The April 2025 Changes to the Franchising Code of Conduct
Peter Snelgar
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The April 2025 Changes to the Franchising Code of Conduct
Part One
This article was originally intended to be a brief summary of those changes to the Franchising Code of Conduct (“the Code”) that were introduced on 1 April 2025. During our review of these changes, with a little breathing room in time, it was quickly decided that at least two parts would be required to give proper justice and thought to the amendments to the Code.
Though we say “amendments to the Code”, this new Code is, essentially, a remake, being able to be differentiated before and after with certainty due to a new numbering system, order of topics and changes extending beyond the more usual ‘addition of sub-sections approach’.
This first part will concentrate on those changes that we believe are largely aimed to increase protections for franchisees for specific circumstances that have come to pass since the initial implementation of the Code. These circumstances may not have initially been planned for or anticipated, and upon their happening may have caused an imbalance of power necessitating redress.
The next of our articles on the topic will detail some of the changes to mechanics and the logistics of documentation and accounting principles for franchisors.
Restraint of Trade
By way of the new Section 42, a franchisor is now prohibited from entering into a franchise agreement that contains a restraint of trade provision that would apply if a number of provisos are met, but essentially, if the agreement contained an option to renew or extend the agreement and the franchisor did not renew or extend the agreement.
This is a particularly specific addition to the Code and does feel as a reaction to a factual circumstance having occurred where a restraint of trade was used in a less than conscionable manner.
This new Section 42 applies to all franchise agreements that were entered into, transferred renewed or extended on or after 1 April 2025.
Early Termination Compensation
The new Section 43 is relevant to all franchise agreements that are not new vehicle dealership agreements.
By way of Section 43(2), franchisors are prohibited from entering into a franchise agreement unless the agreement provides for the franchisee to be compensated if the agreement is terminated before it expires because the franchisor:
- Withdraws from the Australian market;
- Rationalises its networks in Australia; or
- Changes its distribution models in Australia
The agreement must specify how compensation is to be determined, with specific reference to:
- Lost profit from direct and indirect revenue;
- Unamortised capital expenditure requested by the franchisor;
- Loss of opportunity in selling established goodwill; and
- Costs of winding up the franchised business
Pursuant to the new sections 43(3) and (4), franchisors are prohibited from entering into a franchise agreement unless the agreement requires the franchisors to buy back or compensate the franchisee for specific equipment or items purchased by the franchisee, in the event the franchise agreement is terminated before its expiry date under certain circumstances. These specific items and equipment are:
- Outstanding stock purchased by the franchisee that was specified by the franchisor and required to operate the franchise; and
- All essential dedicated equipment and branded product or merchandise purchased by the franchisee that was specified by the franchisor and required to operate the franchise, and that cannot be repurposed for a similar business.
There is a grace period for franchisors in the implementation of these provisions, with them applying to all franchise agreements that are entered into, transferred, renewed, or extended on or after 1 November 2025.
Reasonable Return on Investment
An interesting new provision is that contained in the new Section 44. Again, with a grace period and applying from 1 November 2025.
This Section provides a positive obligation that a franchisor must not enter into a franchise agreement unless that agreement provides the franchisee with a reasonable opportunity to make a return, during the term of the agreement, on any investment required by the franchisor as part of entering into, or under, the agreement.
What the extent of this obligation emplaced on franchisors is, naturally, yet to be tested.
Moving Forward
As always, complex contractual agreements are not a one size fits all situation, all contracts have their own nuances and specificity and individual legal advice should be sought by experienced practitioners prior to entering into any new commercial agreement, particularly franchises.
Disclaimer: This article is for general understanding and should not be used as a substitute for professional legal advice. Any reliance on the information is strictly at the user's risk, and there is no intention to create a lawyer-client relationship from this general communication.
