Franchising opens many doors, but with opportunity comes responsibility. A franchise may look great on paper, but if its expectations don’t align with a franchisee’s values, work style, or business goals, it’s unlikely to succeed. This is especially important for those without prior business ownership experience. Australian Small Business Ombudsman, Bruce Billson, shares best practice tips for prospective franchisees and franchisors.

Franchising, when done well, is one of the most dynamic and scalable forms of entrepreneurship available to small business owners. It offers a unique blend of independence and support where franchisees gain access to proven systems, brand recognition, and customer loyalty – while contributing their own energy, capital, and local market insights.

Success in franchising doesn’t come from simply ticking boxes. At its best, franchising is a relationship. Some might say it’s symbiotic – where franchisees and franchisors depend on each other for success. This interdependence is what makes franchising such a powerful model, but it also means that both parties must be aligned in purpose, expectations and practice.

The recently released Australian Franchise Outlook 2026 by the Franchise Council of Australia states that franchising generates $174 billion annually, is powered by 90,000 small businesses, and provides work for more than half a million Australians. Franchising is also one of the most inclusive business models in the country, offering women, men, and families from all walks of life the opportunity to step into business ownership. The Outlook also provides recent survey results where consumers shared the main reason for choosing franchised business over an independent one is convenience (32 per cent) and being their own boss (76.5 per cent) as the main reason they would consider owning a franchise.

Due diligence is non-negotiable

Prospective franchisees have a responsibility to look beyond the glossy brochures and marketing pitches. That means reading the franchise agreement thoroughly, understanding the financials, and asking the hard questions about profitability, support, and dispute resolution. It also means considering the broader economic and regulatory environment, speaking with current and former franchisees, and even working in the business if possible. Fortunately, there are excellent resources available to help guide this process such as ACCC’s Franchising web content including information about the Franchising Code of Conduct and a free online course to help work out if franchising is for you, and the Franchise Disclosure Register where you can view franchisor profiles and disclosure information before entering any agreements. We’ve also recently released ASBFEO’s franchising guidance materials, which offer practical tips on entering into a franchise, change management and exiting a franchise.

Fit matters

Through our Assistance function, we see disputes between franchisees and franchisors where expectations are not aligned, highlighting the importance of cultural and operational fit. A franchise may look great on paper, but if its expectations or practices don’t align with a franchisee’s values, work style, or business goals, it’s unlikely to succeed. Some systems require hands-on involvement; others offer more autonomy. Some are highly structured; others are more flexible. For those without prior business ownership experience, entering a franchise might seem more convenient but it can be a vulnerable starting point, making it all the more critical to understand what’s truly involved.

Best practice for franchisors

For franchisors, legal compliance is just the beginning. The real challenge lies in building a franchise system that enables success, fosters innovation, and manages change effectively. That means being transparent about fees, policies, and expectations, and providing comprehensive training and support. Change is inevitable, whether it’s a new marketing strategy or a shift in consumer behaviour, and it must be managed with care. Poor communication and disregard for franchisee concerns can erode trust and lead to costly disputes. The best franchisors engage early, consult meaningfully, and support implementation.

Ultimately, franchising is not a shortcut to business success. It’s a structured partnership that requires honesty, transparency, communication, and shared commitment. When done well, it can be a powerful engine for growth, innovation, and community impact.

On the same page

For franchisors and franchisees alike, misalignment at the outset can lead to frustration and underperformance. Misunderstandings about business operating model and misaligned expectations can have disastrous consequences – financially and mentally for both franchisors and franchisees – and ultimately, failure. In most cases, it’s the franchisee who bears the brunt of these issues. Power imbalances within the franchise relationship can further compound these challenges.

For both franchisors and franchisees, building a relationship based on transparency, mutual respect and understanding, and shared ambition – is foundational to franchise success. The franchise model thrives when both parties understand their roles, responsibilities, and the value they bring to the table. Clear guidance and honest communication are critical to setting realistic expectations and ensuring informed decisions.

For small business owners considering franchising, do your homework, seek advice, and make sure the opportunity fits your goals and capabilities. For franchisors, the challenge is to go beyond the minimum and create systems that empower franchisees, adapt to change, and deliver real value.

Want more? Get our newsletter delivered straight to your inbox! Follow Kochie’s Business Builders on Facebook, X, Instagram, and LinkedIn.