Practice area
Franchising & DistributionFranchising (Fair Trading Act 1986; no franchise-specific statute)Franchising and distribution
Define the intended work in Franchising & Distribution, confirm the applicable requirements and select a task to plan the necessary review.
Key facts
- Tasks covered
- 22
- Tasks with a step-by-step checklist
- 6
- Local differences
- 3 jurisdictions where this area changes
Jurisdiction
Tasks
GreenLawyer reviewYellowClose supervisionRedLawyer-led
| Task | How AI is used | Human involvement | What the lawyer must review |
|---|---|---|---|
| Draft or review a franchise disclosure document against the prescribed headings | The tool builds a register of the prescribed disclosure items under the Code edition the lawyer names and records against each item the source paper supplied for it — the franchise agreement and any lease, the site and territory list, supplier and rebate arrangements, litigation and insolvency history, the last two financial years' reports and the solvency material — flagging items with no source, items not refreshed since the last annual update, and figures that differ between papers. Where the client is the franchisee, it runs the same register against the disclosure document received and lists the items left blank or unsupported for the lawyer's questions to the franchisor; it writes no part of the disclosure document or the directors' solvency statement: no draft, no shell, no populated fields, no suggested wording. | RedLawyer-led | The lawyer drafts every item and checks their own wording against the papers — each prescribed item answered in the franchisor's own terms, and fees, sites, rebates, supplier restrictions and litigation history matching the source documents — then confirms the director's solvency statement and any audit report are signed and current, and dates the document so the 14-day disclosure period runs from a defensible date. |
| Draft or review a franchise disclosure document against the Code schedule | Build the register of prescribed items in the Code schedule, including the November 2025 capital expenditure and specific purpose fund items, record against each the source paper supplied for it, then flag items with no source and figures that differ between papers. The tool writes no part of the disclosure document or the directors’ solvency statement: no draft, no first draft, no shell, no populated fields, no suggested wording. Check the document in hand, the lawyer’s own or the franchisor’s, item by item against the ACCC April 2025 model, confirm the four-month annual update was done, and list every figure and earnings claim with no source on the file. | RedLawyer-led |
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| Review the offer papers for a New Zealand franchise sale | Extract the proposed grant, fees, term and any disclosure pack the client already uses. | RedLawyer-led |
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| Check the franchisor's disclosure and any registration the jurisdiction requires | Compare the disclosure document with any register or filing extract that exists, and list missing fields, overdue confirmations and mismatches. | YellowClose supervision |
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| Check Franchise Disclosure Register lodgement and annual confirmation | Compare the live register extract with the disclosure document and list missing fields, overdue confirmations and mismatches. | YellowClose supervision |
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| Remove Australian Franchising Code steps from a New Zealand franchise file | Flag any draft that assumes a Franchise Disclosure Register, Code s 43 compensation, or Code s 44 ROI disclosure. | YellowClose supervision |
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| Draft or review a franchise agreement from the disclosure and the term sheet | Draft the territory, IP, operations, fee and reporting clauses to the lawyer's clause-by-clause instructions, working from the term sheet, the disclosure document and the precedent the lawyer nominates. On a review, mark the franchisor's text against the playbook and list one-sided restraint, transfer, termination and marketing-fund terms. | YellowClose supervision | The lawyer settles every clause as their own: that it matches the term sheet and does not contradict the disclosure document, and that the franchising code's required and prohibited terms (cooling off, dispute resolution, transfer, termination, no recovery of the franchisor's preparation costs) and the unfair contract terms position are right before the agreement is exchanged. A term the playbook is silent on is decided by the lawyer, not left as drafted. |
| Draft or review a franchise agreement against the Franchising Code | From the term sheet and the disclosure document, tabulate the territory, IP, operations, fee and reporting terms and flag one-sided terms against the Code. The tool writes no part of the franchise agreement: no draft, no first draft, no scaffold, no suggested clauses. Check the agreement the lawyer has written against the Code’s required and prohibited terms, the 14-day cooling-off period among them. | RedLawyer-led |
