The suit, filed by Sarah Tither-Kaplan and Toni Gaal, says that both women were students at the L.A. branch of the Studio 4 school -- which Franco co-founded -- back in 2014. The women claim Franco, and other instructors, engaged in "inappropriate and sexually charged behavior toward female students." In docs, they claim Franco created "an environment of harassment and sexual exploitation."

According to the docs, Franco offered them roles in independent films he was producing or directing. Their issue is what they had to do got those roles. In the suit, they claim Franco blew off several film industry guidelines for nude scenes. For instance, they claim young and inexperienced female students were "routinely pressured to engage in simulated sex acts that went far beyond the standards in the industry."

For her part, Toni claims she was denied entry into a sex scenes master class because she had voiced uneasiness about how it was run.

Sarah says she did get into the class, and actually did land roles in Franco productions -- but was often required to shoot nude and/or sex scenes. In docs, she references one in particular -- an orgy scene -- where she claims Franco removed the plastic genital guards from "actresses' vaginas while he simulated oral sex on them." That would be a major no-no in the industry.

She also alleges she witnessed Franco get angry at other actresses -- who refused to go topless or engage in his "sexual exploits" -- and they would be replaced by other women.

According to the suit, Franco did follow through on casting some students -- as he did Tither-Kaplan -- in movies like "The Disaster Artist" ... but they would end up on the cutting room floor.

The NY Times and NPR first reported the lawsuit, which the women are seeking to make a class action that would allow other Studio 4 students to join.