How do you franchise a business in Australia?
Franchising a business involves five steps: confirm it is feasible, build the commercial model, document the system, prepare the legal documents, and recruit your first franchisees. Most businesses take six to twelve months from start to signing their first franchisee.
The order is important. If owners start with legal documents, they often pay a lawyer to draft an agreement for a system that is not ready, then pay again when changes are needed. That is why documents come fourth.
Confirm your business can be franchised
Before spending any money, check if your business model is suitable for franchising. This process is called a feasibility review. In the industry, it often costs several thousand dollars, but we offer ours for free.
The review checks if franchisees are likely to succeed. It looks at whether the business is profitable enough at each location to support both a franchisee’s income and your royalty, if someone else can run it, and if it can be repeated in other places.
- Proven profitability at unit level
- A trading history, ideally two years or more
- Systems that can be documented and taught
- A brand that is protected or protectable
- Enough margin for a franchisee and a royalty
- Demand beyond the area you already service
Few businesses meet every requirement at the start. What matters is knowing which areas you are missing and if they can be fixed. If not, we will let you know. It is better to find out now than after eight months.
Build the commercial model
This is the stage where you decide what you are actually selling. If you get this wrong, everything built on top of it will need to be redone. That is why this step comes before documentation and legal work.
The main question is whether the numbers work for both you and the franchisee. A franchisee should earn a proper living after paying your royalty, the marketing levy, and their own costs. If the model only works because the owner takes no salary, it will not work for a franchisee. Under the new Franchising Code, you must give franchisees a reasonable chance to make a return on their investment.
- Initial franchise fee
- Royalty rate and how it is calculated
- Marketing levy, if any
- Territory model: exclusive or not
- What the franchisee gets for their money
- Term length and renewal structure
Document the system
This is where the way your business operates is turned into a clear, practical system that someone else can follow.
We develop the operations manual, training framework and supporting documentation for you, based on the information gathered throughout the process. Your role is not to sit down and write the manual from scratch. Instead, we prepare the material and work with you to review, correct and refine it so it accurately reflects how your business operates.
- Franchise Operations manual
- Training program and materials
- Standards and compliance framework
- Supplier and equipment specifications
- Marketing guides for franchisees
- Reporting and support routines
No one knows your business better than you, so your input is essential. Our role is to extract that knowledge, structure it properly and turn it into a franchise-ready system. Your role is to review what we prepare, fill in any gaps and make sure the final documents reflect the way you want franchisees to operate.
Prepare the legal documents
Now that the model and the system exist, they can be documented legally. This work is done by a franchise lawyer, not by us and not by you.
The franchise agreement and disclosure document must comply with the Franchising Code of Conduct. A new Code started on 1 April 2025, with more obligations from 1 November 2025. Nearly all obligations now carry civil penalties of up to 600 penalty units. This is not the time to cut corners or use a template, especially a US one, since American documents are based on different laws.
- Franchise agreement
- Disclosure document
- Information statement
- Company and entity structure
- Franchise Disclosure Register entry
Recruit and launch
Once the system is built and the documents are ready, you can go to market. It is tempting to sign the first person who agrees, but it is better to wait. Your early franchisees are your proof of concept, and one struggling franchisee can hurt recruitment more than waiting a few months.
Selection criteria matter more than speed. You are looking for people who can follow a system, have the working capital to survive their first year, and will represent the brand the way you would.
- Franchise prospectus and offer materials
- Lead generation and enquiry handling
- Selection criteria and interview process
- Disclosure and the statutory waiting period
- Onboarding and initial training
- Ongoing field support
Plan for your first two or three franchisees to cost more in support than they bring in through royalties. Helping them succeed is more important than making a profit on their initial fees.
How long does it take to franchise a business?
Six to twelve months from starting the work to being ready to recruit your first franchisee. The variable is almost always how efficiently you return requested information, not how quickly a consultant or lawyer can work.
Owners with written processes move much faster. If you are starting from scratch, expect the documentation stage to take longer than you think.
What does it cost to set up a franchise?
Set-up costs vary widely depending on how much of your business is already documented, how complex the operation is, and how much of the work you take on yourself.
Because that answer needs more detail, we have broken it down by component — legal documents, operations manual, financial model, brand assets, and recruitment — on a separate page.
Three things worth knowing before you start
Start the way you want to finish
Set up the franchise as you want it to operate. Changing the model after you have franchisees is hard and sometimes not possible. Existing agreements last for their term, so a decision made in month three can affect you for a decade.
You are not just buying documents
Some people think franchising is just about gathering a few documents. The documents record a system, but they do not create one. If your business cannot be replicated, no agreement will change that.
Your job will change
Once you have franchisees, you stop running the business and start supporting the people who do through training, field visits, compliance, and sometimes difficult conversations. Some operators do not enjoy this work. It is better to know that now.
Common questions
A feasibility review, which means checking if your business is profitable, can be documented, and is transferable enough to franchise. Doing this before spending on documents or legal work helps prevent investing in a model that will not work.
Yes. The franchise agreement and disclosure document must comply with the Franchising Code of Conduct, and nearly all obligations under the new Code carry civil penalties. A franchise consultant builds the system; a franchise lawyer drafts the legal documents — at The Franchise Institute we do both.
There is no legal minimum. Many businesses successfully begin franchising from one established location. Having a second location can provide additional proof that the model is transferable, but it is not a prerequisite if the original business is profitable, well systemised and capable of being replicated.
Yes. Small businesses franchise successfully all the time. Size matters less than whether the model is proven, documented, and profitable enough to support a franchisee and a royalty.