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| Build a franchisee due-diligence issues list from the disclosure pack | Produce a checklist, a list of questions for the franchisor, and red flags (turnover, litigation, earnings claims) from the disclosure document. | RedLawyer-led |
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| Map post-term restraints and goodwill claims from the agreement | Extract cascading restraint clauses and any goodwill or exit-payment terms into a table by time, geography and activity. | RedLawyer-led |
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| Check investment, earnings-claim and return disclosures in the pack | Extract stated investment, working-capital and earnings figures from the disclosure and list the supporting documents, marking unsourced claims. | RedLawyer-led |
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| Check investment and earnings-claim disclosures under s 44 of the Code | Extract investment, working-capital and earnings figures from the disclosure, list the supporting documents and mark unsourced claims against s 44. | RedLawyer-led |
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| Check early-exit and end-of-term compensation clauses | Extract termination-for-convenience, non-renewal and compensation clauses from the agreement and line them up against the Code or rule the lawyer has named. | RedLawyer-led |
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| Check early-exit compensation clauses under s 43 of the Code | Extract termination-for-convenience, non-renewal and compensation clauses from the agreement and line them up against s 43 of the Code. | RedLawyer-led |
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| Draft a franchise dispute notice and a mediation position paper | Produce a dispute notice, a chronology and a mediation paper from the agreement, the applicable dispute procedure and the correspondence file. | YellowClose supervision |
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| Map termination and handback steps from the agreement and franchise rules | List notice, cure, de-identification, stock and IP-handback steps with dates, and flag steps the papers do not cover. | YellowClose supervision |
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| Draft or review a distribution, dealer or agency agreement | Produce a first draft from the precedent and flag exclusive, RPM, IP and termination terms, with a note if the arrangement may be a franchise. | YellowClose supervision |
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| Review marketing-fund statements against the disclosure and the franchise rules | Extract fund contributions, expenditure and the annual statement into a reconciliation table, marking missing line items. | YellowClose supervision |
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| Map online-channel and territorial-overlap clauses | Extract e-commerce, marketplace and reserved-channel clauses from the agreement and operations manual into a conflict table. | YellowClose supervision |
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| Map franchise online-channel clauses against ACCC guidance and CCA s 48 | Extract e-commerce, marketplace and reserved-channel clauses from the agreement and manual into a conflict table, and flag resale price maintenance risk under CCA s 48. | YellowClose supervision |
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| Compare the disclosure document with the franchise agreement | Line disclosure items up against the agreement clauses and list inconsistencies on fees, territory, restraints and term. | YellowClose supervision |
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| Extract fee, rebate and supplier-restriction terms into a money table | Pull royalties, marketing levies, rebates and designated-supplier rules into a table with clause references. | GreenLawyer review |
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| Summarise a franchise agreement and disclosure document | Extract key terms and disclosure items. | GreenLawyer review | Verify. |
| Check disclosure documents against the Franchising Code | Flag missing code items. | YellowClose supervision | Lawyer confirms. |
| Draft a franchisee termination notice | Draft from facts. | RedLawyer-led | Lawyer settles. |
| Compare franchise agreement versions | Produce a redline summary. | GreenLawyer review | Verify. |
| Draft a marketing-fund report review | Analyse the report. | YellowClose supervision | Lawyer reviews. |
| Advise on AI-generated franchise marketing copyright | Analyse. | YellowClose supervision | Lawyer advises. |
| Apply ethical AI rules in franchise disputes | Check. | YellowClose supervision | Lawyer confirms. |
| Summarise franchise network AI tool licences | Summarise. | GreenLawyer review | Verify. |
Firm-wide obligations
| Obligation | What it covers |
|---|---|
| Trust accounting & handling client money | Checks that apply across files. |
| Costs, billing & litigation funding | Checks that apply across files. |
| Client-facing & access-to-justice AI tools | Checks that apply across files. |