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Our Latest Story
By Jeffrey Lucas
•
21 October 2025
If you hold (or want) a pilot licence, a drink driving charge isn’t just a traffic matter, it can put your medical and flying privileges under the microscope. The smart move is to get advice early, before making any aviation disclosures. Why this matters (even if it happened on the road) Aviation is conservative for good reason. Any alcohol related offence can raise questions about fitness to fly, which may lead to: Medical scrutiny (extra checks, temporary conditions). Short-term flying restrictions while assessments occur. Career and insurance impacts, particularly in commercial roles . We’re not saying your flying days are over, just that it’s both a legal and aeromedical issue from day one. Three costly myths: “It’s only a driving issue.” For pilots, it becomes an aviation issue quickly. “No conviction recorded = no problem.” Outcomes short of conviction can still trigger medical reviews and suspensions . “If I don’t report it, it goes away.” Missing a reporting obligation can be worse than the incident itself. If this happens, keep it simple and strategic: Call us first. We’ll help you meet your reporting obligations on time, in the correct form, and with clear, relevant facts. Coordinate with a Designated Aviation Medical Examiner (DAME) for a practical medical plan. Document sensibly (any counselling, test results, timelines) to support a return to flying pathway. Expect a pause, not necessarily a full stop. Many pilots return with structured steps and credible evidence. How we help: Clear pathway back: Legal, medical and practical steps aligned. Risk management: What to report, when, and how. Career protection: Engage with regulators, employers and insurers the right way. A realistic outlook Plenty of pilots resume flying. Success usually comes down to early advice, credible records, and compliance. Safety is the regulator’s north star; our job is to present your case clearly and keep momentum. Need guidance? CJM Lawyers advises pilots and operators on aeromedical and regulatory issues arising from drink driving charges. Speak to our Aviation Law team promptly so you meet any reporting obligations on time and in the correct form. General information only. This is not legal advice. Your circumstances will determine your obligations and options.
10 October 2025
Testamentary Trusts are powerful estate planning tools that deliver substantial tax savings and robust asset protection for your beneficiaries. This guide explores the key advantages of incorporating a Testamentary Trust into your estate plan and demonstrates how this strategy can preserve and grow your family's wealth for generations to come. A will is a legal document that allows you to control what happens to your assets after you pass away. As the testator (the person making the will), you can specify how your estate should be distributed among your chosen beneficiaries. Beyond asset distribution, your will also names the executor—the person or people you trust to carry out your wishes and handle the administration of your estate. What is a Testamentary Trust? A Testamentary Trust is a sophisticated estate planning tool that operates through your will. Unlike a standard will that distributes assets directly to beneficiaries, a Testamentary Trust holds some or all of your assets in a trust structure after your death. This structure provides ongoing protection and management of your wealth for the people you care about most, your beneficiaries. How does a Testamentary Trust Work? When you pass away, the Testamentary Trust automatically comes into effect as outlined in your will. Rather than receiving assets outright, your beneficiaries become entitled to distributions from the trust. The trustee you've appointed in your will takes on the responsibility of managing the trust assets and making distributions according to your instructions and the beneficiaries' needs. Significant Tax Advantages One of the most compelling reasons to consider a Testamentary Trust is the substantial tax savings it can deliver for your beneficiaries. These benefits are particularly valuable when your beneficiaries either earn high incomes or include children under 18 years of age. How the Tax Benefits Work Under Section 102AG of the Income Tax Assessment Act 1936, income distributed from a Testamentary Trust qualifies as "excepted income." This special classification allows your beneficiaries to access the tax-free threshold on trust distributions—a significant advantage not available with standard discretionary trusts, where distributions to minors above $641 are typically taxed at penalty rates equivalent to the top marginal tax rate. Key Benefits of Testamentary Trusts Asset Protection - Trust assets are generally protected from beneficiaries' creditors, relationship breakdowns, and poor financial decisions. Flexibility - Trustees can adapt distributions based on beneficiaries' changing circumstances, such as education needs, health issues, or life stages. Tax Efficiency - Testamentary Trusts can provide significant tax advantages, including income splitting opportunities and concessional tax rates for minor beneficiaries. Control from Beyond - You maintain control over how and when your assets benefit your loved ones, even after your death. Is a Testamentary Trust Right for You? Testamentary Trusts are particularly valuable for families with: Young children or grandchildren Beneficiaries with disabilities Complex family structures Significant assets requiring ongoing management Concerns about beneficiaries' financial responsibility Who Benefits Most from These Tax Advantages? High-Income Beneficiaries - Trust distributions can be allocated to lower-income family members, reducing the overall tax burden. Families with Minor Children - Children can receive distributions using their full tax-free threshold, rather than facing penalty tax rates. Multi-Generational Wealth Transfer - Income can be distributed strategically across family members to optimise tax outcomes year after year. Long-Term Financial Impact - These tax savings compound over time, potentially saving your family tens of thousands of dollars annually while preserving more of your wealth for future generations. For personalised advice on whether a Testamentary Trust suits your circumstances and to explore the specific tax benefits for your family, speak with our experienced estate planning team.
