A disclosure document is prescriptive and needs to contain certain information to comply with the Franchising Code of Conduct (the Code), including
Franchisors details and business experience
You must provide details of the business including business experience, business names, business associates and you must provide a statement that the business is solvent.
The Franchisor must provide all details, if there are any, of any present litigation and any litigation which was commenced in the past. The relevant litigation is generally for matters including fraud, dishonesty and any breach of franchise.
The disclosure document must contain details of all existing franchisees, this allows a potential franchisee to contact an existing franchisee with any questions they may have regarding the franchise business.
You must describe and list the intellectual property of the franchisor and outline the conditions which restrict the use of the intellectual property by franchisees. The franchisor must also provide any details of a licence agreement regarding the intellectual property.
You must provide details of any statement relating to the exclusivity of any territorial boundaries. You must also provide a prospective franchisee with a history of the territory or site in which it is proposed that the franchisee operate the franchised business.
Goods and services
The disclosure document must contain information regarding the conditions which will be imposed on a franchisee regarding information about the supply of goods and services.
Fees and payments
The disclosure must contain information and specifics of any franchisee payments to the franchisor. This information must include items such as marketing fees, advertising fees or other financial obligations requiring contributions.
The contents of a disclosure document are generally relied on by a franchisee in entering into the franchise system. Consequently the disclosure document must be prepared very carefully and reviewed annually to ensure that it is up to date.
We can advise you on what needs to be included in the disclosure document and of any risks associated with the contents of the disclosure document.
Contact us so that we can work with you to ensure that your disclosure document is up to date and contains the required information.