Section 47 of the Trade Practices Act 1974 prohibits corporations from engaging in the practice of exclusive dealing, although usually only where this has the purpose or effect of substantially lessening competition.

Generally, this will not prevent a Franchisor from forcing Franchisees from purchasing goods from them, as long as the same goods are not available from any alternative source (such as the where the Franchisor produces the goods).

If goods are to be bought from a third party, the Franchisor will not be prevented from imposing quality standards for goods and nominating preferred suppliers who meet those standards. However, a Franchisor who tries to prevent a franchisee from acquiring goods from an alternative supplier who meets the Franchisor’s quality standards may be in breach of the Act.

You should seek further legal advice before seeking to force Franchisees to source goods from particular suppliers.