---
title: "Prospective franchisee due diligence checklist and letter of advice"
url: "https://ailawframework.com/precedents/franchising-and-distribution/prospective-franchisee-due-diligence-checklist"
type: "precedent"
site: "AI Law Framework"
id: "a34-prospective-franchisee-due-diligence-checklist"
area_id: "A34"
kind: "checklist"
ai_level: "red"
version: 1
law_stated_as_at: "2026-10-17"
---

# 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.

Canonical page: https://ailawframework.com/precedents/franchising-and-distribution/prospective-franchisee-due-diligence-checklist  
Law stated as at: 2026-10-17

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: Australia
- AI level: Red. Keep AI out of the decisive steps. A lawyer does the work.
- Law stated as at: 2026-10-17
- Status: Maintained. Checked on 2026-10-17 against the 4 authorities it cites, for Australia.

## 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

## Authorities

- [Competition and Consumer (Industry Codes—Franchising) Regulations 2024 (Cth) ss 18, 22, 23, 26, 27 (good faith; documents; statements; independent advice)](https://www.legislation.gov.au/F2024L01605/latest/text)
- [Competition and Consumer (Industry Codes—Franchising) Regulations 2024 (Cth) ss 38–44, 50, 60–62 (agreement terms; cooling off; capex; specific purpose funds; variation)](https://www.legislation.gov.au/F2024L01605/latest/text)
- [Competition and Consumer (Industry Codes—Franchising) Regulations 2024 (Cth) Sch 1 (disclosure document)](https://www.legislation.gov.au/F2024L01605/latest/text)
- [Competition and Consumer Act 2010 (Cth) Sch 2 (Australian Consumer Law) ss 18, 21, 23](https://www.legislation.gov.au/C2004A00109/latest/text)

## Official form

[Official form](https://www.accc.gov.au/business/industry-codes/franchising-code-of-conduct)

## 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/prospective-franchisee-due-diligence-checklist 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.*