Between April and May 2026 the pressure on Australian franchise networks came from two
directions at once. The regulator sharpened its enforcement of the Franchising Code, and the
cost base underneath every franchisee kept rising. This is what mattered, and what to do
about it.
The Franchising Code review
An independent review of the Franchising Code of Conduct was announced, covering a sector
the Government put at $170 billion. The review’s stated purpose is to improve small business
protections, which in practice means the obligations on franchisors are more likely to widen
than narrow.
For franchisors the practical response is not to wait for the outcome. Disclosure timing,
marketing fund reporting and the dispute procedure are the three areas where we most often
find existing systems already fall short of the current Code, let alone an expanded one.
ACCC enforcement stepped up
Three enforcement actions in eight weeks tell you where the regulator is looking.
- Harvey Norman. A franchisor paid a penalty for an alleged breach of the
Franchising Code. Size is no protection. - Luxottica. The ACCC brought allegations of Code breaches against another
established national network. - Franchise Disclosure Register. A penalty was issued for a breach of the
register obligations, which is the least glamorous and most easily avoided exposure a
franchisor carries.
The register obligation catches franchisors out because it is administrative rather than
legal. Nobody sets out to breach it. It simply does not get done.
Merger control
Australia’s new merger control regime made what the ACCC described as a positive start.
MicroStar’s acquisition of Konvoy was referred to a Phase 2 review, and the ACCC continued
monitoring fuel excise movements and investigating diesel supply conduct in regional and
rural Australia.
For franchise networks growing by acquisition, the change that matters is that
notification thresholds now capture transactions that previously proceeded quietly. Roll-up
strategies need a competition assessment early, not at completion.
The cost base
A third RBA rate rise for the year put small and medium businesses on what one industry
body described as a defensive footing. Australia Post lifted parcel surcharges to cover
energy costs. Quick service restaurant operators reported rising costs, labour shortages and
regulatory pressure arriving together.
Where a franchise agreement fixes supply arrangements or pricing, a rising cost base lands
entirely on the franchisee. That is a term worth reading before signing, and worth raising at
renewal.
Advocacy and tax
The Australian Small Business and Family Enterprise Ombudsman marked ten years, and used
the occasion to call for improvements to the enterprise environment and for changes to unfair
contract terms protections. Separately, proposed changes to the taxation of family and
business trusts drew sustained objection from small business groups, and the instant asset
write-off was flagged for the Budget.
Trust structures sit underneath a large share of Australian franchisees. If the proposed
changes proceed, the structuring decisions made when a business was set up will need
revisiting.
One administrative deadline
Businesses were urged to register their branded SMS sender IDs before July. Networks that
send customer messaging under a brand name should treat this as a compliance task with a
date on it, not an IT preference.
What this means for your network
- Audit your disclosure timing and your Franchise Disclosure Register entry now, before the
Code review reports. - If you are acquiring, get the competition question answered before you sign, not at
completion. - Read your supply and pricing clauses against a rising cost base and know who wears the
increase. - Revisit trust structures if the proposed tax changes progress.
If any of this touches a decision you are about to make,
get in touch. Initial consultation is
complimentary.
Sources: ACCC Franchising Code of Conduct,
ACCC media releases,
Reserve Bank of Australia.
This article is general information, not legal advice.