Overseas Franchisors Coming “Down Under” in 2026

Master franchising;

• Direct licensing to a single or multi-unit Franchisee;

• Area Development Agreements; and

• Partnership, Joint Venture or Partnering Agreements.

Each model has its own pros and cons and seeking specialist local advice from Franchise Specialists is highly recommended to ensure compliance and a successful roll out of an overseas brand.

Robert Toth and his Franchise legal team at Sanicki Lawyers are a recognized Franchise Law Firm with Robert and the team at Sanicki lawyers have over 38 years’ experience advising in the franchise sector.

The Firm is a Member of the Franchise Council of Australia (FCA) the recognized National Franchise body, the (IFLA) International Franchise Lawyers Association and Global Law Experts with a network of Franchising and Licensing firms around the world.

We know the local market, the regulatory environment and have a network of consultants to assist overseas franchisors get their business successfully into the Australian market.

Master franchising is the most common model adopted by overseas Franchisors as the obligations, role and responsibilities of the overseas Franchisor are taken up by the Master Franchisee.  Here the overseas Franchisor does not contract directly with local unit franchisees and therefore legal liability and any “litigation” risks, rest with the Master Franchisee under Australian law.

The Master Franchisee must comply with the Australian Franchise Code to establish its own sites and recruit Franchisees, meet performance criteria, and train and support franchisees. It must also   meet the costs of setting up its own business operations and ensure the system operates successfully.  The overseas Franchisor usually has a well-established overseas profile, strong brand recognition and systems in place to support the Master Franchisee.

The key ultimately is choosing the right Master Franchisee as this can make or break the successful roll out of the brand.

One disadvantage of Master franchising is that the overseas/head franchisor is one step removed from practical control and face to face management which is left to the Master Franchisee.  The Master franchisee therefore needs to not only have the capital resources but also the ability, personality, and skills to succeed and manage the system in the territory.

Under the mandatory Franchise Code, overseas franchisors and Master franchisees must comply with the Code.

Many overseas franchisors are surprised by how overregulated we are in Australia however we are known to be one of the most regulated franchise sectors in the world requiring the issue of a FDD (disclosure document), a strict disclosure regime and registration of the system with the ACCC.

There may also be obligations to register as a foreign company, where the overseas franchisor is “doing business” in Australia under our Corporations Act and Taxation laws.

Under the Franchise Code an overseas franchisor must give its master franchisee a Code compliant Disclosure document. In 2015 the obligation for an overseas franchisor to also give a disclosure document to a sub or unit franchisee was removed.

The Disclosure document must be in the form set out under the Code and set out details about the franchise system, responsibilities of the master franchisee, including marketing, operational support, and territory rights.

In many cases overseas Franchisors have no disclosure document or their FDD or disclosure statement needs updating to be Code compliant as does their Franchise Agreement as there are many disclosure obligations around supplier rebates, end of term arrangements, online sales, audit of marketing funds, and ADR and mediation provisions.

Franchisors can also be made liable for a failure of their franchisees to pay their staff under our Fair Work Act 2009, and we also have an “unfair contract terms” regime.

The fines and penalties for breach of the Disclosure Code are significant apart from the damage to the brand’s reputation. It can also enable a franchisee to terminate the agreement.

 From our 38 years of experience acting for overseas companies and master franchisees the top issues we see that have caused issues are:

• Underestimating the diverse regions, states, and territories in the Australian market: It is a big country, and the state or territory to enter the market can be make or break the brand.

• Not understanding the differences in the consumer market between the various states and territories: A franchise system highly successful in Queensland may not transport well to Victoria.

• Overestimating the size of the Australian market and placing unrealistic performance criteria on the Master Franchisee: We often see unrealistic targets set out in master franchise agreements which create undue pressure on the master franchisee for example to establish 5 franchise sites in the first year is unrealistic depending on the nature of the franchise.

