Purchasing a Franchise in Queensland: A Practical Guide for New Buyers

Understanding What a Franchise Is

A franchise is a business arrangement where the franchisor (the owner of the brand) grants a franchisee (the buyer) the right to operate a business under that brand’s systems, trademarks, and procedures. In return, the franchisee pays fees and agrees to follow strict operational guidelines.

These fees may include:

• An upfront franchise fee
• Ongoing royalties
• Marketing contributions or other marketing fees
• Fit-out or equipment costs
• Training costs

Franchises operate under a regulated framework which helps protect buyers, but the level of responsibility on the franchisee remains high. You are still running a business, and its success depends on how well you manage that business within the franchisor’s model.

The Key Steps to Buying a Franchise

Step 1: Research the Franchise System

Before engaging in discussions with a franchisor, take time to understand the business model and what is expected of you. This includes looking at whether the opportunity aligns with your goals and whether buying a franchise is a better option than buying an existing business outright. You should consider the following questions:

• How long has the franchise been operating?
• Is the brand financially stable and reputable?
• Are existing franchisees satisfied with the system and support?
• What is the competition like in your region?
• What are the franchise’s long-term growth prospects?

In Queensland, you are encouraged to speak with current and former franchisees, as well as other franchisees in the network. They can often provide honest insight into the level of support the franchisor actually provides and whether the business is as profitable as advertised.



Step 2: Understand Your Legal Rights Under the Franchising Code of Conduct

The Franchising Code of Conduct is a compulsory industry code under the Competition and Consumer Act 2010. It regulates how franchisors and franchisees deal with one another across Australia, and it forms a key part of the legal framework you must understand when buying a franchise.

Key protections for franchisees include:

• An obligation for parties to act in good faith from negotiations through to termination or renewal.
• Disclosure obligations for the franchisor including a detailed disclosure document before entering into a franchise agreement.
• A consideration period (and in some cases a cooling-off period) before signing the agreement.
• Rules on how pooled funds (such as marketing or other common-purpose funds) must be managed and reported.
• Limits on certain unfair contract terms. For example, restrictions on post-term non-compete clauses in certain cases under the new Code.

Because the Code governs the franchise relationship, both your rights and your obligations are set out, so it’s important to understand it fully when buying a franchise.



Step 3: Review the Disclosure Document

Before you sign any documents, the franchisor must provide you with:

• A compliant Disclosure Document (in the form required by the Code) at least 14 days before signing.
• A copy of the franchise agreement in final form.
• If the franchisor or an associate intends to lease premises to you, details of that lease, sub-lease or occupancy agreement (including benefits the franchisor receives).
• A copy of the Franchising Code of Conduct.

Check that the Disclosure Document complies with the Code’s format and contains the required disclosures, and ask the franchisor to clarify any parts of the agreement or business premises arrangement you don’t understand.



Step 4: Conduct Financial Due Diligence

Buying a franchise is a significant investment, and due diligence should never be rushed. You should take the time to carry out your own research so you understand the risks involved, including the possibility that you could lose money if the franchise does not perform as expected. You should:

• Review the franchisor’s financial statements
• Analyse projected income and expenses
• Confirm ongoing fees
• Examine the cost of fit-out, staffing, and stock
• Check for hidden or indirect expenses

Look closely at how the franchisor manages its operating procedures and consider whether you have the business skills needed to meet the demands of the system. Many franchise buyers seek advice from an accountant who is familiar with the industry. This helps you understand cash-flow expectations and confirm whether the business is financially viable.



Step 5: Understand the Franchise Agreement

The franchise agreement is the formal contract that sets out your rights and obligations. These agreements are often lengthy and complex. They typically cover:

• How long the franchise term lasts
• Renewal rights
• Exit rights
• Dispute resolution processes
• IP and branding rules
• Performance targets
• Marketing requirements
• Training and support obligations
• Grounds for termination

Because franchisors usually use standardised agreements, the terms may not be negotiable. Even so, it is important to have the contract reviewed by a commercial lawyer to help identify unfair obligations, one-sided risks, or financial pitfalls.

Step 6: Secure a Location

If your chosen franchise involves a retail outlet or hospitality venue, you will likely enter into a retail shop lease. In Queensland, such leases are regulated under the Retail Shop Leases Act 1994.

Under the Act, a lessor must provide a draft lease and a disclosure statement at least 7 days before you enter the lease. You should review all obligations (rent reviews, outgoings, fit-out works, refurbishment cycles) and check how the lease aligns with your franchise agreement.

Franchisors often require you to sign either the head lease (in their name) or a sub-lease. Make sure you understand which applies and how your franchise obligations tie in. Fit-out costs and refurbishment obligations can add significant expense, so treat those as part of your due diligence. While the law provides protections for retail tenants in Queensland, you also have responsibilities, so getting legal advice early is strongly recommended.



Step 7: Review Your Business Structure

Before you enter into a franchise agreement, consider how the business will be structured. When buying a franchise, the right structure helps you manage your obligations and understand how the business model will operate once you become your own boss. Common options include:

• Sole trader
• Company
• Partnership
• Trust

Your structure will affect tax, liability, asset protection, and long-term planning, and it can also influence which franchise opportunities are the best fit for your circumstances. Often, franchisees use a company or trust, depending on their circumstances and professional advice.



Step 8: Arrange Finance and Finalise Your Purchase

Once you are confident in the commercial and legal aspects of buying a franchise, you can proceed with:

• Securing finance
• Paying the franchise fee
• Signing the franchise agreement
• Signing the lease
• Completing any required training
• Preparing for opening day

By this stage, you should have a clear understanding of the set-up costs, your responsibilities, and what it will take to run your own business under the system. This is also the point where you should feel satisfied that you have chosen the right franchise and are ready to move forward with confidence under both the franchise agreement and Queensland leasing laws.



Where Airlie Legal Fits In

Stepping into a franchise is an exciting move, but it also comes with detailed agreements, financial commitments, and leasing requirements that deserve careful attention. You’ve worked through the key steps in this guide, and by now you’ll know that buying a franchise is a significant legal and commercial decision, particularly in a market shaped by strong Australian competition. A successful franchise purchase is built on clear information, solid advice, and the confidence that every document has been reviewed properly.

This is where our team can support you. At Airlie Legal, we break down the franchise agreement, review the Disclosure Document, and help you understand the terms that will shape your responsibilities and future rights. If your franchise involves taking over a current site or securing a new location, we examine the lease and explain how Queensland’s Retail Shop Leases Act affects your position so you can move forward without uncertainty.

For buyers still weighing up how to structure their new venture, we talk through the practical options and what they mean for tax, liability, and long-term planning. We take the time to explain each step so you can make decisions with a clear picture of the path ahead.

If you’re buying a franchise in Queensland and want to begin on the right footing, our team at Airlie Legal is ready to give you the advice you need to finalise your purchase on solid ground.