Penalties for failure to Update the Franchise Disclosure Register

The ACCC announced on Thursday that it had issued infringement notices to Cash Converters Pty Ltd and Mobile Travel Agents Pty Ltd, for their alleged failures to comply with the Franchising Code of Conduct and that each franchisor had paid $16,500.00 in penalties.

According to the ACCC, Mobile Travel Agents has approximately 488 franchisees, and Cash Converters has approximately 74 franchisee owned stores (and 79 corporate stores).

What were the Infringement Notices for?

The infringement notices were issued in each case for a failure to confirm or update the franchisor's information on the Franchise Disclosure Register.

The Franchise Disclosure Register is a public register of Australian franchisors, which contains information that may be relevant to a prospective franchisee when making a decision on whether to enter into a franchise agreement.

Section 93 of the Franchising Code of Conduct requires a franchisor each year (generally on or before 14 November), to either:

(a) confirm the information already contained in the Franchise Disclosure Register; or

(b) update the information contained in the Franchise Disclosure Register to the extent that the information is incorrect, out-of-date, or has not previously been provided by the franchisor for inclusion in the Franchise Disclosure Register.

The penalty for a failure to update the Franchise Disclosure Register, as required by the Franchising Code of Conduct, is 600 penalty units. 

The ACCC deputy chair Mick Keogh said that "The requirement for franchisors to maintain accurate and up-to-date public profiles on the Register ensures prospective franchisees and other stakeholders have clear and accurate information to help them make informed business decisions, including whether to enter into a franchise agreement."

What is an Infringement Notice?

An infringement notice is similar to an on-the-spot fine. 

The penalty payable under an infringement notice is far less than the maximum penalty that can be claimed by the ACCC under the penalty provisions of the Franchising Code of Conduct.

An infringement notice can be issued where the ACCC has reasonable grounds to believe that a person has contravened a civil penalty provision of an industry code. In addition, the ACCC has indicated that it is more likely to issue an infringement notice where the breach is less serious.

The Franchise Disclosure Register clearly shows when information is out-of-date, so it is relatively easy for the ACCC to ascertain whether information has been confirmed or updated within the timeframe required by the Franchising Code.

For a more detailed consideration of infringement notices, see our previous article Infringment Notice Penalties for Alleged Franchising Code Breach.

Takeaways

As we approach the end of the financial year, franchisors need to be aware of their ongoing obligations.

A franchisor's disclosure document must (except in certain circumstances) be updated on or before 31 October 2025 (within 4 months of the end of the financial year).

In addition, a franchisor must confirm or update the information on the Franchise Disclosure Register on or before 14 November 2025.

The ACCC has made it clear by issuing infringement notices to Cash Converters and Mobile Travel Agents, that franchisors must confirm or update information on the Franchise Disclosure Register within the time period prescribed by the Franchising Code, or risk facing ACCC action.