Franchisors Face Greater Compliance Obligations Under the Franchising Code: Are You Ready?
- Barry Money
- 19 hours ago
- 3 min read
Updated: 7 hours ago
Operating a successful franchise network requires far more than recruiting franchisees and growing your brand. It also means maintaining strict compliance with Australia's Franchising Code of Conduct, which continues to evolve to improve transparency, accountability and franchisee confidence.
The Australian Competition and Consumer Commission (ACCC) has recently reminded franchisors that failing to meet their legal obligations can result in significant penalties and enforcement action. Recent changes to the Code place even greater emphasis on financial transparency, particularly regarding franchisee-funded accounts and disclosure obligations.
For franchisors, this serves as an important reminder that compliance is not a once-a-year exercise, it is an ongoing responsibility.
New Rules for Specific Purpose Funds
Since 1 November 2025, the Franchising Code has introduced new obligations governing specific purpose funds, replacing the previous focus on marketing funds alone.
These funds often contain contributions made by franchisees for activities such as marketing, advertising, technology, training or other agreed network initiatives. The revised Code introduces stricter accountability requirements to ensure franchisees understand exactly how their money is managed.
Among the key obligations, franchisors administering a specific purpose fund must:
Prepare an annual financial statement that clearly explains the money received, where it came from and how it was spent.
Keep all franchisee contributions in a separate account with a recognised financial institution.
Maintain appropriate financial records that support transparency and accountability.
These measures are designed to strengthen trust between franchisors and franchisees by ensuring greater visibility over the management of shared funds.
Keeping Your Franchise Disclosure Register Up to Date
The Franchise Disclosure Register remains another critical compliance obligation.
Franchisors are required to maintain an accurate and current profile on the national register within the prescribed timeframes. Providing incomplete, inaccurate or outdated information may constitute a breach of the Franchising Code and expose a franchisor to regulatory action by the ACCC.
The disclosure register also assists prospective franchisees by improving access to important information before they commit to purchasing a franchise.
For franchisors, this means that updating the register should form part of regular compliance reviews rather than being left until franchise recruitment begins.
ACCC Enforcement Demonstrates Compliance Matters
The ACCC has already demonstrated its willingness to enforce these obligations.
Recently, Venue Smart Pty Ltd paid $59,400 after the ACCC issued three infringement notices alleging breaches of the Franchising Code.
According to the ACCC, the alleged breaches included:
Failing to prepare the required annual financial statement for its marketing fund during the 2024–25 financial year.
Failing to maintain a separate financial institution account for franchisee marketing fund contributions.
Failing to provide the required information for the Franchise Disclosure Register at least 14 days before entering into a franchise agreement with a prospective franchisee.
The case highlights that administrative compliance obligations are not simply procedural requirements, they are enforceable legal obligations carrying financial consequences.
Why Compliance Should Be Part of Your Franchise Growth Strategy
Many franchisors understandably focus on business development, recruitment and operational growth. However, strong compliance systems should be viewed as part of the overall franchise growth strategy rather than an administrative burden.
Well-managed compliance processes help:
Build confidence with prospective franchisees.
Demonstrate professionalism and transparency.
Reduce regulatory risk.
Protect the long-term reputation of the franchise network.
Minimise the likelihood of costly investigations or enforcement action.
As franchise systems expand, maintaining accurate records, financial reporting and disclosure processes becomes increasingly important.
Don't Wait Until the ACCC Comes Knocking
The updated Franchising Code reflects a broader move towards greater accountability across the franchising sector.
Franchisors should regularly review their compliance systems, financial reporting procedures and disclosure obligations to ensure they remain consistent with current legal requirements. Those uncertain about their obligations should obtain independent legal advice before issues arise.
Strong compliance not only protects your business from regulatory action, it also strengthens franchisee confidence and supports sustainable franchise growth.
Speak With a Franchise System Architect
If you are exploring franchising and want to determine whether your business is ready for franchising, it helps to speak with someone who understands the structural side of franchise development.
At Franchising Made Easy®, we specialise in helping founders design franchise systems that are commercially viable, operationally disciplined and built for long-term growth.
If you would like to explore your options, consider booking a consultation to discuss your business and expansion ambitions.
Source: This article is based on information published by the Australian Competition and Consumer Commission (ACCC) in its Franchising Information Network update, "Reminder to franchisors: Comply with your obligations under the Franchising Code." Readers can access the original guidance and related resources through the ACCC's official publications.