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8 September 2025
Why is IP Protection Crucial for Your Business? In today's fast-paced, innovation-driven economy, what truly differentiates a business isn't always tangible. It's often the unique ideas, the recognisable brand, the innovative processes, and the creative works – collectively known as intellectual property (IP). For businesses of all sizes, from agile startups to established enterprises, protecting these intangible assets isn't just a legal formality; it's a strategy for long-term success and growth. In Australia, like anywhere else, a failure to proactively protect your IP can expose your business to significant risks, undermining your competitive edge and stifling your potential for expansion. Safeguarding Your Competitive Advantage Imagine dedicating countless hours and significant resources to developing a groundbreaking product or a distinctive brand identity. Without proper IP protection, a competitor could legally replicate your innovation or imitate your branding, directly siphoning off your market share. This isn't just about preventing direct copying; it's about building a legal "moat" around what makes your business unique. Trademarks protect your brand name, logo, slogan, and even unique packaging, ensuring that customers can distinguish your goods and services from those of competitors. A strong, protected trademark builds brand loyalty and trust. Trade Secrets cover confidential business information that provides a competitive advantage, such as proprietary formulas, customer lists, or manufacturing processes. Maintaining their secrecy through robust internal controls and agreements is key to their protection. By securing these rights, you gain the legal standing to deter infringement and take action against those who try to unfairly capitalise on your hard work. Attracting Investment and Enhancing Business Value For startups seeking funding or established companies looking for expansion capital, a strong IP portfolio is a powerful magnet for investors. Venture capitalists and lenders increasingly view IP as a critical asset, reflecting a company's innovation, market potential, and reduced risk profile. A robust IP strategy signals that your business is not only innovative but also strategically sound and legally protected. IP assets can significantly enhance your business's overall valuation. Imagine a tech company with a suite of patents covering its core technology, or a consumer brand with globally recognised trademarks; these assets add substantial value beyond physical property. In a similar vein, your trademarks can significantly enhance the value of your business. Generating Revenue Streams IP is not merely a defensive tool; it's an offensive weapon for revenue generation. Once your IP is protected, you can monetise it in various ways: Licensing: Granting others the right to use your patented technology, copyrighted material, or trademarked brand in exchange for royalties or fees. This can open new income streams without requiring expense from your side. Franchising: For businesses with strong brands and proven business models, IP protection is fundamental to successful franchising, allowing you to expand your footprint while maintaining control over your brand identity and operational standards. Sale of IP: Your intellectual property can be sold outright, providing a significant capital injection. Conclusion In the dynamic business landscape of today, intellectual property is no longer a niche legal concern but a core business asset. Prioritising its protection is fundamental to securing your competitive advantage, attracting crucial investment, opening new revenue avenues, and fostering an environment of innovation. By understanding and proactively managing your IP, your business can build a resilient foundation for sustainable growth and long-term success.
