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.

Generally, a franchisee must operate a franchise for the term of the franchise agreement, however there are some circumstances in which the franchise agreement can be ended early (that is, before the expiry date).

1 - Cooling off - franchise agreements must include a mandatory cooling off period of a least 14 days.

2 - Sale - a franchise agreement will set out the process for you to sell your franchise business to an incoming franchisee.

3 - Request For Early Termination - under section 54 of the Franchising Code of Conduct you can request an early termination of the franchise agreement - although the franchisor does not have to agree to the early termination.

4 - Termination - in very limited circumstances you may be able to terminate the franchise agreement for the franchisor's conduct.

Can I Get Out of my Franchise Agreement?

The Franchising Code of Conduct (the Franchising Code) sets out the obligations (including annual obligations) relating to advertising and marketing funds operated by a franchisor.

The Federal Government has substantially changed the Information Statement to be provided to prospective franchisees as part of the pre-disclosure process. It has also clarified that the Information Statement must be given before the other documents given to a prospective franchisee (14 days before a prospective franchisee enters into a franchise agreement).

The Franchising Code of Conduct (the Franchising Code) was amended on 1 June 2021, with most amendments applying from 1 July 2021, including the Exit and Termination amendments.

The long awaited dispute resolution provisions under the Franchising Code of Conduct (the Franchising Code) came into force on 2 June 2021.

A right of renewal in a franchise agreement is a right which gives you the option to "renew" the franchise agreement at the end of the term. [What is a franchise agreement?].

Not all franchise agreements contain a right of renewal.

Even if your franchise agreement contains a right of renewal you may not want to renew the franchise agreement. 

The rights to end the franchise relationship, to sell your franchised business, or to pass your franchised business on to a beneficiary are determined by the terms of your franchise agreement and the Franchising Code of Conduct (the Code).

A franchise agreement outlines the conditions under which you can operate the franchise business, including how long you can operate the business for.

When buying a franchise or signing a franchise agreement it is important to consider the "term" of the franchise agreement.

I have been involved in franchising businesses since the early 1980's. At that time, franchising as a business growth strategy in Australia was in its infancy. Now, we are one of the biggest adopters of franchising in the world.

The Australian franchise industry employs around 520,000 people and contributes more than $135 billion each year to the economy. There are more than 1,100 franchisors and 70,000 franchisees operating in Australia.

However, while franchising is a very successful business model, it is important to carefully consider both the advantages of franchising and the disadvantages of franchising before making the decision to either franchise your business or buy a franchise.

Guide to Franchising Your Business

Guide to Buying a Franchise