A year ago, franchisors in Australia were required under the Franchise Code of Conduct (Code) to create a profile and upload their information onto the then newly created Franchise Disclosure Register (Register).
The Register is an online display board of all franchises in Australia. It gives prospective franchise buyers, current franchisees and professional advisers access to information that is important to know when making business decisions.
Franchise Disclosure Register
Franchisors who gave a disclosure document on or before 31 October 2022, or master franchisors in a master franchise system with two or more sub-franchisors, needed to create a profile and upload their information on or before 14 November 2022. This was required under regulation 53C of the Code.
Now, it’s time for franchisors to update their profile and provide up-to-date information. Regulation 53E requires franchisors to update their information annually where it is incorrect, out-of-date or has not previously been provided. Some things to look out for include:
- 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.
- ANZSIC classification
- The disclosure information
- Any uploaded documents such as the disclosure document, key facts sheet and standard form franchise agreement.
If the information provided remains current, the franchisor must confirm so on the Register.
Franchisors who gave a disclosure document after 31 October 2022 or master franchisors in a master franchise system with two or more sub-franchisors after 31 October 2022 should keep a close eye on their annual review date. It is essential to keep your profile updated.
For new franchisors, registrations on the Register must occur at least 14-days before the franchisor enters into the franchise agreement with the prospective franchisee. For an overview of the information required, please visit the Franchise Disclosure website.
Franchisors must also update the disclosure document within four months after the end of each financial year – that is, by 31 October 2023 for this year – if:
- The franchisor entered into more than 1 franchise agreement during the year, and
- The franchisor intends to enter into another franchise agreement in the following year.
Once updated, the disclosure document should be uploaded onto the Franchise Disclosure Register.
Ongoing compliance and penalties
It is important to note that even though franchisors are required to do an annual review, franchisors must play an active role in keeping their profile up-to-date. Under regulations 8 and 53C to 53E, franchisors could incur a penalty of $165,000 (600 penalty units) per infringement.
For more information on your obligations under the Franchise Code of Conduct, please contact Coleman Greig’s Franchising Law team.