Our Latest Story
By Jeffrey Lucas
•
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If you hold (or want) a pilot licence, a drink driving charge isn’t just a traffic matter, it can put your medical and flying privileges under the microscope. The smart move is to get advice early, before making any aviation disclosures. Why this matters (even if it happened on the road) Aviation is conservative for good reason. Any alcohol related offence can raise questions about fitness to fly, which may lead to: Medical scrutiny (extra checks, temporary conditions). Short-term flying restrictions while assessments occur. Career and insurance impacts, particularly in commercial roles . We’re not saying your flying days are over, just that it’s both a legal and aeromedical issue from day one. Three costly myths: “It’s only a driving issue.” For pilots, it becomes an aviation issue quickly. “No conviction recorded = no problem.” Outcomes short of conviction can still trigger medical reviews and suspensions . “If I don’t report it, it goes away.” Missing a reporting obligation can be worse than the incident itself. If this happens, keep it simple and strategic: Call us first. We’ll help you meet your reporting obligations on time, in the correct form, and with clear, relevant facts. Coordinate with a Designated Aviation Medical Examiner (DAME) for a practical medical plan. Document sensibly (any counselling, test results, timelines) to support a return to flying pathway. Expect a pause, not necessarily a full stop. Many pilots return with structured steps and credible evidence. How we help: Clear pathway back: Legal, medical and practical steps aligned. Risk management: What to report, when, and how. Career protection: Engage with regulators, employers and insurers the right way. A realistic outlook Plenty of pilots resume flying. Success usually comes down to early advice, credible records, and compliance. Safety is the regulator’s north star; our job is to present your case clearly and keep momentum. Need guidance? CJM Lawyers advises pilots and operators on aeromedical and regulatory issues arising from drink driving charges. Speak to our Aviation Law team promptly so you meet any reporting obligations on time and in the correct form. General information only. This is not legal advice. Your circumstances will determine your obligations and options.
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By Kale Venz and Luis Gonzalez
•
8 September 2025
Why is IP Protection Crucial for Your Business? In today's fast-paced, innovation-driven economy, what truly differentiates a business isn't always tangible. It's often the unique ideas, the recognisable brand, the innovative processes, and the creative works – collectively known as intellectual property (IP). For businesses of all sizes, from agile startups to established enterprises, protecting these intangible assets isn't just a legal formality; it's a strategy for long-term success and growth. In Australia, like anywhere else, a failure to proactively protect your IP can expose your business to significant risks, undermining your competitive edge and stifling your potential for expansion. Safeguarding Your Competitive Advantage Imagine dedicating countless hours and significant resources to developing a groundbreaking product or a distinctive brand identity. Without proper IP protection, a competitor could legally replicate your innovation or imitate your branding, directly siphoning off your market share. This isn't just about preventing direct copying; it's about building a legal "moat" around what makes your business unique. Trademarks protect your brand name, logo, slogan, and even unique packaging, ensuring that customers can distinguish your goods and services from those of competitors. A strong, protected trademark builds brand loyalty and trust. Trade Secrets cover confidential business information that provides a competitive advantage, such as proprietary formulas, customer lists, or manufacturing processes. Maintaining their secrecy through robust internal controls and agreements is key to their protection. By securing these rights, you gain the legal standing to deter infringement and take action against those who try to unfairly capitalise on your hard work. Attracting Investment and Enhancing Business Value For startups seeking funding or established companies looking for expansion capital, a strong IP portfolio is a powerful magnet for investors. Venture capitalists and lenders increasingly view IP as a critical asset, reflecting a company's innovation, market potential, and reduced risk profile. A robust IP strategy signals that your business is not only innovative but also strategically sound and legally protected. IP assets can significantly enhance your business's overall valuation. Imagine a tech company with a suite of patents covering its core technology, or a consumer brand with globally recognised trademarks; these assets add substantial value beyond physical property. In a similar vein, your trademarks can significantly enhance the value of your business. Generating Revenue Streams IP is not merely a defensive tool; it's an offensive weapon for revenue generation. Once your IP is protected, you can monetise it in various ways: Licensing: Granting others the right to use your patented technology, copyrighted material, or trademarked brand in exchange for royalties or fees. This can open new income streams without requiring expense from your side. Franchising: For businesses with strong brands and proven business models, IP protection is fundamental to successful franchising, allowing you to expand your footprint while maintaining control over your brand identity and operational standards. Sale of IP: Your intellectual property can be sold outright, providing a significant capital injection. Conclusion In the dynamic business landscape of today, intellectual property is no longer a niche legal concern but a core business asset. Prioritising its protection is fundamental to securing your competitive advantage, attracting crucial investment, opening new revenue avenues, and fostering an environment of innovation. By understanding and proactively managing your IP, your business can build a resilient foundation for sustainable growth and long-term success.
