Franchise agreements may seem rigid, but there’s often more room for flexibility than you might expect, especially if you know where to look. 

If you’re wondering whether you can negotiate a franchise agreement in Australia, the answer is yes. Key terms, such as fees, territory rights, contract length and exit conditions, are often negotiable, as long as the agreement remains compliant with the Franchising Code of Conduct and the Competition and Consumer Act 2010.

Before signing anything, it’s also worth reviewing the disclosure document, checking the franchisor’s track record and getting clear on your obligations. There’s more to it than just signing on the dotted line. If you’re considering joining a franchise, read on to see what you can negotiate and how to approach it with confidence.

A Quick Overview: Can You Negotiate a Franchise Agreement?

Yes, franchise agreements can be negotiated in Australia. The Franchising Code of Conduct allows room for discussion on specific terms, although franchisors may not always be flexible on everything. Key areas where negotiation is possible include:

  • Franchise fees and ongoing royalties
  • Territory exclusivity
  • Length of the franchise term and renewal rights
  • Termination and exit clauses
  • Level of training and support

Legal advice is highly recommended to ensure your interests are protected and your obligations are clear.

Understanding Australian Franchise Laws

Before entering any negotiation, it’s important to understand the legal framework that governs franchising in Australia.

The Franchising Code of Conduct

The Franchising Code of Conduct, regulated by the Australian Competition and Consumer Commission (ACCC), applies to all franchise agreements in Australia. It sets out mandatory disclosure obligations and conduct requirements for both franchisors and franchisees.

Key features include:

  • A 14-day disclosure period before signing the agreement
  • The right to a cooling-off period
  • Requirements for dispute resolution procedures

Competition and Consumer Act 2010 (Cth)

The Competition and Consumer Act 2010 (Cth) also impacts franchise agreements, particularly concerning:

  • Unfair contract terms
  • Misleading or deceptive conduct

These laws protect franchisees from being locked into unfair or one-sided agreements.

Key Terms You Can Negotiate in a Franchise Agreement

While some franchisors offer standardised agreements, there are usually several terms that may be open to negotiation. Below are the main areas where negotiation is possible:

1. Initial and Ongoing Fees

Franchise fees typically include an initial franchise fee, ongoing royalties and contributions to a marketing fund. You may be able to:

  • Request a reduction in the initial fee.
  • Negotiate a royalty-free grace period.
  • Clarify how marketing contributions are used.

2. Territory Rights

Exclusivity is a major concern for franchisees. Negotiating for a clearly defined and exclusive territory can prevent future competition from other franchisees or company-owned outlets in the same area.

  • Ask for maps and boundaries in writing.
  • Seek clauses that prevent overlap with nearby franchises.

3. Term and Renewal Conditions

Most franchise agreements have an initial term of 5–10 years, with renewal options.

  • Negotiate for a longer initial term.
  • Ensure fair and automatic renewal terms.
  • Avoid conditions that give the franchisor unilateral rights to deny renewal.

4. Exit and Termination Clauses

Understand your rights if things don’t go as planned.

  • Request flexible exit clauses without heavy penalties.
  • Ensure that termination rights aren’t skewed in favour of the franchisor.
  • Look for fair dispute resolution procedures.

5. Training and Ongoing Support

Franchisors usually provide training and business support, but the level and scope can vary greatly.

  • Clarify training duration, content and cost.
  • Ask about ongoing operational, marketing and technical support.
  • Include support commitments in the contract.

Due Diligence: What to Do Before Signing

Negotiating a franchise agreement isn’t just about haggling over terms. It’s also about conducting thorough due diligence to understand what you’re getting into.

Review the Disclosure Document

The Franchising Code mandates that franchisors provide a disclosure document at least 14 days before you sign. This document includes:

  • Financial statements
  • Contact details of current and past franchisees
  • Legal proceedings involving the franchisor

Reading it carefully is a must.

Assess the Financial Viability

  • Ask for profit and loss statements or financial projections.
  • Consult an accountant or financial advisor to evaluate the business model.

Speak to Existing Franchisees

  • Get honest feedback on the franchisor’s support, training and responsiveness.
  • Ask about hidden costs or unexpected challenges.

Understand Post-Termination Obligations

Some agreements include restrictive covenants that limit what you can do after the franchise ends.

  • Review non-compete clauses.
  • Clarify any obligations to return materials or equipment.

Common Mistakes to Avoid When Negotiating a Franchise Agreement

  • Assuming the agreement is non-negotiable: Many franchisees don’t realise they have the right to request changes.
  • Skipping legal advice: Franchise law is complex, and even small oversights can be costly.
  • Focusing only on fees: Other terms like territory, renewal and support can be equally important.
  • Rushing into signing: Always take the time to review documents and consult professionals.

Benefits of Negotiating Your Franchise Agreement

Negotiating isn’t about being difficult—it’s about protecting your business investment. Here are some key benefits:

  • Improved profitability: Lower fees and better support increase your chances of success.
  • Reduced risk: Fairer terms mean less exposure to legal or financial troubles.
  • Stronger relationship: Open communication during negotiation fosters mutual respect.

Final Thoughts

So, can you negotiate a franchise agreement in Australia? Absolutely. While not every term may be flexible, taking the time to review, negotiate and understand your agreement is essential to your long-term success as a franchisee. The process can be complex, and that’s where legal guidance becomes invaluable.

Need Legal Help to Negotiate a Franchise Agreement?

At Rotstein Commercial Lawyers, we understand the intricacies of Australian franchise law and are committed to protecting your interests. Whether you’re reviewing an agreement, seeking to negotiate better terms or preparing to sign, our experienced legal team can provide tailored advice every step of the way.

Ensure your franchise journey starts on solid legal ground—partner with Rotstein Commercial Lawyers today. Call us on +61 3 9604 7888 or visit our Contact Us page to schedule a consultation.