How to Choose a Franchise in Australia (Legal & Practical Guide)

Introduction

Choosing a franchise is one of the most important business decisions you’ll make. The right choice can give you a proven business model, brand recognition, and ongoing support. The wrong choice can lead to financial strain, disputes, and legal headaches.

This guide walks through the key steps to choosing a franchise in Australia, combining commercial insight with essential legal considerations under the Franchising Code of Conduct.

Start With Self-Assessment

Before looking at brands or industries, ask yourself:

• What are my goals — lifestyle, income, or long-term growth?

• How much time can I realistically invest in the business?

• What are my financial limits and risk tolerance?

• Do I want to work hands-on or manage a team?

The best franchise for you depends on alignment between your skills, interests, and investment level — not just the popularity of the brand.

Research Franchise Sectors and Demand

Popular franchise sectors in Australia include:

• Food & Beverage: Cafés, quick-service restaurants, juice bars

• Home Services: Cleaning, gardening, maintenance, mobile trades

• Health & Fitness: Gyms, wellness studios, allied health

• Education: Tutoring and learning support franchises

• Pet & Retail: Pet grooming, convenience, and speciality stores

Look for sectors with steady consumer demand and scalability rather than trend-based fads.You can check Franchise Council of Australia reports and ACCC guidance to compare industry performance.

Evaluate the Franchisor’s Reputation

A good franchisor should offer strong leadership, transparent communication, and fair commercial terms. Before signing:

• Speak with existing franchisees about their experiences

• Check if the franchisor has faced ACCC investigations or disputes

• Review the Disclosure Document for details on litigation, support, and turnover

• Assess the brand’s online presence and consumer reputation

Red flag signs include high franchise turnover, unverified income claims, and poor communication.

Understand the Financial Commitments

Owning a franchise can be costly. Be clear on:

• Initial franchise fee: The cost to join the system

• Fit-out and equipment: Often substantial in retail and hospitality

• Ongoing royalties and marketing fees: Typically a % of turnover

• Working capital and stock: Required for day-to-day operations

Ask your accountant to review the franchisor’s financials and provide cash-flow projections based on realistic assumptions.

Analyse the Franchise Agreement

The franchise agreement is the legal backbone of your investment. Watch for clauses covering:

• Term length and renewal rights

• Territory exclusivity

• Marketing obligations

• Personal guarantees

• Termination rights and exit conditions

Under the Franchising Code of Conduct, you must receive the disclosure document and draft franchise agreement at least 14 days before signing or paying money. Use this time to obtain independent legal advice.

Speak With a Franchise Lawyer Before You Commit

An experienced franchise lawyer, such as, Greyson Legal can:

• Review your disclosure document and franchise agreement

• Explain complex clauses (e.g. restraint of trade or step-in rights)

• Identify unfair terms or unusual risk factors

• Assist with negotiation and due diligence

Legal advice at this stage is far cheaper than resolving a dispute later.

Don’t Rush — Use the Cooling-Off Period Wisely

Even after signing, new franchisees have a 14-day cooling-off period under the Code. If you change your mind during that window, you can terminate and recover most of your payment (less the franchisor’s reasonable expenses). But ideally, all major issues should be identified before signing, not after.

Conclusion

The right franchise can provide stability and growth — but the wrong choice can lock you into years of stress.Take time to research, review, and seek expert advice before committing. With thorough due diligence and legal guidance, you’ll be well-positioned to make an informed, confident decision.

Need help reviewing a franchise opportunity?

Greyson Legal provides specialist franchise law advice to franchisees and franchisors across Australia — including disclosure reviews, franchise agreement analysis, and dispute resolution.

📞 Contact us today to discuss your next franchise decision.