Our Latest Story
By Jeffrey Lucas
•
21 October 2025
If you hold (or want) a pilot licence, a drink driving charge isn’t just a traffic matter, it can put your medical and flying privileges under the microscope. The smart move is to get advice early, before making any aviation disclosures. Why this matters (even if it happened on the road) Aviation is conservative for good reason. Any alcohol related offence can raise questions about fitness to fly, which may lead to: Medical scrutiny (extra checks, temporary conditions). Short-term flying restrictions while assessments occur. Career and insurance impacts, particularly in commercial roles . We’re not saying your flying days are over, just that it’s both a legal and aeromedical issue from day one. Three costly myths: “It’s only a driving issue.” For pilots, it becomes an aviation issue quickly. “No conviction recorded = no problem.” Outcomes short of conviction can still trigger medical reviews and suspensions . “If I don’t report it, it goes away.” Missing a reporting obligation can be worse than the incident itself. If this happens, keep it simple and strategic: Call us first. We’ll help you meet your reporting obligations on time, in the correct form, and with clear, relevant facts. Coordinate with a Designated Aviation Medical Examiner (DAME) for a practical medical plan. Document sensibly (any counselling, test results, timelines) to support a return to flying pathway. Expect a pause, not necessarily a full stop. Many pilots return with structured steps and credible evidence. How we help: Clear pathway back: Legal, medical and practical steps aligned. Risk management: What to report, when, and how. Career protection: Engage with regulators, employers and insurers the right way. A realistic outlook Plenty of pilots resume flying. Success usually comes down to early advice, credible records, and compliance. Safety is the regulator’s north star; our job is to present your case clearly and keep momentum. Need guidance? CJM Lawyers advises pilots and operators on aeromedical and regulatory issues arising from drink driving charges. Speak to our Aviation Law team promptly so you meet any reporting obligations on time and in the correct form. General information only. This is not legal advice. Your circumstances will determine your obligations and options.
10 October 2025
Testamentary Trusts are powerful estate planning tools that deliver substantial tax savings and robust asset protection for your beneficiaries. This guide explores the key advantages of incorporating a Testamentary Trust into your estate plan and demonstrates how this strategy can preserve and grow your family's wealth for generations to come. A will is a legal document that allows you to control what happens to your assets after you pass away. As the testator (the person making the will), you can specify how your estate should be distributed among your chosen beneficiaries. Beyond asset distribution, your will also names the executor—the person or people you trust to carry out your wishes and handle the administration of your estate. What is a Testamentary Trust? A Testamentary Trust is a sophisticated estate planning tool that operates through your will. Unlike a standard will that distributes assets directly to beneficiaries, a Testamentary Trust holds some or all of your assets in a trust structure after your death. This structure provides ongoing protection and management of your wealth for the people you care about most, your beneficiaries. How does a Testamentary Trust Work? When you pass away, the Testamentary Trust automatically comes into effect as outlined in your will. Rather than receiving assets outright, your beneficiaries become entitled to distributions from the trust. The trustee you've appointed in your will takes on the responsibility of managing the trust assets and making distributions according to your instructions and the beneficiaries' needs. Significant Tax Advantages One of the most compelling reasons to consider a Testamentary Trust is the substantial tax savings it can deliver for your beneficiaries. These benefits are particularly valuable when your beneficiaries either earn high incomes or include children under 18 years of age. How the Tax Benefits Work Under Section 102AG of the Income Tax Assessment Act 1936, income distributed from a Testamentary Trust qualifies as "excepted income." This special classification allows your beneficiaries to access the tax-free threshold on trust distributions—a significant advantage not available with standard discretionary trusts, where distributions to minors above $641 are typically taxed at penalty rates equivalent to the top marginal tax rate. Key Benefits of Testamentary Trusts Asset Protection - Trust assets are generally protected from beneficiaries' creditors, relationship breakdowns, and poor financial decisions. Flexibility - Trustees can adapt distributions based on beneficiaries' changing circumstances, such as education needs, health issues, or life stages. Tax Efficiency - Testamentary Trusts can provide significant tax advantages, including income splitting opportunities and concessional tax rates for minor beneficiaries. Control from Beyond - You maintain control over how and when your assets benefit your loved ones, even after your death. Is a Testamentary Trust Right for You? Testamentary Trusts are particularly valuable for families with: Young children or grandchildren Beneficiaries with disabilities Complex family structures Significant assets requiring ongoing management Concerns about beneficiaries' financial responsibility Who Benefits Most from These Tax Advantages? High-Income Beneficiaries - Trust distributions can be allocated to lower-income family members, reducing the overall tax burden. Families with Minor Children - Children can receive distributions using their full tax-free threshold, rather than facing penalty tax rates. Multi-Generational Wealth Transfer - Income can be distributed strategically across family members to optimise tax outcomes year after year. Long-Term Financial Impact - These tax savings compound over time, potentially saving your family tens of thousands of dollars annually while preserving more of your wealth for future generations. For personalised advice on whether a Testamentary Trust suits your circumstances and to explore the specific tax benefits for your family, speak with our experienced estate planning team.
