O
ne in three small businesses in Australia is run by a migrant. Walk down any suburban high street — the Indian takeaway, the convenience store, the franchise café, the cleaning van — and every third door you pass belongs to someone who started somewhere else.
But here is the harder truth. One in three also means one in three who may not know their rights. One in three who signed in a language that was not their first, under pressure, with a dream in one hand and a disclosure document in the other.
Mick Keogh, Deputy Chair of the Australian Competition and Consumer Commission (ACCC), puts it plainly. “We have been made aware of situations where certain franchises, particularly those with low upfront costs, appear to target recent migrants as prospective franchisees,” he says. “Franchisors may seek to take advantage of franchisees’ limited familiarity with Australia’s franchising laws, uncertainty about where to obtain independent advice, or, in some cases, limited English proficiency.”
The appeal of franchising to migrants is understandable. An established brand, a proven system, a pathway to independence — for someone new to Australia, it can feel like the safer option compared to building something from scratch. It is not always safer.
“The key issue we see is franchisees who haven’t done enough research before entering a franchise agreement,” Keogh says. “Failing to do solid research including getting independent legal and business advice leaves many franchisees in a position where their expectations don’t meet the reality of the business. A franchise doesn’t guarantee success.”
For someone navigating a lengthy technical agreement in a second or third language, certain clauses carry particular risk. Ongoing costs are a common trap — franchisees are often locked into buying supplies exclusively from the franchisor’s approved suppliers at fixed prices, even when cheaper alternatives are available. Marketing fund contributions, known as specific purpose funds, catch many off guard. And the end of the agreement can be the biggest shock of all.
“Many franchisees assume that their agreement will be renewed but this is not always the case,” Keogh says. “When a franchise agreement ends it is the franchisor who decides — they can also choose to end the agreement, sometimes without paying the franchisee anything.” Franchisors must give at least six months notice. Keogh’s advice is to use that time to seek independent legal advice and speak with former franchisees about what renewal actually looked like for them.
Pressure to sign quickly is another common danger. “Sales tactics designed to get the deal done should be a warning sign that you should slow down and do independent research,” Keogh says. Under the Franchise Code of Conduct, all agreements must include a 14-day cooling-off period. Franchisees are sometimes encouraged to waive it. “It is important to avoid doing this — especially if you feel pressured to do so. It is far more difficult to end a franchise agreement once it is signed and the cooling-off period has expired.”
Perhaps the most troubling pattern is what happens when things go wrong. Many franchisees from migrant backgrounds do not report problems at all. “We do receive reports indicating that some complainants do not feel comfortable raising concerns directly with their franchisor or reporting issues to the ACCC,” Keogh says. “This may arise out of cultural hesitation, or fear of franchisor reprisal.”
The result is people working twelve-hour days, seven days a week, too afraid to complain and too invested to walk away.
Every franchisor is legally required to provide a disclosure document before an agreement is signed — an information pack covering costs, risks, obligations and business arrangements. It also must include contact details of previous franchisees. “Talking to previous franchisees can be a very important way to obtain first-hand insights into the reality of owning a particular franchise outlet,” Keogh says. Too many prospective franchisees skip this step and trust the handshake instead.
For migrants who rely on family and community networks rather than formal advice, Keogh has a clear message. “Because of the unique characteristics of franchising, it’s important to get independent advice from financial and legal experts with franchising experience. Yes, there are additional costs, but the expense is well worth it in the long run.” A well-meaning uncle who runs a newsagency is not the same as a lawyer who has read five hundred franchise agreements.
The ACCC offers free guidance including videos, checklists and resources in Hindi, Mandarin and Cantonese. Keogh recommends the free online course “Is franchising right for me?” as a starting point for anyone considering taking the leap.
His final advice is simple. “Do your research and get independent advice early. You don’t have to accept the terms of the agreement if they are unreasonable. Once you enter an agreement it is very hard to change it, so make sure you have the full picture before you sign.”
The ACCC’s free franchising resources, including multilingual materials, are available at accc.gov.au.
Plus, read The Small Business Economy Report from The Balance Sheet
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