New Franchise Disclosure Register

The Federal Government has released the Competition and Consumer (Industry Codes—Franchising) Amendment (Franchise Disclosure Register) Regulations 2022 (Amendment), a draft legislation which proposes new obligations on franchisors such as publishing disclosure documents and other materials on a new, publicly available register.

New Franchise Disclosure Register

The Amendment introduces the new Franchise Disclosure Register (Register) and amends the Franchising Code of Conduct (Franchising Code).  The purpose of the Register is to provide information about franchises, submitted by franchisors, to prospective franchisees, current franchisees and professional advisers.  This development from the Federal Government’s 2021/2022 budget aims to increase the accountability and transparency of franchisors and the franchise sector.^[1]

The Register is currently accessible for franchisors to create a franchise profile using their myGovID.  Franchisors have until 14 November 2022 to create a franchise profile and to publish their franchise’s disclosure information.  The Register will become publicly available on 15 November 2022, where franchise buyers and public users will be able to view the franchisor’s profile and the disclosure information they have provided.^[2]

What information will appear in the Register?

Under the new requirements, franchisors must upload and publish:

• current disclosure documents;^[3] and
• information to enhance franchisor profiles and search functionality.

Current disclosure documents will be uploaded to the Register and published by franchisors operating under the Franchising Code annually.  Presently, under clauses 8(7) and 8(8) of the Franchising Code, franchisors who are not expanding their franchise do not have to update this document, however this must be confirmed and disclosed in the proposed new Register.

As disclosure documents may contain information that is not appropriate for publication in the Register, the proposed Amendment contains exceptions on disclosure of personal information within the meaning of the Privacy Act 1988 (Cth).  Section 53F of the Amendment sets out that the franchisor must redact personal information relating to individuals other than the franchisor as well as information relating to franchisees, or a particular site being occupied by a franchisee.  Under section 53F, the franchisor may redact any information that is of a commercial nature and is commercially sensitive.

Further, if, on or before 31 October 2022, a franchisor creates and gives a copy of a disclosure document to a prospective or current franchisee in accordance with clauses 8 and 9 of the Franchising Code of Conduct then they must provide the following information for the Register:

• the franchisor’s name, ABN, registered office, principal place of business, business telephone number and email address;
• business name of the franchise;
• the ANZSIC division and subdivision cods for the franchise’s industry; and
• any other information required by the Secretary, except personal information not relating to the franchisor or information relating to a particular franchisee or site being occupied by a franchisee.^[4]

Franchisors are required to annually review the information provided pursuant to sections 53C and 53D and either confirm it is correct or update as necessary.  Failure to provide the information in required by sections 53C and 53D or confirm/update annually could result in a penalty of up to 600 penalty units (or $133,200 at the time of writing).

Section 53G allows franchisors to authorise an agent or representative to access and update the Register on their behalf.

What are the current transitional arrangements?

Transitional provisions have been developed in order to support the franchising sector’s transition to the Register.

Currently, the existing requirements apply, namely that franchisors must update their disclosure document within four (4) months of the end of the financial year, where exceptions apply if the franchisor has not, or is not proposing to enter into any franchise agreements.

During the transition period, following the launch of the Register earlier this year, franchisors may create a profile and publish existing disclosure documents.

Once the new requirements become effective, having a profile and publishing latest disclosure documents will be mandatory for franchisors, by 14 November 2022, regardless of their financial year.

Lastly, as an ongoing requirement, all franchisors must:

• maintain their profile and publish latest disclosure documentation within four (4) months of the end of their subsequent financial year; and
• ensure they provide the information required by section 53D at least fourteen (14) days before entering into the franchise agreement.

Links and further references

Legislation

Competition and Consumer (Industry Codes—Franchising) Amendment (Franchise Disclosure Register) Regulations 2022

Franchising Code of Conduct

Privacy Act 1988 (Cth)

Further information on the Franchise Disclosure Register

If you need advice on any aspect of franchising, contact us for a confidential and obligation-free discussion:

Disclaimer

This article contains general commentary only.  You should not rely on the commentary as legal advice.  Specific legal advice should be obtained to ascertain how the law applies to your particular circumstances.

[1] The Treasury, ‘Franchising code of conduct’, Latest from the Treasury (Web Page) https://treasury.gov.au/franchising-code-of-conduct#:~:text=The%20amendments%20to%20the%20Franchising,announced%20on%2012%20March%202021.

[2] Australian Government, ‘Franchise Disclosure Register’, Business structures and types: Franchising (Web Page, 1 April 2022) https://franchisedisclosure.gov.au/.

[3] A document detailing particulars of the franchisor, including name, business address, phone number and ABN, amongst other things.  See Annexure 1 to the Franchising Code.

[4] Amendment, 53C(2) and (4); see also sections 53D(3) and (4) post-31 October 2022.

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