Checking Business Licences Before Franchising in Australia

A successful business does not automatically have permission to operate in every Australian location. When you franchise an existing business, approvals held by your company may not cover a franchisee’s separate business, premises or activities. Before offering your first franchise, map the licences, permits and qualifications needed to operate the model, then decide who will obtain, pay for and maintain each one.

1. Separate franchise compliance from permission to operate

Australia specifically regulates franchising through the mandatory Franchising Code of Conduct, prescribed under the Competition and Consumer Act 2010. The Australian Competition and Consumer Commission regulates compliance with the Code. Australian Consumer Law, contract law and other legislation also apply.

There is no general franchise approval process that certifies your business model as ready to sell. Franchisors must maintain a profile and publish required information on the Franchise Disclosure Register, but that is not an operating licence or government endorsement.

Your franchisees may separately need approvals under state, territory or local requirements. What applies depends on the activities, location, premises and people involved. A food business, for example, needs a different review from a business providing regulated trade services.

Treat these as two connected workstreams: compliance with franchising rules and permission to carry out the underlying business. Completing one does not complete the other.

2. Build an approval map for the actual business model

Start with everything your existing business does, rather than a generic description such as “retail” or “home services”. List the services delivered, products sold, equipment used and types of premises occupied. Include optional activities you expect franchisees to offer.

For each activity, investigate whether permission attaches to:

• The operating entity: an approval held by your company may not cover an independently owned franchisee business.
• The premises: an existing approval may depend on a particular address, layout or permitted use.
• An individual: some work requires personal qualifications, registrations or licences.
• A particular activity: adding a service or product category may introduce further requirements.

Create a working table showing the relevant authority, approval required, intended holder, application dependencies, cost categories and renewal conditions. Mark anything not yet confirmed as an open question, not an assumption.

Check requirements with the relevant regulator or council and obtain specialist advice where necessary. Ask specifically whether an approval can be transferred, whether a new application is needed and whether work can begin while an application is pending. Do not assume your existing arrangements answer these questions for a franchisee.

3. Allocate responsibility before making commitments

Use the approval map to settle the division of responsibilities between franchisor and franchisee. A promise to “assist with licensing” is too vague unless both parties understand what assistance includes.

For each approval, decide who researches requirements, prepares the application, supplies supporting documents, pays the charges and monitors renewal. Identify any actions that depend on the other party, such as providing equipment specifications or evidence of training.

Ask your franchise lawyer to reflect this allocation appropriately in the franchise agreement and disclosure material. The Code imposes pre-contract disclosure obligations, and information supplied to prospective franchisees must not be misleading or deceptive. Avoid presenting an opening date as assured when an essential approval remains uncertain.

Also address what happens if permission is delayed, refused or subject to unexpected conditions. Consider the consequences for opening commitments and expenditure before either party makes binding promises. Contract wording cannot remove a statutory duty from the person on whom the law places it.

Make clear that your assistance does not replace the franchisee’s independent legal or technical advice.

4. Make approval checks an opening condition

Create an internal opening checklist that requires evidence of the necessary permissions before regulated activities begin. This is a practical control, not a substitute for checking the law.

Check that each approval names the correct holder, covers the proposed activities and premises, and remains valid. Where qualified individuals are required, confirm who will perform or supervise the relevant work and what happens during their absence.

Repeat the review when the model changes or expands into another jurisdiction. New services, relocated premises or changes in ownership can require fresh enquiries. Establish a process for franchisees to report restrictions, suspensions or impending expiry promptly, so the franchise community can respond without assuming every outlet has identical requirements.

Practical takeaway: Before offering a franchise, build one approval map for your intended opening location. Resolve who holds each permission, who maintains it and what evidence is needed before trading. Then verify that map afresh for every new location.