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3 Nov 2021

Franchise Disclosure Register – draft legislation released

The federal government has recently released draft amendments to the Franchising Code of Conduct (Code) to enable the establishment of the Franchise Disclosure Register (Register). Under the proposed changes, franchisors will be required to upload documents and information about their franchised business to the Register.

Submissions on the changes are being made, which will hopefully lead to necessary amendments being made to the final legislation. In the meantime, it is important to understand what is currently proposed.

The Register will operate as an online portal that will be accessible by the public, enabling potential franchisees to access information about franchised businesses.

In particular, franchisors will be required to provide identification information about the franchise system and a copy of their current disclosure document. It is a requirement for personal information about an individual and franchise site specific information to be redacted. Certain information about rebates may be redacted.

Franchisors will also be required to upload information in relation to “materially relevant facts” (which are not included in a disclosure document published on the Register) within 14 days after becoming aware of any such facts.

It is anticipated Franchisors will be able to familiarise themselves with the Register by voluntarily uploading information and documents from 31 March 2022, before all franchisors will be required to do so by 31 October 2022.

Information uploaded to the Register will then need to be updated on a yearly basis in line with existing disclosure update requirements under the Code. This may initially mean that franchisors operating on a non-conventional financial year basis will need to upload disclosure documents to the Register twice within 12 months (by 31 October 2022 and again by 30 April 2023 where they operate on a January to December financial year, for example).

Failure to provide the required information and disclosure document on the Register may result in the incursion of a maximum civil pecuniary penalty of 600 penalty units (currently $133,200).

The Exposure Draft of the amending legislation and the Explanatory Statement can be accessed here.

This article provides general commentary only. It is not legal advice. Before acting on the basis of any material contained in this article, seek professional advice.


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