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Franchise Law: Franchise Regulations Compliance Costs

While Australian franchise law and the Franchising Code of Conduct do not currently require franchisors to be registered or have their franchise agreements or franchise disclosure documents vetted by an external agency, franchisors are expected to maintain all their documentation and conduct themselves in accordance with the Franchising Code at all times.

The cost of having Code-compliant documentation produced may in itself act as a filter to restrict the entry of new franchisors into the market place.

Costs to produce franchise agreements and franchise disclosure documents vary according to the complexity of the franchise business model, and the experience and qualifications of the service provider engaged to perform the work.

Some franchise businesses may have in-house franchise law expertise which can offset this often considerable outlay.

Additionally, there is an ongoing (and at least annual) cost of franchise law compliance due to the requirement to update franchise disclosure documents every year, and for any material change in the franchise business.