Franchise agreement: what's in it and key clauses to check

A franchise agreement is the contract you'll live with for years, so it pays to know what's normally in it before it lands on your desk. This guide explains what an agreement is, what the Franchising Code says it must and mustn't include, the clauses to check, and how term and renewal work, using National Floors as the example.

It's general information, not legal or financial advice. A franchise lawyer should read your actual agreement before you sign.

The short version. A franchise agreement is a contract that lets you run a business under the franchisor's brand and system in return for payments. It should cover fees, term, brand use, supply, marketing, selling the business, disputes and how it ends. Check the term and renewal, fees, territory, supply, changes, exit and restraint of trade clauses with a franchise lawyer. You get the final agreement at least 14 days before you can sign.

What is a franchise agreement?

A franchise agreement is the contract in which a franchisor lets you run a business under its brand and system, in return for payments. It sets out each side's rights and duties. Under the Franchising Code, an arrangement counts as a franchise agreement if three features are present, whatever the document is called.

The ACCC describes the three features as:

the franchisor grants you the right to carry on the business of offering, supplying or distributing goods or services in Australia under a system or marketing plan substantially determined, controlled or suggested by the franchisor or an associate;
the business is substantially associated with a brand, trade mark or other symbol that belongs to, or is licensed by, the franchisor or an associate; and
you pay or must pay the franchisor or an associate an amount before starting or continuing the business.

The agreement isn't the same as the disclosure document. The disclosure document summarises the franchise in the Code's set order, and the agreement is the contract that binds you. Our glossary explains the disclosure document and other terms. The ACCC also notes that an agreement can be written, oral or implied, so get what you're promised into the written agreement.

What's in a franchise agreement?

The ACCC says an agreement should cover the fees you pay, the term, your rights and limits on the brand and intellectual property, equipment and supplies you must buy, promotion and local marketing, a reasonable opportunity to make a return on your investment, selling the business, settling disputes, and how the agreement can end.

The disclosure document tells you where each topic sits. This table matches the common clauses to the disclosure document item, with what National Floors' Disclosure Document says in general terms. For the actual figures, read Item 14 of the Disclosure Document, which we also go through on your discovery call.

Clause	What it covers	Disclosure item	National Floors
Fees and payments	What you pay, to whom, when, and whether it is refundable	14	Set out in the Disclosure Document and explained on the discovery call.
Territory	The area you operate in, and whether it is exclusive	9 and 13	A non-exclusive Local Marketing Area. Other franchisees may serve customers who approach them, and National Floors may sell online (Item 12).
Supply	What you must buy, from whom, and any rebates	10 and 11	Approved Suppliers are listed in the Manuals. No obligation to accept goods from the franchisor, and no franchisor rebates.
Marketing	Fund contributions and what you spend locally	15	A marketing fund and your own local marketing contribution. The agreement doesn't commit the franchisor to spend fund money in your area.
Training and support	What you are taught and what help you get	14 and 17B	Initial training before opening. Failing to complete it satisfactorily is among the listed grounds for ending the agreement.
Refurbishment and capital expenditure	Significant costs you may have to meet during the term	14	Refurbishment is typically needed every 5 years. Amounts are in the Disclosure Document.
Changes	Whether and how the agreement or the manuals can change	17	Read it with your lawyer.
Disputes	How disagreements are raised and settled	17A	The Code's dispute process applies.
Ending early	The grounds for ending, and what happens next	17B	Listed in the Disclosure Document.
Term, renewal and the end	How long it runs and what happens after	18	Generally 5 years, with a renewal option if an Additional Term is in the Schedule.
Transfer	Selling or passing on the business	19	Check how the agreement changes on transfer.

Which franchise agreement clauses should I check before signing?

Check the term and renewal rights, every payment and when it is due, how your territory works, what you must buy and from whom, how the agreement can be changed, how either side can end it, selling the business, any restraint of trade clause, and how disputes are settled. Take each one to an independent franchise lawyer.

Term and renewal. How long it runs, whether you can renew, and on what conditions. See the next section.
Fees and payments. Ask for every payment in one list: what, to whom, when and whether it is refundable. Compare it with Item 14.
Territory. Is it exclusive? Can the franchisor or other franchisees serve customers in your area, or sell online? Can the area change? For National Floors, it is a non-exclusive Local Marketing Area.
Supply. Where you must buy, whether you can shop around, and whether the franchisor takes rebates. Supply rules can limit your ability to shop around.
Marketing funds. How the fund is run, what it may be spent on and what you must contribute locally. Our guide to royalties and franchise fees explains the usual fees.
Significant capital expenditure. Since 1 November 2025 the Code has required the disclosure document to cover significant capital expenditure the franchisor may require. Ask what it would be, when it could fall due and why.
Changes after signing. The ACCC says franchisors usually can't change the agreement unless you agree or the agreement allows it, and a change can't apply retrospectively without your written consent. Check how the manuals can change.
Ending early. Read the franchisor's grounds for ending the agreement and yours. The Code lets you propose early termination in writing, and the franchisor must respond in writing within 28 days, but it doesn't have to agree.
Selling the business. What approval you need from the franchisor and what conditions apply to a buyer.
Restraint of trade. Whether you can run a similar business after the agreement ends, where and for how long. The new Code limits some restraints.
Disputes. The Code sets a dispute process, and an agreement can't make you pay the franchisor's costs of a dispute.
Your lease. Whether the lease and the franchise agreement end at the same time. Our location guide covers lease basics.

