Over the last couple of years, there have been several changes to the Franchising Code of Conduct as a direct result of the Federal Government's response to a Parliamentary Inquiry Report which scrutinised the operation and effectiveness of the Franchising Code of Conduct.
Earlier this year, new clauses 53 to 53J were inserted, with these relating to:
- the establishment and contents of the Franchise Disclosure Register (Register)
- obligations to provide information for inclusion in the Register
- redacting certain information from documents
- giving of information by agents
- other matters.
The deadline for franchisors to upload content onto the new Franchise Disclosure Register is looming - it is less than 2 weeks away!
What is the new Franchise Disclosure Register?
The Register is a free service tool that gives "prospective franchise buyers, current franchisees and professional advisers access to information that is important to know when making business decisions."  Content on the Register is not provided by the Australian Government, but by franchisors. A failure to comply (including registration by franchisors) can result in enforcement action by the Australian Competition and Consumer Commission (ACCC), as well as penalties. Going forward it is therefore crucial that franchisors learn, understand, and comply with their obligations.
Franchisors must upload key information as part of their profile to the Register by 14 November 2022.
Published franchise profiles and disclosure information will appear on the Register on 15 November 2022. This means franchise buyers and public users will be able to freely search the Register.
After the 14 November 2022 deadline, new franchisors are required to create a profile and include their key disclosure information on the Register at least 14 days before:
- entering into a franchise agreement with a prospective franchisee, or
- the prospective franchisee making a non-refundable payment in connection with the proposed franchisee agreement (see clause 9(1)).
Franchisees must be provided with the following in executable form:
- the franchise agreement
- disclosure documents and key facts sheet
- a copy of the Franchising Code of Conduct and information statement.
Where and how to register
The Register and further information can be accessed here.
Franchisors can create their profile on the Register using their myGovID. Authorisation to act on behalf of their ABN for interactions with The Department of the Treasury, will also be required by franchisors. Authorisation can be obtained via the myGovID's Relationship Authorisation Manager (RAM), with franchisor's representatives (e.g. their lawyers) also needing authorisation to access the Register on behalf of franchisors.
Access to the Franchisor Dashboard is available after logging in to the Register using a myGovID. Importantly, franchisors should also remember to update and publish disclosure information on the Register (this is a requirement under clause 9 of the Franchising Code of Conduct). Information can also be unpublished as required from time-to-time.
Key information required to be uploaded for disclosure
For a basic overview of information required please click here.
Some of the mandatory information required includes:
- name, trading name and ABN
- franchisor contact details
- industry and subdivision
- payment and costs information
- standard terms and renewal options under franchise agreements
- any applicable restraints of trade for franchisees.2
Ongoing compliance and penalties that apply
Under the new Regulations (see sections 53C to 53E in particular), a franchisor who fails to provide the necessary information for disclosure on the Register or fails to annually update their information on the Register may incur a penalty of $133,200 (i.e. 600 civil penalty units) per transgression.3
If you are uncertain or require professional advice in relation to the new Register and your obligations, feel free to get in touch with Bartier Perry's Corporate & Commercial team.
1 See https://franchisedisclosure.gov.au/.
2 See https://franchisedisclosure.gov.au/Franchisors.
3 Consumer (Industry Codes - Franchising) Amendment (Franchise Disclosure Register) Regulations 2022 (Regulations).
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.