On 1 April 2022 the Franchising Code of Conduct (the Franchising Code) was amended to insert a new clause 53 which sets out the requirements for the Franchise Disclosure Register.
As was foreshadowed, as a result of the franchise inquiry by the Parliamentary Joint Committee on Corporations and Financial Services, franchisors will be required to provide and update annually, information about their franchise network on the Franchise Disclosure Register.
By 14 November 2022, franchisors must create a profile on the Franchise Disclosure Register (known as a Franchise Profile). The profile is created through MyGovID and can be accessed here.
From 15 November 2022, the Franchise Disclosure Register will become public and users will be able to access the information provided by Australian franchisors.
The Franchise Disclosure Register can be accessed here.
I am a franchisor, do I need to register?
Clause 53C and 53D of the Franchising Code provides that a franchisor must register a profile on the Franchise Disclosure Register if:
- they have created a disclosure document (pursuant to clause 8 of the Franchising Code) and they have given that disclosure document to a prospective franchisee on or before 31 October 2022 (in accordance with clause 9 of the Franchising Code) and if they are a master franchisor in a master franchise system, that system has 2 or more subfranchisors;
- they are proposing to enter into a franchise agreement with a prospective franchisee and they are required to give a disclosure document to the prospective franchisee (in accordance with clause 9 of the Franchising Code) and if they are a master franchisor in a master franchise system, that system has 2 or more subfranchisors.
If a franchisor fails to provide the information for inclusion in the Franchise Disclosure Register as required by the Franchising Code, the maximum penalty is 600 units (from 1 July 2023 $187,800.00).
What information must be included in the franchise profile?
Clause 53C(2) and 53D(2) of the Franchising Code provide that the following information must be included in the Register:
- the name of the franchisor;
- the name under which the franchisor carries on business in Australia relevant to the franchise;
- if the franchisor has an ABN - the franchisor's ABN;
- the address, or addresses, of the franchisor's registered office and principal place of business in Australia;
- the business telephone number and email address of the franchisor;
- the ANZSIC division and subdivision codes for the industry in which the business operated under the franchise operates;
- any information required to be provided to the Secretary under sub-clause (4).
The Franchise Profile itself requires the following information to be included:
- Franchisor Name;
- Franchisor Trading Name;
- Australian Business Number;
- the address of the franchisor's registered office;
- the address of the franchisor's principal place of business;
- Industry Division (selected from a dropdown menu);
- Industry Subdivision (selected from a dropdown menu);
- the last month of the franchisor's financial year;
- the email address for a representative of the franchisor;
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whether the franchisor is required to update their disclosure document for the current financial year;
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the franchisor's email; and
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the franchisor's phone number.
In addition to the information set out above, which is required, the following information may be included in the Franchise Profile (but is not required to be included in the Franchise Profile):
- a description of the kind of business operated under the franchise;
- the length of time that the franchisor has operated the franchise system in Australia;
- the number of businesses in the franchise system (split into Franchisees and Corporate owned units)
- the states in which the franchise currently operates;
- the states in which the franchise is expected to expand;
- whether the franchise system restricts franchisees choosing suppliers;
- what payments the franchisor requires before the franchisee can enter into a franchise agreement (and a description of these payments);
- what the costs are to establish the franchise business;
- what the minimum and maximum setup cost is;
- what payments the franchisees have to make to the franchisor during the term of the franchise agreement (and a description of these payments);
- what the minimum ongoing payment is and what the maximum ongoing payment is;
- whether the franchisor's standard form franchise agreement allows the franchisor to vary the agreement with the franchisee's consent;
- what the standard term of franchise agreements is;
- whether franchisees are given an option to renew a franchise agreement;
- whether franchisees are entitled to compensation for goodwill in the business;
- whether franchisees are subject to a restraint of trade.
The information is very similar to the information included in the Key Facts Sheet.
What documents must be included in the Franchise Profile?
There is currently no requirement to upload any documents to the Franchise Profile.
Subject to the qualifications set out below in relation to redaction, the following documents may be uploaded to the Franchise Profile:
- the franchisor's current Disclosure Document;
- the franchisor's current Key Facts Sheet;
- the franchisor's standard form Franchise Agreement;
- the franchisor's trademark or company logo.
Clause 53F of the Franchising Code requires that any documents that are uploaded to the Franchise Profile or for which a link is included on the Franchise Profile must be redacted.
In particular the franchisor:
- must redact from the relevant document:
- personal information that relates to an individual other than the franchisor;
- information that relates to a particular franchisee or a particular site being occupied by a franchisee
- may redact from the relevant document:
- information that is of a commercial nature and is commercially sensitive.
If you are considering uploading or providing a link to documents on your Franchise Profile we suggest that you first obtain legal advice about what may need to be redacted.
Annual Update
Clause 53E of the Franchising Code provides that the information contained in the Franchise Disclosure Register must be updated or confirmed at least once for each financial year on or before 14 November following the end of the relevant financial year.
The maximum penalty for a failure to update or confirm the information contained in the Franchise Disclosure Register on or before 14 November following the end of the relevant financial year is 600 penalty units (from 1 July 2023 $187,800.00).
Disclaimer
The information in this article is general in nature and is not intended to address the circumstances of any person or other entity. Although we do our best to provide timely and accurate information, we do not guarantee that the information in this article is accurate or that it will continue to be accurate in the future.
