewal scenario. If it does, and the agreement was entered into after 1 April 2025, the clause may be void and the franchisor may already be in breach. Independent legal advice before signing remains the single most cost-effective due-diligence step available.

For franchisors, the fix-list is more urgent. Standard-form agreements need review against the prohibited-terms list, with any non-compliant restraint clauses removed or redrafted before the next agreement is signed. Disclosure documents need updating to reflect the capital expenditure requirements before any prospective franchisee receives them, and Franchise Disclosure Register profiles need to be treated as live documents rather than set-and-forget filings. The Harvey Norman and OPSM penalties were not large in absolute terms, but they confirm the ACCC is monitoring compliance actively and has no hesitation in issuing infringement notices against household-name brands.

SOURCES & CITATIONS

1. [Competition and Consumer (Industry Codes, Franchising) Regulations 2024](https://www.legislation.gov.au/F2024L01605/2025-10-21/2025-10-21/text/original/pdf?ref=bushletter.com)
2. [Disclosing significant capital expenditure for franchising, ACCC guidance](https://www.accc.gov.au/business/industry-codes/franchising-code-of-conduct/disclosing-significant-capital-expenditure-for-franchising?ref=bushletter.com)
3. [OPSM and Laubman and Pank franchisor pays penalty for alleged breach of franchising code, ACCC](https://www.accc.gov.au/media-release/opsm-and-laubman-pank-franchisor-pays-penalty-for-alleged-breach-of-franchising-code?ref=bushletter.com)
4. [Harvey Norman franchisor pays penalty for alleged breach of franchising code, ACCC](https://www.accc.gov.au/media-release/harvey-norman-franchisor-pays-penalty-for-alleged-breach-of-franchising-code?ref=bushletter.com)

FREQUENTLY ASKED QUESTIONS

What is the value of a 600 penalty unit fine under the new franchising code?

At the Commonwealth penalty unit rate of $313 in effect from 1 July 2023, a 600-penalty-unit breach equates to roughly $187,800\. Multiple breaches across multiple agreements multiply that exposure significantly.

When did the new capital expenditure disclosure rules take effect?

The detailed capital expenditure disclosure requirements commenced on 1 November 2025, separate from the broader code remake that took effect on 1 April 2025\. Franchisors must disclose the rationale, timing, amount, anticipated benefits and risks of any significant capital expenditure and discuss those figures with prospective franchisees before any agreement is signed.

Are post-term restraint of trade clauses completely banned under the new code?

No, they are banned only in specific circumstances. A franchisor cannot include a restraint of trade clause that applies after a franchise agreement expires where that expiry follows a renewal or extension request from the franchisee. Restraints operating in other contexts may still be enforceable, but any clause that contravenes the code attracts a civil penalty of 600 penalty units.

What is the Franchise Disclosure Register and why does it matter?

The Franchise Disclosure Register is a public database maintained under the code that requires franchisors to keep an up-to-date profile accessible to prospective franchisees. Failure to maintain it is a breach the ACCC is actively enforcing, as shown by penalties paid by Harvey Norman and OPSM franchisor entities over alleged breaches in 2025 and 2026.

How does the new dispute-resolution process work?

A party must notify the other in writing of the dispute. The parties then have 21 days to resolve it between themselves. If unresolved after 21 days, either party may refer the matter to an Alternative Dispute Resolution practitioner or, where permitted, an arbitrator. Failure to participate in the process carries civil penalties.

![Jonas Valenti](https://res.cloudinary.com/dz77sb7j1/image/upload/v1774262594/bushletter/authors/jonas-valenti.png)

[Jonas Valenti](https://bushletter.com/author/jonas-valenti/?ref=bushletter.com)

Jonas Valenti writes about search and how businesses get discovered. He has spent years watching what makes a company visible online, and is unsentimental about tactics that no longer work.