NDIS: What Providers and Franchisors Must Know

Explosive headlines about fraud, unsafe care and unpaid staff have brought the scandal-plagued National Disability Insurance Scheme (‘NDIS’) into the national spotlight.

For providers, franchise networks and investors, the NDIS is now subject to heightened regulatory scrutiny, increasing the legal and commercial stakes for those who fail to meet their obligations.

NDIS participants are often vulnerable Australians living with permanent disabilities, including intellectual, cognitive, neurological, sensory, physical or psychosocial impairments. In light of this vulnerability, regulators have strengthened oversight and enforcements through:

• The National Disability Insurance Scheme Act 2013 (Cth) (‘NDIS Act’),

• The National Disability Insurance Scheme (Supports for Participants Rules) 2013 (Cth) (‘NDIS Rules’); and

• The National Disability Insurance Scheme (Code of Conduct Rules) 2018 (NDIS Code of Conduct).

Why the NDIS Is Under Fire

The NDIS Quality and Safeguards Commission (NDIS Commission) is responsible for registering and regulating providers. It has broad powers to investigate, sanction and prosecute. It works alongside other regulators and law-enforcement agencies, and recent legislative amendments have significantly increased enforcement tools and civil penalties.

Following widespread fraud across the $50 billion scheme, the Federal Government has expanded regulator powers and significantly increased penalties, particularly for conduct that harms NDIS participants.  

Recent media coverage of large providers under investigation, high staff turnover and concerns about participant safety show how quickly compliance failures can escalate into reputational crises, particularly where there are breaches of the NDIS Act.

So, You Want to Become an NDIS Provider?

Many care providers and disability support workers enter the NDIS by registering directly as providers.

Franchising is another model that allows individuals to join an established disability service brand or convert an existing NDIS-focused business into a franchise network.

This structure however requires engagement and compliance with both franchise laws and NDIS regulatory requirements.

Legal Risks of NDIS Franchising

Franchising enables disability service businesses to scale by licensing their systems, brand and intellectual property to franchisees.

However, the legal risk is heightened because both the Franchising Code of Conduct and the NDIS framework can apply simultaneously.

The Franchising Code of Conduct sets out specific obligations for franchisors, many of which overlap with NDIS compliance requirements.

Provider obligations include:

• Disclosure documents must cover NDIS-specific considerations, including registration and operational compliance, so prospective franchisees understand the regulatory burden.

• Pre-contractual disclosure documents and franchise agreements must be provided at least 14 days before signing or accepting any non-refundable payment.

• Training and support systems must meet the NDIS Commission’s quality and safeguarding standards.

• Franchisors systems must be designed to embed compliance, not merely reference it.

• Legal advice should be obtained to review franchise documentation and policies for compliance with the Franchising Code and NDIS regulatory requirements.

Registration and Scope (Including Supported Independent Living)

Providers must determine whether their services fall into categories where registration is mandatory, such as Supported Independent Living (‘SIL’) and digital platforms from 1 July 2026.

The Federal Government recently announced that all providers delivering NDIS-funded SIL and digital platform services must register with the NDIS Commission from that date.

These reforms sit within broader changes to the NDIS Act and NDIS Rules aimed at increasing accountability and auditing across the scheme.

Operating beyond registration scope, or failing to register when required, may attract significant penalties – hence obtaining early legal advice on registration strategy is important.

Marketing and Consumer Law Compliance

NDIS-facing Businesses must take particular care with advertising and promotional materials.

Claims implying NDIS endorsement, guaranteed funding or “all-inclusive” offers, where costs are not claimable under NDIS rules, can expose providers to enforcement action under the Australian Consumer Law.

Recent examples include:

Vorwerk Australia Pty Ltd, trading as Thermomix in Australia, was fined $79,200 for allegedly misleading consumers with claims suggesting two products were NDIS-endorsed.

Bedding retailer Bedshed was penalised $39,600 for allegedly claiming some products were “NDIS approved” or “NDIS permitted.”

These cases demonstrate the ACCC’s willingness to intervene in disability-related advertising even where the business is not a traditional NDIS provider. Legal review of marketing materials and digital content is therefore an essential risk management step.

Proper Management and Governance

Providers relying on NDIS funding must maintain:

• transparent financial management,

• strong auditing processes; and

• proper payment controls.

Weaknesses in these areas can quickly attract regulatory attention, cause reputational damage, and may also engage questions of breaches of director’s duties where governance systems are inadequate.

Penalties

NDIS providers can face penalties of up to $16.5 million if they injure or kill a participant or operate without the required registration under new laws addressing fraud and abuse.

In 2024, disability care provider, LiveBetter, was fined $1.8 million by the Federal Court of Australia for breaching care standards after the death of a woman who suffered severe burns.

The NDIS Commission prosecuted the not‑for‑profit provider for failing to protect the participant, showing the Court’s readiness to impose significant penalties for serious contraventions.

Key changes include:

•  The maximum fine for breaches of the NDIS Code of Conduct that cause injury or death has risen from $400,000 to $16.5 million.

  
  

• A new criminal penalty, punishable by up to two years in prison, will apply to unregistered providers operating unlawfully.

The scale of these penalties means boards and executives must treat NDIS compliance as a core governance issue, not just an operational one.

Why Legal Advice Matters

Stricter oversight, harsher penalties, mandatory registration and franchising obligations have created a complex legal landscape for NDIS providers.

Organisations must now manage obligations under:

• The NDIS Act and NDIS Rules,

• The NDIS Code of Conduct,

• The Australian Consumer Law; and

• The Franchising Code of Conduct.

Legal advisers can assist providers to:

• Confirm registration and compliance requirements ahead of the July 2026 deadline, including assessing whether services fall within SIL or platform categories.

• Develop internal compliance frameworks, policies and training programs that meet regulator expectations.

• Respond to investigations by the NDIS Commission, including drafting responses, managing document production and advising on remediation steps.

• Review marketing materials and franchise recruitment materials for consumer law compliance.

• Prepare for new statutory duties under upcoming reforms and align governance frameworks so boards and executives can demonstrate they have taken reasonable steps to ensure compliance.

The content in this Article is intended only to provide a summary and general overview on matters of interest. It is not intended to be comprehensive nor does it constitute legal advice. It should not be relied upon as such. You should seek legal or other professional advice before acting or relying on any of the content.

ABOUT THE AUTHOR

Naomi Shivaraman  has been an award winning journalist and producer for 25 years. She joined BlackBay as the team’s Legal Affairs Strategist, a role created to utilise her combined legal and media strategy skills, helping clients and stakeholders navigate the court of public opinion.

Not only does she assist the team in a paralegal capacity on complex litigation matters, but she also provides reputational, media and communications counsel. For the past few years, Naomi has combined her law studies with a full-time career. Naomi will finish her Bachelor of Laws degree at Macquarie University next year.