Is Your Business Ready to Franchise in Australia? Here’s What to Consider First

Introduction

Franchising isn’t just about expansion, it’s about scaling smart. In Australia, with over 1,100 franchise systems and more than 70,000 franchise units, growth brings opportunity but also responsibility. Before taking the leap, here are the key considerations your business must meet to thrive in the Australian franchise landscape.

1. Proven Business Model & Replicability

Your concept must be market-tested and easily replicable:

• Operate multiple company-owned outlets to prove demand and smooth out operations.
  
• Develop standardised manuals and training systems that franchisees can follow reliably across locations.

2. Legal Compliance & Structure

Australian franchising is governed by rigorous regulations:

• You must comply with the Franchising Code of Conduct, Australian Consumer Law, and Fair Work Act, and register the business with ASIC as a franchisor.
• Set up a business structure that protects IP and limits liability—such as separate IP holding and operating entities.
  

3. Intellectual Property Protection

Your brand’s identity must be legally secured:

• Register trademarks through IP Australia to protect your name, logo, and brand elements.
  
• Use consistent branding in all franchisee materials, and include IP protection clauses in agreements.
  

4. Disclosure & Documentation

Transparency is legally mandatory—and practical:

• Provide the Franchise Disclosure Document, Franchise Agreement, and Code copy 14 days before signing.
  
• Update disclosure documents annually, and maintain a public Franchise Disclosure Register profile.
  

5. Marketing Fund & Support Infrastructure

Invest in franchisee success with solid systems:

• Set up a marketing (specific‑purpose) fund with transparent auditing, annual reporting, and franchisee voting if needed.
  
• Prepare to offer robust training, ongoing operations support, and marketing materials to help franchisees succeed.
  

6. Workplace Compliance & Risk Management

You’ll be held responsible for the network’s practices:

• Understand and enforce compliance with workplace laws to avoid penalties for underpayments or unsafe practices.
  
• Prepare procedures to monitor franchisee compliance (set expectations, training, auditing, enforcement).
  

7. Financial Viability for Franchisees

Your franchise must be financially attractive:

• Develop realistic financial projections—including initial and ongoing costs (franchise fees, royalties, fit‑out, working capital)—and forecast breakeven points.
  
• Use results  of existing franchise partners’ performance to demonstrate franchisee viability and guide lending decisions.
  

8. Franchise Marketing & Recruitment Strategy

Your growth vision depends on attracting the right franchisees:

• Build a compelling franchise offer, including transparent legal documents, proven systems, training, support, and a strategic marketing fund.
  
• Target ideal franchisee profiles through online platforms, brokers, and expos—supporting them with clear branding and marketing collateral.
  

Summary Table

Final Thought

Smart franchising is about preparation. If your business demonstrates a replicable model, is built on legal foundations, protects its brand and franchisees, and supports growth with finance, marketing, and operational systems, you’re ready to scale. Australia’s franchise sector offers significant opportunity but sustainable success requires rigour and foresight.

Franchise fees can feel confusing but they’re only valuable if you get solid returns. Here’s a breakdown of common costs, what makes them worthwhile, and red flags that could signal trouble.

Typical Franchise Fees in Australia

1. Initial Franchise Fee ($20k – $70k+)
   A one-off payment for brand rights, training, setup support and access to systems. Fees vary widely—from under $20,000 for home-based models to over $100,000 for specialised or premium brands.
   
2. Ongoing Royalties (4%–12% of turnover)
   Paid regularly to fund continued brand use, operational support, training, and innovation. Typically the Royalty for retail business is approximately 10% including marketing fund and for service based business it could be higher and within range of 12-17%. At GrowthHive, we have seen franchise models with 30-40% royalty but they provide a lot more value, for example: providing booked jobs. 
3. Marketing Fund Contribution (1%–4%)
   Collected to finance national or local brand advertising. In Australia, the standard range is around 1.5–2.5%.
   

What Fees Are Worth It

1. A Proven Brand with Consistent Demand
Great brand recognition reduces your marketing burden and boosts customer trust. Higher initial fees may be justified by a solid track record and strong consumer loyalty.

2. Real Marketing Support
Look for robust, transparent marketing programs. If contributions go into a professionally managed fund with measurable campaigns through digital ads, PR or local activations, they’re likely worth it.

3. Strategic Business Coaching & Ongoing Training
Ongoing strategic support, including field visits, refresher training and operational guidance, is a sign of franchisor investment in franchisee growth.

4. Fair and Transparent ROI Potential
Use forecasts from company-run branches and initial disclosures to assess potential returns. A strong franchisor-backed model should deliver 12–15% ROI post-costs.

Red Flags to Watch Out For

• Hidden or Unclear Fees – Watch for unexpected costs like administrative charges, lead generation fees, or arbitrary IT charges .
  
• High Royalties, Little Return – If the royalty rate is much higher than industry norm (6–8%) and support is weak, and franchisees are struggling financially.
  
• No Performance Benchmarks – A reputable franchise should openly share financial data, earnings claims, and peer performance benchmarks. Avoid those that don’t .
  
• Lack of Transparency or Support Promises – Vague documentation, pressured sign-up, or claims like “unlimited support” without specific signal trouble .
  

🔍 Don’t Just Compare Prices—Assess Value

Smart Step-by-Step Evaluation

1. Analyse the FDD for clear, quantifiable earnings and fee breakdowns.
   
2. Ask franchisees about ROI, support, marketing results, and hidden costs.
   
3. Benchmark against peers: Compare fee levels and services in similar concepts.
   
4. Negotiate where possible: Consider caps, waiver of initial portions, or staged fee structures.
   
5. Forecast real-world ROI: Include all costs, even unexpected ones, in your cash flow model.
   

Final Take

Franchise fees aren’t inherently good or bad, it depends on the value you receive in return. Great franchisors deliver strong brand support, marketing, training, and innovation, boosting your ROI over time. Avoid those with hidden charges, unclear benefit structures, or royalty rates that don’t reflect real value.

Ready to turn your business into Australia’s next franchise success story? Don’t leave it to guesswork: explore real franchise opportunities that are already set up for growth. Visit our Franchise Listing Directory to see what’s working, or connect with like-minded entrepreneurs and experts in our Facebook community. The next step in your franchise journey starts here.