The Competition and Consumer (Industry Codes – Franchising) Amendment (Franchise Disclosure Register) Regulations 2022 (Regulations) commenced on 1 April 2022, introducing the Franchise Disclosure Register (Register).
The introduction of the public Register will increase transparency of the operation and structure of franchise systems, before franchisees enter into franchise agreements, by facilitating free and easy access to relevant information. The Register can be accessed here: https://franchisedisclosure.gov.au/.
Do I need to upload documents to the Register?
You are required to upload documents to the Register, if you are a franchisor who:
has not previously established their profile in the Register in relation to the franchise; and
is proposing to enter into a franchise agreement with a prospective franchisee in relation to the franchise; and
the disclosure document relating to the franchise has been given to the prospective franchisee on or before 30 October 2022; and
is a master franchisor, and has two or more sub-franchisors.
What are franchisors required to do?
1. Establish a profile on the Register
All franchisors must create a franchise profile and publish disclosure information about the franchise system by 14 November 2022. Franchisors are required to upload core business information to establish its franchise profile on the Register. Core business information includes:
franchisor’s name;
business trading name;
ABN; and
telephone number, email and address.
2. Additional information
Franchisors may be required to provide additional information drawn from the disclosure document to be included on the Register, if requested. Franchisors can choose to publish its disclosure document, key facts sheet and standard form franchise agreement on the Register.
3. Timing
Franchisors must provide information for inclusion on the Register at least 14 days before the franchisor enters into a franchise agreement with a prospective franchisee.
4. Updating information
Franchisors must keep all information on the Register up-to-date with current and correct information. The updated information must be provided within 14 days after the four-month period after the end of each financial year. According to the Explanatory Memorandum, this timeframe aligns with the other reporting timeframes under the Code for franchisors to update its disclosure document – plus an additional 14 days to allow franchisors to then update the Register.
Additional profile information will be required from franchisors when updating its disclosure document, including the number of franchisees in the system and information about payments and costs.
5. Agents
Franchisors can satisfy its obligations under the Regulations in relation to providing or giving information to the Register if these obligations are fulfilled by another person acting on the franchisor’s behalf (i.e. their agent). An agent can be appointed by a franchisor to manage the franchisor’s profile on the Register. This provision is designed to reduce the regulatory burden on franchisors.
What about my personal information?
Disclosure documents, key facts sheets and other related documents often contain personal information about franchisors or details about the commercial operations of a franchise (including trade secrets).
To protect the privacy of franchisors and to avoid putting a franchise at a relative competitive disadvantage, franchisors may redact information from documents that they are required to upload on the Register.
Franchisors must redact the following kinds of information from documents or links included in the Register:
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; and
information that is of a commercial nature and is commercially sensitive.
Penalties
Franchisors who fail to provide the required information, or update the information, for inclusion on the Register, could face a maximum civil penalty of 600 penalty units (currently $133,200).
The Franchising Team at Cowell Clarke can assist you to stay on-top of your legal obligations as a franchisor to avoid the hefty penalties imposed by the new Regulations.
Contact Megan Jongebloed for further information on how the new Regulations affect you.
This publication has been prepared for general guidance on matters of interest only and does not constitute professional legal advice. You should not act upon the information contained in this publication without obtaining specific professional legal advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication and to the extent permitted by law, Cowell Clarke does not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting or refraining to act in relation on the information contained in this publication or for any decision based on it.