---
title: "Does this distribution agreement meet the franchise agreement test"
url: "https://ailawframework.com/precedents/franchising-and-distribution/distribution-agreement-franchise-test"
type: "precedent"
site: "AI Law Framework"
id: "a34-distribution-agreement-franchise-test"
area_id: "A34"
kind: "checklist"
ai_level: "yellow"
version: 1
task_ids: ["A34-T1-R11"]
law_stated_as_at: "2026-10-22"
---

# Does this distribution agreement meet the franchise agreement test

> Test of a distribution, dealer or agency agreement against the meaning of franchise agreement in section 7, and against the exclusions in section 10, of the Franchising Code regulations.

Canonical page: https://ailawframework.com/precedents/franchising-and-distribution/distribution-agreement-franchise-test  
Law stated as at: 2026-10-22

Site index for agents: https://ailawframework.com/llms.txt

## Key facts

- Kind: Checklist. Steps or checks to work through and tick off.
- Practice area: [Franchising & Distribution](https://ailawframework.com/precedents/franchising-and-distribution.md)
- Jurisdictions: Commonwealth
- AI level: Yellow. You and the tool draft together, with you directing. You check every statement you rely on.
- Law stated as at: 2026-10-22
- Status: Maintained. Checked on 2026-10-22 against the 2 authorities it cites, for Commonwealth.

## When to use it

Use when reviewing a distribution, dealer or agency agreement to see whether the Franchising Code can apply, before the agreement is treated as outside the Code.

## Used for these tasks

- [Draft or review a distribution, dealer or agency agreement](https://ailawframework.com/practice/franchising-and-distribution/draft-or-review-a-distribution-dealer-or-agency-agreement.md)

## How AI may be used

The tool places the agreement beside each element of sections 7 and 10, and the lawyer decides whether the agreement is a franchise agreement and whether an exclusion applies.

**AI may:**

- Record the grant, the trade mark or commercial symbol, and each payment the lawyer identifies.
- Mark payments the lawyer says are genuine wholesale, a loan repayment, consignment on a genuine wholesale basis, or market value for real property, fixtures, equipment or supplies.
- Set out the section 10 exclusions that were read, without applying a percentage the lawyer has not calculated.

**AI must not:**

- Do not conclude that the Code applies or does not apply.
- Do not treat an employment, partnership, landlord, mortgage or loan relationship as a franchise agreement merely because it exists.
- Do not draft the distribution agreement.

**The lawyer checks:**

- All four paragraphs of section 7(1) are required. Section 7(2) deems certain transfers, renewals, extensions and a motor vehicle dealership agreement to be a franchise agreement.
- Section 10(3) uses a two-year history and a 20 per cent turnover test for the first year. The lawyer calculates the percentage. This sheet does not.
- Section 10(1) refers to section 51AE of the Act and to other prescribed codes. Those were not opened, other than the two codes named in section 10(2).

## Authorities

- [Competition and Consumer (Industry Codes—Franchising) Regulations 2024 (Cth) s 7](https://classic.austlii.edu.au/au/legis/cth/num_reg/caccr2024202401605650/s7.html)
- [Competition and Consumer (Industry Codes—Franchising) Regulations 2024 (Cth) s 10](https://classic.austlii.edu.au/au/legis/cth/num_reg/caccr2024202401605650/s10.html)

## Full text and drafting notes

The full text and the drafting notes are not part of this public page. Signed-in firm accounts can read them at https://ailawframework.com/precedents/franchising-and-distribution/distribution-agreement-franchise-test and through the signed-in MCP connector https://ailawframework.com/mcp/firm.

*Practice guidance for planning and review. Confirm current primary sources and the requirements of the actual matter. This is general information, not legal advice.*