By Kale Venz and Luis Gonzalez
•
8 September 2025
Why is IP Protection Crucial for Your Business? In today's fast-paced, innovation-driven economy, what truly differentiates a business isn't always tangible. It's often the unique ideas, the recognisable brand, the innovative processes, and the creative works – collectively known as intellectual property (IP). For businesses of all sizes, from agile startups to established enterprises, protecting these intangible assets isn't just a legal formality; it's a strategy for long-term success and growth. In Australia, like anywhere else, a failure to proactively protect your IP can expose your business to significant risks, undermining your competitive edge and stifling your potential for expansion. Safeguarding Your Competitive Advantage Imagine dedicating countless hours and significant resources to developing a groundbreaking product or a distinctive brand identity. Without proper IP protection, a competitor could legally replicate your innovation or imitate your branding, directly siphoning off your market share. This isn't just about preventing direct copying; it's about building a legal "moat" around what makes your business unique. Trademarks protect your brand name, logo, slogan, and even unique packaging, ensuring that customers can distinguish your goods and services from those of competitors. A strong, protected trademark builds brand loyalty and trust. Trade Secrets cover confidential business information that provides a competitive advantage, such as proprietary formulas, customer lists, or manufacturing processes. Maintaining their secrecy through robust internal controls and agreements is key to their protection. By securing these rights, you gain the legal standing to deter infringement and take action against those who try to unfairly capitalise on your hard work. Attracting Investment and Enhancing Business Value For startups seeking funding or established companies looking for expansion capital, a strong IP portfolio is a powerful magnet for investors. Venture capitalists and lenders increasingly view IP as a critical asset, reflecting a company's innovation, market potential, and reduced risk profile. A robust IP strategy signals that your business is not only innovative but also strategically sound and legally protected. IP assets can significantly enhance your business's overall valuation. Imagine a tech company with a suite of patents covering its core technology, or a consumer brand with globally recognised trademarks; these assets add substantial value beyond physical property. In a similar vein, your trademarks can significantly enhance the value of your business. Generating Revenue Streams IP is not merely a defensive tool; it's an offensive weapon for revenue generation. Once your IP is protected, you can monetise it in various ways: Licensing: Granting others the right to use your patented technology, copyrighted material, or trademarked brand in exchange for royalties or fees. This can open new income streams without requiring expense from your side. Franchising: For businesses with strong brands and proven business models, IP protection is fundamental to successful franchising, allowing you to expand your footprint while maintaining control over your brand identity and operational standards. Sale of IP: Your intellectual property can be sold outright, providing a significant capital injection. Conclusion In the dynamic business landscape of today, intellectual property is no longer a niche legal concern but a core business asset. Prioritising its protection is fundamental to securing your competitive advantage, attracting crucial investment, opening new revenue avenues, and fostering an environment of innovation. By understanding and proactively managing your IP, your business can build a resilient foundation for sustainable growth and long-term success.
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