Updated 17 May 2025
Franchising can be a rewarding experience that provides benefits for both the franchisor and the franchisee. But what if either the franchisor or the franchisee wants to end the relationship before the franchise agreement expires?
Under the terms of a franchise agreement, a franchisee is given the right to operate the franchise business for a period of time. When the time period expires, the franchise agreement "expires". [What is a Franchise Agreement?]
If the franchise agreement ends before it expires, this is generally referred to as "termination".
Franchise agreement termination is a complex area, which has increased in complexity since the introduction of the new Franchising Code in April 2025.
A franchisor can terminate a franchise agreement early (that is, before the franchise agreement expires), if the franchisor follows the procedures set out in the franchise agreement and the applicable Franchising Code of Conduct (the Franchising Code). [What is the Franchising Code of Conduct?]
There are less options for franchisees to terminate a franchise agreement early because franchise agreements do not generally allow a franchisee to simply terminate the franchise agreement. If a franchise agreement contains provisions allowing a franchisee to terminate the franchise agreement, a franchisee can terminate a franchise agreement early if the franchisee follows the provisions set out in the franchise agreement.
There are also limited circumstances where a franchisor or franchisee can terminate a franchise agreement at 'common law'. We have not dealt with these circumstances in this article.
Termination Under the Franchising Code of Conduct
Termination Clauses in Franchise Agreements
Legal Procedures for Terminating A Franchise Agreement
