Received a Franchise Termination Notice?

If you have received a franchise termination notice, do not assume that the franchisor is entitled to terminate your franchise agreement. Whether the termination is valid will depend on your franchise agreement, the applicable version of the Franchising Code of Conduct (the Franchising Code) and the grounds relied upon by the franchisor.

You should check the grounds of termination, whether your franchise agreement gives the franchisor the right to terminate, whether a breach notice was issued, and if so whether the breach was remedied. You should also check whether dispute resolution rights are available under the Franchising Code.

 

Table of Contents

1. Is the Franchise Termination Notice valid?

2. Can your franchisor terminate because of a breach?

3. Can your franchisor terminate if you have not breached?

4. Termination on Particular Grounds

5. Can you challenge a Franchise Termination Notice?

6. What happens if a Franchise Termination Notice is Invalid?

7. What should you do after receiving a Franchise Termination Notice?

 

Is the Franchise Termination Notice Valid?

Not every Franchise Termination Notice will be valid. The termination must be permitted by both the franchise agreement and the Franchising Code, and any procedural requirements under the Franchising Code must be followed.

For a more detailed explanation of the different ways a franchise agreement can be terminated under the current and previous Franchising Codes, see our guide to franchise agreement termination.

The Franchising Code allows a franchisor to terminate a franchise agreement with a franchisee, provided that the franchisor follows the provisions set out in the Franchising Code.

• Section 55 of the Franchising Code governs termination where the franchisee has breached the franchise agreement (See clause 27 of the Competition and Consumer (Industry Codes—Franchising) Regulations 2014 (the old Code) for franchise agreements entered into before the new Franchising Code took effect on 1 April 2025);
• Section 56 of the Franchising Code covers termination where the franchisee has not breached the franchise agreement (See clause 28 of the old Code for agreements entered into before 1 April 2025);
• Section 57 of the Franchising Code covers circumstances when the franchisor can terminate the franchise agreement with 7 days' notice and the franchisee cannot dispute the notice (See clause 29 of the old Franchising Code for agreements entered into before 1 April 2025);
• Section 58 of the Franchising Code covers circumstances when the franchisor can terminate and the franchisee may dispute the notice (See clause 29 of the old Franchising Code for agreements entered into before 1 April 2025).

If the franchisor does not follow the provisions set out in the Franchising Code, the proposed franchise termination notice is unlikely to be valid.

If you have received a franchise termination notice you should seek advice from an experienced franchise lawyer as soon as possible.

 

 

Can your franchisor terminate because of a breach?

Yes, your franchisor can terminate for a breach, provided that the franchisor follows the procedure set out in the Franchising Code.

Under section 55 of the Franchising Code, a franchisor can terminate your franchise agreement if you have breached the franchise agreement and

• the franchisor has provided you with a valid breach notice;
• the franchisor has given you a reasonable time to remedy the breach/es;
• the franchisor has proposed to terminate the agreement if the breach/es are not remedied; and
• you have not remedied the breach/es within the time specified.
  

 

What is a reasonable time to remedy the breaches?

The Franchising Code provides that a franchisor does not have to allow more than 30 days for a franchisee to remedy the breach.

If you have received a breach notice which provides that you must remedy the breach in a period which is less than 30 days, you should first check the provisions of your franchise agreement to see what the specified notice period under the franchise agreement is.

If the specified notice period under the franchise agreement is less than 30 days, or the agreement uses the wording of the Franchising Code that the time "need not be more than 30 days after the date of the notice", and the breach notice complies with the franchise agreement, then the relevant period must be objectively reasonable.

Factors to be taken into account in assessing whether any breach period is reasonable include:

• the type of breach;
• whether you have previously received a notice for the type of breach;
• if the breach relates to outstanding monies, whether you have been given time to pay the outstanding monies before the issuing of the notice.

For a more detailed look at the requirements for breach notices, read our article Franchise Breach Notices.

 

What if you remedy the breaches?