| Incoming evidence — deepfakes & synthetic documents | Checks that apply across files. |
| AI decision systems | Checks that apply across files. |
| Confidentiality & client information | Checks that apply across files. |
| AML/CTF — the practice as a reporting entity | Checks that apply across files. |
What changes in Australia
| Topic | What changes |
|---|---|
| Franchising Code | Franchising Code of Conduct 2025, made under the Competition and Consumer Act 2010 (Cth): in force 1 April 2025, with further provisions from 1 November 2025. The ACL and state contract law also apply. |
| Distribution | CCA exclusive dealing (s 47); third-line forcing needs a substantial lessening of competition (since 2017); resale price maintenance (s 48) is per se prohibited; cartel provisions apply. |
| Disclosure and Register | Disclosure documents follow a prescribed model. The ACCC runs the Franchise Disclosure Register and issued infringement notices of $15,650 to $19,800 in 2024–25. |
| New obligations | The 2025 Code added goodwill compensation, early termination compensation (s 43) and return on investment (s 44), commencing 1 November 2025. |
| Limits on AI assistance |
|
What changes in New Zealand
Known here as: Franchising (Fair Trading Act 1986; no franchise-specific statute)
| Topic | What changes |
|---|---|
| No franchise statute | No franchise-specific Act or mandatory code on official sources. A 26 June 2009 Beehive speech found no case for franchise-specific regulation. |
| What applies | Fair Trading Act 1986: misleading or deceptive conduct, unfair practices and false claims. Contract, IP and competition law also apply. |
| Unconscionable conduct | The Commerce Commission explains the s 8 factors, applies the prohibition to business-to-business contracts, and uses franchise examples. |
| Not Australian law | No Franchising Code, Franchise Disclosure Register or statutory disclosure document. A Franchise Association code does not replace the Fair Trading Act. |
| Limits on AI assistance |
|
- Beehive: Where Franchising Fits in New Zealand's Regulatory Framework (26 June 2009) · 2026-09-23
- Fair Trading Act 1986 · 2026-09-23
- Commerce Commission: unconscionable conduct · 2026-09-23
- Consumer Protection NZ: Fair Trading Act · 2026-09-23
- Courts of New Zealand: GenAI guidelines — Lawyers (7 December 2023) · 2026-09-23
What changes in United States
Known here as: Franchising and distribution
| Topic | What changes |
|---|---|
| Governing law | The FTC Franchise Rule plus state franchise-registration and relationship statutes. Distribution and dealer statutes are state law. |
| Checking | Check generated FDD mark-ups against the current FTC rule and the state examiner's requirements. |
Precedents for this area
- Franchise disclosure document: Schedule 1 build sheet and verification register (Checklist, AI use Red). Working register for preparing or reviewing a franchisor’s disclosure document under the 2024 Franchising Code. It lists every Schedule 1 item with its source documents, owner and verifier, plus the form, signing, update and Register obligations.
- Information statement for prospective franchisees (ACCC): when and how to give it (Form, AI use Green). Guide to giving the ACCC’s information statement: the 7-day deadline, giving it before any other document, keeping proof of delivery, and why it must be given in the ACCC’s current form, unaltered.
- Prospective franchisee due diligence checklist and letter of advice (Checklist, AI use Red). Lawyer’s checklist for advising a prospective franchisee on the disclosure document, franchise agreement and lease, with a letter of advice and the independent legal adviser’s statement for s 27 of the Franchising Code.
- Franchisor notice of breach and opportunity to remedy (s 55 Franchising Code) (Notice, AI use Red). Franchisor’s notice to a franchisee of a breach, the steps required to remedy it and the time allowed, meeting s 55 of the Franchising Code, with a pre-issue checklist covering good faith, the agreement’s own notice terms and the separate s 57 and s 58 grounds.
- Notice of dispute under the Franchising Code, with ADR referral and Ombudsman request (Notice, AI use Yellow). Notice of dispute meeting s 72(1) of the Franchising Code (nature of the dispute, outcome wanted, proposed resolution), with a follow-up ADR referral and a request for the Ombudsman to appoint an ADR practitioner.
- Franchise agreement clause: franchisor-mandated AI tools, customer data and AI-generated marketing (Clause, AI use Yellow). Clause allocating who may mandate and pay for AI tools in a franchise network, who controls customer data fed into them, how marketing funds may be spent on AI, and who checks AI-generated advertising before it is published.
- Prompt template with guardrails: compare the disclosure document with the franchise agreement (AI prompt, AI use Yellow). Ready-to-use prompt for an approved AI tool that lines up disclosure document items against franchise agreement clauses and lists inconsistencies on fees, territory, term, restraints, capex and funds, with citations and a verification checklist.
All precedents for Franchising & Distribution. Signed-in accounts can read the full text.