Terminating a franchise agreement after receiving lease information

When a franchisee can terminate their franchise agreement

When these two factors apply, the franchisee can usually end their franchise agreement within 14 days after they:

• receive the proposed lease or terms of occupancy, or
• receive the final lease or terms of occupancy if these are significantly different from the proposed lease or occupancy terms, or
• enter into the lease or are granted the occupancy licence if the terms are not identical to what was previously provided.

The 14 days gives a franchisee time to:

• consider the lease or occupancy agreement
• change their mind about the franchise altogether.

How the termination right applies to other agreements

This termination right only allows the franchisee to end their franchise agreement.

Franchisees need to be careful if they’ve already entered into other agreements for their franchise.

For example, franchisees need to be aware that if they have already signed a lease, they may be stuck with it after they end their franchise agreement. In this situation, the franchisee should make sure they can also end their lease on acceptable terms. Franchisees should speak to their lawyer about making sure their lease agreement includes such a term.

Leasing laws are separate laws to the Franchising Code of Conduct. There are different leasing laws in each state and territory.

For help with a lease, franchisees can contact their:

• state small business commissioner or
• Australian Small Business and Family Enterprise Ombudsman.