Section 55(3) of the Franchising Code (Clause 27(4) of the old Franchising Code for agreements entered into before 1 April 2025) provides that if you remedy breach/es in accordance with a breach notice, the franchisor cannot terminate an agreement for those breach/es.

Section 55(3) of the Code is a civil penalty provision, which means that if the franchisor attempts to issue a termination notice relying on a breach that has been remedied, the franchisor may be liable for a penalty of up to 600 penalty units ($218,400.00 as of 1 July 2026).

 

 

Can a franchisor terminate your franchise agreement if you have not breached it?

Yes, section 56 of the Franchising Code provides that a franchisor can terminate your franchise agreement if the franchise agreement allows the franchisor to terminate in certain circumstances and one of those circumstances has occurred.

Examples of such circumstances include if the franchise agreement requires you to obtain a Visa and you have been unable to obtain the Visa, or if the franchise agreement requires you to complete training to the satisfaction of the franchisor and you have not done so.

Section 56(3) of the Franchising Code provides that a franchisor must not terminate the franchise agreement unless the franchisor has given the franchisee reasonable written notice of the proposed termination and the reasons for it. It is also a civil penalty provision, so failure to comply may result in fines to the franchisor of up to 600 penalty units ($218.400.00 as of 1 July 2026).

 

 

Termination on Particular Grounds

When you cannot dispute the ground

Under section 57 of the Franchising Code, a franchisor can terminate your franchise agreement on particular grounds, including if:

• you no longer hold a licence that you must hold to carry on the franchised business;
• you become bankrupt, insolvent under administration or a Chapter 5 body corporate (if you are a company);
• you are deregistered (if you are a company);
• you are found by a court to have committed a serious contravention of a Fair Work civil remedy provision;
• you are found by a court to have contravened section 245AAA, 245AAB or 245AAC of the Migration Act 1958 and given a civil penalty order or convicted of a criminal offence in relation to the section concerned; or
• you are convicted of a serious offence.

If any of these circumstances occur, the franchisor may terminate the franchise agreement if they have given you 7 days' written notice of the proposed termination and the grounds for it. Under the new Franchising Code, which affects franchise agreements entered into after 1 April 2025, you do not have an opportunity to dispute a termination notice based on these grounds.

 

When you can dispute the ground

Under section 58 of the Franchising Code, there are certain grounds for termination that you can dispute if you receive a termination notice concerning them. These are:

• you voluntarily abandon the franchise business or the franchise relationship;
  
• you operate the franchised business in a way that endangers public health or safety; or
• you act fraudulently in connection with the operation of the franchise business.
  

If you dispute any of these grounds mentioned in the termination notice, you can notify the franchisor of the dispute with a dispute notice and commence the dispute resolution process. If there is a dispute raised, the franchisor cannot terminate the agreement until after 28 days from the provision of the dispute notice.

 

Can you challenge a Franchise Termination Notice?

You can challenge a franchise termination notice where:

1. the franchisor has not followed the procedure set out in the Franchising Code;

2. you dispute the grounds of the alleged termination;

3. either the notice to remedy breach (if applicable) or the termination notice was defective;
4. the franchisor alleges that you have voluntarily abandoned the franchise business, endangered public safety or acted fraudulently.

 

What happens if the Franchise Termination Notice is invalid?

If a franchise termination notice does not comply with the provisions of the Franchising Code and/or your franchise agreement, the franchise termination notice may be invalid and you may have rights against the franchisor.

You may have the right to terminate the franchise agreement for repudiation, or the right to claim damages against the franchisor for wrongful termination.

 

 

What should you do after receiving a Franchise Termination Notice?

If you receive a franchise termination notice you should immediately get legal advice from a franchise lawyer.

Not all franchise termination notices are valid. A franchise lawyer can review the franchise termination notice, review your franchise agreement and review any previous breach notice, advise whether the proposed termination appears valid and what options are available.

 

Disclaimer

The information in this article is general in nature and is not intended to address the circumstances of any person or other entity. Although we do our best to provide timely and accurate information, we do not guarantee that the information in this article is accurate or that it will continue to be accurate in the future.