Buying a Franchise in Australia: Is It Really a Licence?

An opportunity advertised as a ‘licence’, ‘dealership’ or ‘business partnership’ may still be a franchise under Australian law. Before paying for access to a brand and its operating system, establish what you are actually buying. The label on the brochure is not decisive: the substance of the arrangement determines whether protections for Australia’s franchising community apply.

Understand the legal test, not the sales label

The Australian Competition and Consumer Commission (ACCC) explains that an arrangement is a franchise agreement under the Franchising Code of Conduct when all three defining features are present.

First, one person grants another the right to carry on a business in Australia supplying goods or services under a particular system or marketing plan. That system or plan must be substantially determined, controlled or suggested by the person granting the right, or their associate.

Second, the business is associated with a particular trade mark, advertising or commercial symbol owned, used, licensed or specified by that person or their associate.

Third, the operator must make, or agree to make, certain types of payments to that person or their associate before starting or continuing the business.

These features must be assessed together. Permission to use a trade mark alone does not necessarily create a franchise. Equally, calling a payment a ‘licence subscription’ rather than a ‘franchise fee’ does not settle the question.

Ask an independent franchise lawyer to assess the complete arrangement. The payment element has legal qualifications and exclusions, so a simple checklist cannot conclusively determine your position.

Map how the proposed business would operate

Start with the practical obligations, rather than the seller’s description. Collect the proposed contract, schedules, operating requirements, fee list and any separate agreements with associated businesses.

Then create a short record under three headings:

• System: Who decides how services are delivered, which processes you follow and how the business is presented? Record requirements concerning operating manuals, booking systems, customer handling and promotions.
• Brand: Which name, trade marks or visual identity will customers see? Identify who owns or licenses them and what permission you receive to use them.
• Payments: Who receives the initial and continuing payments? Include charges for access, software, administration and other compulsory services for your lawyer to assess.

For example, a branded service opportunity might require operators to use a prescribed booking platform, follow a detailed service manual and pay a recurring access fee. Those facts warrant examination against the legal test; they do not, by themselves, establish the answer.

Keep copies of presentations and emails. If the seller says you have complete operational freedom, ask them to identify the provisions supporting that claim. Compare the answer with the actual requirements you would have to follow.

Know why classification affects your rights

Australia specifically regulates franchising through the mandatory Franchising Code of Conduct, enforced by the ACCC. A new Code commenced on 1 April 2025, with some requirements applying from 1 November 2025. Your lawyer should confirm which provisions apply to the proposed transaction.

Where an arrangement is a franchise, the Code imposes disclosure requirements and standards of conduct. These include providing prospective franchisees with an information statement, disclosure document and franchise agreement. The Code also requires parties to act in good faith, including during dealings before an agreement is entered into.

Franchisors must also have a profile on the Australian Government’s Franchise Disclosure Register. Search for the business and ask about any apparent mismatch between the registered entity and the entity offering you the opportunity. Absence from the register does not prove that an arrangement falls outside the Code.

The Australian Consumer Law also applies, including prohibitions on misleading or deceptive conduct. Depending on the contract and circumstances, unfair contract terms protections may apply too. A genuine non-franchise licence is not therefore a law-free arrangement, but you should not assume it carries the same specific protections as a franchise.

Resolve uncertainty before committing

If the seller says the opportunity is not a franchise, request a written explanation addressing the three defining features. Give that explanation and the complete document set to your own lawyer, rather than relying solely on the seller’s adviser.

Ask your lawyer to identify whether any required disclosure or contractual protections are missing, and what must happen before you sign or pay. Remember that a franchise agreement can be oral or implied: the absence of a document headed ‘franchise agreement’ is not conclusive.

Practical takeaway: Establish the legal nature of the arrangement before judging the deal. Check the system, brand and payments together, and resolve any classification concerns with independent advice before committing money.