Australia progresses unfair contract protections for franchisees

The Australian Government is progressing work to extend unfair contract terms protections to all franchisees covered by the Franchising Code of Conduct. In an address to the Franchise Council of Australia CEO Roundtable in Canberra on 20 October 2026, Andrew Leigh outlined the proposal alongside existing code protections and consultation on other business reforms.

Broader contract protection under consideration

The proposed extension would address a limit in the current Australian Consumer Law protections for unfair contract terms. Those protections generally apply to standard form contracts where at least one party has fewer than 100 employees or annual turnover below $10 million.

Leigh said most franchisees fall within those thresholds, but some large franchise businesses sit outside them. Extending protection to all franchisees covered by the code would therefore broaden its reach beyond the current business-size criteria.

Consultation for the review of unfair contract terms earlier in 2026 examined that extension, alongside how the existing protections operate. The address described the government as progressing the work, rather than announcing that the extension had become law.

That distinction matters for the franchise community. The proposal concerns the future scope of protection, while the existing thresholds remain the basis described in the address. Larger franchise businesses should not treat the proposed extension as a protection already available to them.

The government is also considering feedback on extending unfair trading practices protections to small businesses and franchisees. Treasury’s consultation examined both businesses buying goods and services as consumers and unfair practices in business-to-business dealings. This is a related reform process, but separate from the proposed extension of unfair contract terms protections.

The remade code provides the current foundation

Leigh placed the contract reform work in the context of the remade Franchising Code of Conduct, which commenced on 1 April 2025. Further provisions began applying on 1 November 2025.

The code strengthens protections while simplifying some requirements, including aspects of disclosure and renewal processes. One central requirement is that agreements covered by the new provisions give franchisees a reasonable opportunity to make a return, during the agreement’s term, on investment required by the franchisor.

The address emphasised an important boundary: this requirement does not guarantee profitability. Commercial risk remains, and the question is whether the agreement provides a reasonable chance to recover the required investment and earn a return.

For prospective franchisees, that makes the relationship between required investment and agreement length a practical point to examine. It is not a substitute for assessing the commercial risks of the business or obtaining advice on the agreement.

The code also requires provision for compensation in specified circumstances of early termination. These include certain changes to a franchisor’s Australian network or distribution model. The qualification is important: the address did not describe a general entitlement to compensation whenever an agreement ends early.

Leasing and workplace proposals sit alongside reform

Beyond franchise agreements, Leigh highlighted consultation launched with Small Business Minister Anne Aly on opportunities for greater consistency in retail leasing across Australia.

The address presented that work as part of making expansion easier. It did not announce an agreed national leasing framework or completed changes to state and territory arrangements. For franchise businesses considering additional premises, it is therefore a consultation process to monitor rather than an immediate change to lease obligations.

Workplace restrictions are another part of the government’s agenda. Leigh said draft legislation had been released the previous month to ban non-compete clauses for workers earning below the Fair Work Act high-income threshold, then $190,100 a year.

The reform agenda also addresses no-poach and wage-fixing arrangements, with consultation on appropriate safeguards for legitimate business interests. As with the proposed contract protections, the release of draft legislation should be distinguished from a ban already being in force.

What franchise businesses should do now

The address brought together existing obligations and several reform processes at different stages. It also noted that the government had provided $7.1 million over two years from 2025–26 to strengthen the Australian Competition and Consumer Commission’s code enforcement, education and engagement work.

For franchisors and franchisees, the immediate priority is to understand the rules that already apply while tracking proposals that could change contracts, leasing and employment arrangements. Reviews should distinguish between current code requirements, protections subject to business-size thresholds and reforms still under consideration.

Practical takeaway: Check franchise agreements against the current code, seek advice on investment-return and termination provisions, and monitor the proposed extension of unfair contract terms protections without assuming it is already law.