Another useful test is whether you can explain each clause back in your own words. If you can't, ask the franchisor in writing and your lawyer in person.

How do the term and renewal work in a franchise agreement?

The term is how long the agreement runs. You aren't automatically entitled to another one: renewal depends on what your agreement says. At least six months before the term ends, the franchisor must tell you in writing whether it will extend or renew. National Floors' agreement generally runs for five years.

How the National Floors term and renewal work

The term is generally 5 years.
There is a renewal option if an Additional Term is specified in the Schedule.
You notify us between 6 and 12 months before the end of the Initial Term, and the renewal is subject to the conditions in the agreement.
If the term ends and you continue trading, it can run month to month, with 30 days' notice from either side.
Item 18 of the Disclosure Document states what happens at the end: whether there is any compensation or goodwill, whether you can sell the business and whether a restraint of trade applies. Read that item carefully with your lawyer.

What the Code adds

A renewal or extension has no cooling-off period, but the franchisor must still give you updated documents and 14 days to read them, unless you opt out in writing in a repeat-franchisee case.
For agreements entered, renewed or extended from 1 November 2025, the franchisor must give you a reasonable opportunity to make a return on any investment it requires. It isn't a promise of any particular result.
Renewal can come with conditions, such as refurbishing or signing a new agreement on updated terms, so ask what they would be.
Holding over after the term still needs disclosure under the Code, the ACCC says.
Align the lease and the agreement: a lease that ends well before or after the franchise term can leave you exposed.

What can't a franchise agreement include?

Under the Franchising Code, an agreement can't make you pay the franchisor's costs of settling a dispute, let it change the agreement retrospectively without your written consent, give it a general release from liability, waive statements it made to you, or limit its duty to act in good faith. Restraints of trade after the agreement ends are also limited.

Good faith applies to both sides, and it starts before you sign: franchisors must act in good faith with prospective franchisees too. The ACCC also says most franchisees are likely to be protected by the unfair contract terms laws, which can make an unfair, one-sided standard term void. Our guide to the Franchising Code covers the rules in more detail. If a clause worries you, ask your lawyer whether it's allowed.

Can I read a sample franchise agreement before I commit?

You'll get the agreement in its final form at least 14 days before you can sign, and you can ask when you'll receive it. Franchisors can also publish their standard agreement on the free Franchise Disclosure Register. Few have: on 20 October 2026, Assistant Minister Andrew Leigh urged every franchisor to publish theirs.

In a speech to the Franchise Council of Australia CEO Roundtable, the Assistant Minister said the register lets franchisors publish their standard agreements, 'yet hardly any have done so'. Treasury is encouraging transparency, which would make comparing agreements easier. You can search the Franchise Disclosure Register to see which franchisors have published one.

A sample from another brand shows how an agreement is structured, not what your deal is. Only your own agreement counts, so ask any franchisor early when you'll see it. With National Floors, raise it on your discovery call.

Should I get a lawyer to review a franchise agreement?

Yes. The ACCC says to always get independent professional advice from advisers with franchising experience. The Code also requires the franchisor to hold statements about advice from a lawyer, a business adviser and an accountant before it signs, or your own signed statement that you chose not to get it.

Ask for a quote first, and tell the lawyer your timeline. Item 14 of our Disclosure Document estimates $100 to $500 an hour for your own legal, accounting and business advice. You can ask the franchisor to change terms, and a change you ask for doesn't restart your 14 days, but it doesn't have to agree. If it won't move on something that matters to you, walking away before you sign or pay is the easiest exit.

Questions

What's the difference between a franchise agreement and a disclosure document?

The disclosure document is the franchisor's signed summary of the business, in the Code's set 23-item order. The franchise agreement is the contract you sign, which binds both sides. You should receive both, in final form, at least 14 days before you can sign, along with a copy of the Code.

Can I negotiate a franchise agreement?

You can ask. The ACCC says you can negotiate changes before you enter the agreement, but the franchisor doesn't have to agree. A change that you request doesn't restart the 14 days. If it won't negotiate terms that matter to you, it may be better to walk away before you sign.

Can a franchisor change the agreement after I sign?

Usually only if you agree or the agreement allows it. The disclosure document must say when the franchisor has varied agreements recently and when it may do so in future. Changes can't apply retrospectively without your written consent, so ask your lawyer how the manuals and agreement can change.

How long is a National Floors franchise agreement?

Generally five years, according to Item 18 of our Disclosure Document, with an option to renew if the agreement's Schedule includes an Additional Term. You notify us between six and twelve months before the end of the Initial Term. Read the Disclosure Document for the conditions that apply.

Can I get out of a franchise agreement early?

Not automatically. You can end a new agreement during the 14-day cooling-off period. After that, the Code lets you propose early termination in writing, and the franchisor must give a written response within 28 days, but it doesn't have to agree. Costs can be high, so ask your lawyer first.

Does a franchise agreement have to be in writing?

Franchisees nearly always sign a written agreement, but the ACCC says a franchise agreement can also be oral or implied, and the Code applies if the three defining features are present. Get everything you've been promised into the written agreement or the disclosure document before you sign.