Franchising Code Refund Changes 2025: What Franchisors and Franchisees Need to Know

The new Franchising Code of Conduct, effective as of 1 April 2025, continues to keep both franchisors and franchisees on their toes with drafting anomalies that may lead to unintended consequences. One significant change relates to payments made by franchisees before entering into a franchise agreement.

Under the previous Franchising Code, franchisees were entitled to a full refund of any amount paid before receiving disclosure or within 14 days of receiving disclosure. However, the new Code introduces a key change:

• Refunds are now only available if the money is paid after the franchisee receives disclosure during the newly named Consideration Period.

This means that franchisees who pay deposits prior to receiving disclosure may not be legally entitled to a refund if they choose not to proceed.

This change may be an unintended consequence of the Code’s drafting, but it has significant implications. Franchisees could face financial risks if they pay deposits early and later decide not to proceed, as they may not be entitled to a refund. Franchisors, on the other hand, must ensure they are transparent about this change to avoid disputes or legal challenges. Both parties—and their legal advisers—should be aware of this provision and advise their clients accordingly.

The Franchise & Business Lawyers can assist both franchisors and franchisees in navigating the complexities of the new Franchising Code of Conduct. Whether you need advice on refund provisions, disclosure requirements, or compliance, our team is here to help. Contact us today for expert support.