Checklist · Franchising & Distribution
Prospective franchisee due diligence checklist and letter of advice
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.
- Kind
- Checklist. Steps or checks to work through and tick off.
- Where it applies
- Australia
- AI use
- Red Keep AI out of the decisive steps. A lawyer does the work.
- Law stated as at
- 17 October 2026
- Status
- Maintained. Checked on 17 October 2026 against the 4 authorities it cites, for Australia.
- Version
- 1
- Source
- Written for this library
When to use it
Use when acting for a person or company considering buying a new franchise. For a transfer of an existing franchise, add the sale contract and the franchisor’s consent conditions. Do not use when acting for the franchisor.
How AI may be used
Lawyer-led. AI may summarise the disclosure pack into an issues list, but the lawyer checks it against the documents and gives the advice and the s 27 statement personally.
AI may
- Summarise the disclosure document and franchise agreement into a cited issues list
- List questions for the franchisor from gaps and inconsistencies
- Extract fees, levies and capex into a money table with clause references
AI must not
- Must not assess whether the franchise is a good investment or whether earnings are achievable
- Must not draft the s 27 adviser’s statement
- Must not process the client’s personal financial information in an unapproved tool
The lawyer checks
- Every issue in the letter checked against the clause or disclosure item cited
- Client told to get business and accounting advice, and the scope of legal advice made clear
- Statement signed only after advice was actually given
Method: how the Green, Yellow and Red levels are decided. This is guidance for planning, not legal advice.
Official form
Open the official form. Always use the current version from the issuer.
Read the full text
The full text is for signed-in accounts. It is free. When you sign in you can:
- read the whole precedent, with its drafting notes beside it;
- copy it, or download it as a Word file or Markdown;
- add it to your firm’s knowledge base, so colleagues can find it;
- let the AI tools you connect read it from that knowledge base.
The summary, the law it rests on and the AI-use guidance above stay public. Privacy.
More in Franchising & Distribution
- Franchise disclosure document: Schedule 1 build sheet and verification register
- Information statement for prospective franchisees (ACCC): when and how to give it
- Franchisor notice of breach and opportunity to remedy (s 55 Franchising Code)
- Notice of dispute under the Franchising Code, with ADR referral and Ombudsman request
- Franchise agreement clause: franchisor-mandated AI tools, customer data and AI-generated marketing
- Prompt template with guardrails: compare the disclosure document with the franchise agreement
All precedents for Franchising & Distribution · Tasks and AI use in this area