• Seeking an unrealistic Master license fee: Asking for a significant up-front fee for granting the rights is unlikely to secure a Master franchisee.  Bank funding is tight and the set up cost for premises and labor are high. There is now an expected “sharing of the risk” between the Franchisor and master franchisee with the License fees payable over time, tied to the performance and roll out of franchises.

• Not getting Franchise Specialist advice in the local market: Getting local on the ground Specialist Franchise legal advice will assist in a successful rollout of the system and limit the risks.

• Failing to develop a specific business entry plan: Like any business, overseas franchisors should develop a business entry plan to detail the costs and benefits, risks, identify competitors in the market and provide financial modelling to make sure the grant of rights will be financially viable for the overseas franchisor, Master franchisee and unit franchisees.

• Failing to ensure their IP/ brand is registered before entering the market: We have seen cases where an overseas company did not do basic trademark searches and register their TM in the market and then could not use their brand, in Australia.

Master Franchisees now expect more from their Overseas Franchisor by way of systems, support and marketing. The upfront Master License fee must be realistic to attract the right master, franchisee.

Therefore, we all need to think more laterally about the way the fees are charged and how to share the risk, so as franchises roll out, the overseas Franchisor benefits from each new unit franchisee which then also assists the Master Franchisee fund itself into the role.

The key is of course selecting the right Master franchisee.  Often, the best candidate may not have the capital necessary up front, whereas the best candidate may need some “franchisor vendor terms” to take up the role. Master franchising is still the most preferred model for overseas companies getting into a different market.

Direct Franchising – Here the overseas franchisor is usually well-established, well-funded and established and has the systems to support unit franchisees from abroad and therefore they will not need to appoint a local master franchisee.

They will grant rights directly to the individual unit franchisee as they can provide the support online and the franchisee may not need on the ground training and support. Financially, it can be better for the overseas franchisor as the royalty is paid directly to them without splitting fees with the Master Franchisee.

The overseas franchisor must still comply with the Australian Franchise Code and issue each unit franchisee the necessary FDD (Disclosure document) Code compliant Franchise Agreement and related documents in accordance with the Code. As the Franchisor contracts directly with the franchisee, they take the risk of being liable if the franchise fails. This model may not be suitable for many business sectors where local training and support is required and may not be as attractive to prospective franchisees, as they may be concerned about the lack of a local presence by the Franchisor.

This model enables an overseas franchisor to test the market by appointing an Area Developer whose role is not to establish a franchise, but act as an agent for the overseas company to find and secure a Master Franchisee or unit Franchisees.

The Area Developer may be given performance criteria and is paid a success fee on signing up a franchisee. They do not enter a contract with the unit franchisee who will contract with the overseas franchisor (or a Master).

Often an overseas franchisor may enter into a JV or limited partnership agreement. There are tax considerations in establishing these structures that need to be considered. We have a network of Accountants that can assist our overseas clients in relation to taxation issues.

As we always say “documents are your friend” which means any relationship needs to be properly and clearly documented.  This may require a Master Franchise Agreement or a shareholder or JV agreement to cover key issues such as capital contribution, distribution of profit, the parties’ roles and responsibilities and exit and termination rights such as pre-emptive, buy out rights and triggers on default.

Overseas companies must also register as a foreign company or establish a fully owned subsidiary company with at least one resident Australian Director under our ASIC laws.

 We act for many overseas franchisors and can assist with Code and legal compliance. This involves converting their FDD and Franchise Agreement to be Australian Code compliant.

We provide practical and commercial advice on related laws and compliance issues and can assist with local knowledge of the market and work with our overseas clients to ensure they are Code compliant, and their agreements are clear, commercial, and suited to the local market.

Contact: Franchise License and Distribution Team

Robert Toth | Special Counsel | Accredited Commercial Law and Franchise Specialist |

Email:   robert@sanickilawyers.com.au | Mobile: 0412 673 757