Buying a Franchise in Australia: Cooling-Off Rights

Buying a franchise can involve several commitments before the doors open. If you change your mind after signing, a cooling-off right may provide a way out of the franchise agreement — but not necessarily every related expense or contract. Before joining Australia’s franchising community, understand when that right applies, how to exercise it and what money could remain at risk.

Separate the disclosure period from cooling off

Australia’s Franchising Code of Conduct is a mandatory code under the Competition and Consumer Act 2010. The Australian Competition and Consumer Commission (ACCC) regulates compliance. A new Code commenced on 1 April 2025, with some additional requirements applying from 1 November 2025.

Two protections can easily be confused:

• Pre-contract disclosure: generally, the franchisor must provide the required documents at least 14 days before you enter the agreement or make a non-refundable payment.
• Cooling off: you are usually entitled to terminate a new franchise agreement within 14 days of entering it, subject to the applicable rules.

The first period gives you time to investigate before committing. The second provides a limited opportunity to withdraw afterwards. Neither should replace independent legal and accounting advice.

Do not assume the cooling-off deadline is simply 14 days after the date printed on the contract. The transaction structure and the timing of relevant documents, including certain premises information, can affect your position. Transfers of existing franchises also require particular attention.

Ask your solicitor to confirm, in writing, whether you have a cooling-off right, what triggers it and the exact deadline for giving notice.

Check eligibility before relying on an exit

Cooling off is not a universal cancellation right for every franchise transaction. A first-time buyer signing a new agreement should not assume that the same rules apply to a renewal, extension or purchase from an existing franchisee.

Give your solicitor the complete transaction picture, including:

• Whether you are entering a new agreement or taking a transfer of an existing one.
• Whether you already operate another business under the same franchise system.
• Any proposed waiver of disclosure or cooling-off protections.
• Any premises documents supplied separately from the franchise agreement.
• The dates on which documents were received, signed or changed.

The Code permits cooling-off waivers in certain circumstances. Treat a waiver as a significant legal decision, not an administrative shortcut. Ask your adviser whether it is permitted in your situation and precisely which protection you would surrender.

Keep a dated record of the transaction. Save emails, attachments, signed versions and payment receipts in one place. If there is later disagreement about the deadline, a clear documentary record will be much more useful than your recollection of a sales conversation.

Work out what cancellation would actually cost

Cooling off does not necessarily mean a full refund. Under the Code, a franchisee exercising an applicable cooling-off right is entitled to repayment of relevant payments, but the franchisor may retain reasonable expenses where the legal requirements are satisfied.

Before signing, ask what expenses the franchisor proposes to retain and where those expenses, or their calculation method, appear in the agreement. Request an itemised explanation rather than accepting a broad statement that an initial fee is non-refundable. A contractual label does not, by itself, determine your statutory rights.

More importantly, terminating the franchise agreement may not automatically cancel commitments to other parties. These might include:

• A business purchase agreement with an outgoing franchisee.
• Equipment orders or hire agreements.
• A finance facility and associated establishment costs.
• A premises lease or deposit.
• Professional fees for work already completed.

Create a short commitment schedule showing each counterparty, the amount paid, the next payment date and the cancellation terms. Ask your solicitor whether related contracts can be made conditional on the franchise purchase proceeding beyond the relevant cooling-off period. The other parties must agree; do not assume such protection exists.

Give clear notice and preserve evidence

If you decide to withdraw, act promptly. Tell your solicitor immediately rather than spending the remaining days negotiating informally with a salesperson.

Cooling-off termination should be communicated in writing. Have your adviser check the required recipient, delivery method and deadline against the Code and your agreement. Clearly identify the agreement and state that you are exercising the applicable cooling-off right; avoid wording that merely asks whether cancellation might be possible.

Keep evidence of delivery and request written acknowledgement. Also request an itemised refund calculation and confirmation of when repayment is due. If the franchisor disputes your notice or deductions, obtain legal advice about the Code’s dispute resolution process. The Australian Small Business and Family Enterprise Ombudsman can provide information about dispute assistance.

Practical takeaway: before signing, obtain a confirmed cooling-off deadline, a written explanation of potential deductions and a list of commitments that would survive cancellation. Cooling off is a safety net, not a substitute for deciding carefully.