In this article I take a look at some of the recent commentary around the outlook for franchising in 2026, as well as recapping the regulatory changes in 2025 (particularly the changes that came into effect on 1 November 2025).
2025 was a busy year in franchising with 2 tranches of Franchising Code changes coming into effect, requiring franchise disclosure documents to be updated twice last year in some cases.
Thankfully, 2026 should see more stability on the regulatory front.
The latest figures from the Australian franchise industry1 estimate that there are 1,300 franchise networks and approximately 90,000 franchised businesses operating in Australia.
The sector employs an estimated 600,000 people and generates $174 billion in annual revenue.
IBIS World data from 20252 shows motor vehicle retailing generating the highest proportion of revenue in the franchise sector, closely followed by fuel retailing. Retail and accommodation and food services make up the next biggest revenue generation sectors.
FCA data3 indicates that retail is currently the largest workforce sector in the Australian franchise industry at 35.4 per cent, followed by Quick Service Restaurants (QSR) at 23.8% and mobile services at 22.5%.
At the lower end of the workforce sector scale sits real estate and trades at 6.4 per cent, fitness at 6.2 per cent and automotive at 3.9 per cent.
Consumer survey data from the Australian Franchise Outlook Report 2026 indicates that Australian consumers have the most interaction with food and drink franchises4, retail store franchises5 and cake and bakery franchises6.
As with other industries AI is likely to play a major role in franchising in 2026.
Franchise Wisely reports that by mid-2026 it is expected that more than 60 per cent of online discovery sessions will begin in AI platforms rather than traditional search engines. They go on to state that rather than simply returning a list of available franchises, AI is taking into account the needs of the prospective franchise buyer.
According to Joel Kleber, Chief Marketing Officer for Jim's Group, the use of AI in the search for finding a franchise can bring challenges for franchisors. He states that Jim's are having to ensure that when people are researching a Jim's franchise the information that is surfacing is up to date and accurate.
Funding is likely to be an ongoing issue for prospective franchisees in 2026. In this regulatory environment, it can be difficult for franchisees to secure funding. As you would expect, top-tier well known franchises are much easier to fund than newer unknown brands. This presents a barrier to entry for newer franchisors.
The survey of prospective franchisees in the Australian Franchise Outlook 2026 report7 states that of the prospective franchise owners surveyed, 24.7% were comfortable with considering an investment under $50,000, 23.3% were comfortable with considering an investment of $50,000 to $100,000 and 17.8% were comfortable with an investment between $100,000 and $250,000.
For existing franchisees, labour hire continues to be a pressure point. In addition to the challenges of finding good staff, from 1 July 2026 Payday Super will be introduced, meaning that employers will need to pay employee's super contributions at the same time as they pay salary or wages. This change is likely to significantly affect small businesses who do not have a regular cash flow.
Respondents to the survey of prospective franchisees in the Australian Franchise Outlook 2026 report showed most interest in owning food and drink franchises (31.5%) and professional or business services franchises (28.8%).
Although, 54.8% of survey participants were weighing up whether to buy a franchise or start their own business.
While traditional franchising sectors continue to be the largest (in terms of revenue and workforce participation), there is an expectation that franchises in health and medical services, as well as wellness services, will expand to meet rising demand from an aging population with an increased focus on health.
2025 saw more changes to the franchising regulatory environment.
The new Franchising Code of Conduct came into effect on 1 April 2025.
From 1 April 2025 any disclosure documents provided to franchisees were required to be in the updated form.
Consequently franchisors who granted franchises between April and November 2025 were required to complete a mid-year update to their disclosure document.
Additionally, and franchise agreements entered into, renewed, extended or transferred from 1 April 2025 were prohibited from including a restraint of trade clause which would apply when the franchise agreement ends (subject to certain conditions being met).
The second tranche of changes under the Franchising Code of Conduct came into effect from 1 November 2025.
From 1 November 2025 a disclosure document must state whether the franchisee will be required to undertake significant capital expenditure.
If a franchisee is required to undertake significant capital expenditure the disclosure document must include informaiton about the significant capital expenditure.
The provisions in the Franchising Code that previously applied to marketing or cooperative funds have been extended to apply to any specific purpose fund.
From 1 November 2025 franchisors must establish a separate account for each fund to which a franchisee is required to contribute (eg marketing, IT, conference).
Franchisors must create a financial statement for each specific purpose fund (and have the financial statement audited, unless 75% of the franchisee contributing to the fund vote for the statement not to be audited).
All franchise agreements entered into, renewed or extended on or after 1 November 2025 must give franchisees a reasonable opportunity to make a return on investment.
The ACCC in its guide 2025 Franchising Code Changes states that a reasonable opportunity may be based on the following factors:
Franchise agreements entered into after 1 November 2025 must include compensation for the early termination of a franchise agreement in certain specific circumstances.
Specifically the franchise agreement must include compensation if the franchise agreement is terminated early
For both franchisors and franchisees, the key message heading into 2026 is to stay informed and be proactive.
The franchising sector remains a significant part of the Australian economy, with strong consumer engagement across core categories such as food, retail and personal services. At the same time, shifts in how prospective franchisees discover opportunities (including via AI platforms), tighter funding conditions and ongoing labour pressures mean that both new and existing franchise participants need to plan carefully.
From a regulatory perspective, franchisors should ensure that their disclosure documents, franchise agreements and special purpose fund management practices fully reflect the April and November 2025 reforms.
Looking ahead, opportunities in 2026 are likely to emerge in sectors such as health, medical and wellness services, while traditional sectors are likely to continue to dominate revenue and employment.
1. Australian Franchise Outlook 2026.
2. https://www.ibisworld.com/australia/industry/franchising/1902
3. Australian Franchise Outlook 2026 page 10.
4. Australian Franchise Outlook 20206 Page 14 - Of the consumers surveyed, 71.9% had purchased from a food and drink franchise in the last month.
5. Australian Franchise Outlook 2026 page 14 - Of the consumers surveyed 64% had purchased from a retail franchise in the last month.
6. Australian Franchise Outlook 2026 page 14 - Of the consumers surveyed 61.6% had purchased from a cake and bakery franchise in the last month.
7. Australian Franchise Outlook 2026 page 25.