7 min read
A Franchisor Liability Case Study: ASIC v Darranda Pty Ltd
Compliance is an important and ever-changing component of running a business. As a franchisor, it can be tempting to...
5 min read
Assignment vs. Novation: What's the Difference?
Assignment and novation are two methods of transferring contractual rights or obligations from one party to another. While they might seem similar and even interchangeable on the surface, they actually have very different uses, so it is important to have a good understanding of what you want to transfer and how you can do it.
Topics: Franchising For Franchisors For Franchisees Exiting A Franchise
13 min read
Understanding Franchise Agreement Termination
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
Topics: Featured For Franchisors For Franchisees Exiting A Franchise
7 min read
Consequences of Terminating a Franchise Agreement
Terminating a franchise agreement can have significant consequences.
Economic conditions in Australia remain challenging, placing pressure on both franchisees and franchisors.
According to IBIS1, while the COVID pandemic hampered the performance of franchised businesses over 2020 and 2021, post-pandemic conditions have continued to be difficult. In particular, interest rate rises have caused spending on franchised goods and services to decrease.
While franchise agreements will generally contain post termination provisions designed to protect the franchisor's brand, data suggests that replacing a franchisee may not be a simple process.
Recent figures cited in the Independent Review of the Franchising Code of Conduct indicate that from 2014 to 2023 the number of franchisees in Australia declined by approximately 5.2%.
Additionally, post termination provisions contained in a franchise agreement may negatively impact the franchisee if the franchisee wishes to operate an independent business.
What Happens When a Franchise Agreement is Terminated?
What are the Consequences for a Franchisee when a Franchise Agreement is Terminated?
What are the Consequences for a Franchisor when a Franchise Agreement is Terminated?
Topics: Featured For Franchisors For Franchisees Exiting A Franchise
11 min read
Selling a Franchise Business: Legal & Financial Considerations
Selling a franchise business involves more than finding a buyer and agreeing on a price. The terms of your franchise agreement, transfer fees, franchisor requirements, and the Franchising Code of Conduct are all relevant to the sale.
In this article, we look at some of the key legal and financial considerations that can affect a franchise sale. If you are looking for the process involved in selling a franchise, see our guide How to Sell a Franchise in Australia.
Topics: Featured Franchising For Franchisees Exiting A Franchise
7 min read
Can I Get Out of a Franchise Agreement?
While it is possible, there are limited circumstances under which a franchisee can 'get out of a franchise agreement'.
Franchise agreements have a set term. When you enter into the franchise agreement, you agree to operate the franchise business, for the term of the franchise agreement. The date that the term of the franchise agreement ends is called the expiry date.
For a detailed explanation of each way a franchise relationship can end, see our guide to exiting a franchise agreement.