national franchise disclosure register now open: what do franchisors need to do
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The highly-anticipated Franchise Disclosure Register (Register) is now available. It comes after the Federal Government made amendments to the Competition and Consumer (Industry Codes – Franchising) Regulation 2014 (Code) which includes the incorporation of the Register. The Register will assist prospective franchisees by placing greater obligations on the information franchisors must make available to the public.
what is the franchise disclosure register
The Register was initially announced as part of the Australian Federal Government’s 2021 / 2022 budget, with $4.3 million committed to the development of a Franchise Disclosure Register. The amendments to the Code have since been finalised and commenced on 1 April 2022.
The purpose of the Register is to increase transparency and accountability within the franchise sector.
The amendments to the Code require a review of the amendments to be undertaken on or after 15 November 2023, with a report to be given on or before 30 June 2024. During the review, franchisors and other franchise industry stakeholders will have an opportunity to make submissions on these amendments and its operation in practice.
what do franchisors need to know
There are some key items for franchisors to take note of in regards to the Franchise Disclosure Register.
- Franchisors must upload key disclosure information to the Register by 14 November 2022.
- While previously it was anticipated that franchisors would need to disclose commercially sensitive information like financial statements, franchisors can redact information from the disclosure document if it is of a commercial nature and commercially sensitive, and is not otherwise required to provide such sensitive information.
- Franchisors can authorise a representative to access and update the Register on their behalf.
key deadlines
The Register is now open and Franchisors have until 14 November 2022 to include their details and key disclosure information on the Register. Failure to do so may breach the Code and the franchisor may incur a penalty of up to $133,200 as a result.
The Register will go live on 15 November 2022.
who is required to register?
A franchisor is required to be included on the Register if:
- they are required under section 8 of the Code to maintain a disclosure document; and
- they have on or before 31 October 2022 provided a copy of the disclosure document to a franchisee or prospective franchisee; and
- in the case where the franchisor is the master franchisor of a franchise system, where the master franchise system has 2 or more subfranchisors.
Franchisors who issue a disclosure document after 31 October 2022 will need to be included on the Register at least 14 days before entering into a franchise agreement with a prospective franchisee.
A master franchisor with no more than one master franchisee will not be required to register, but their master franchisee will still be required to do so.
how to register
To register, franchisors must have a myGovID to be able to log in to the Register, create a franchise profile, and to publish their key disclosure information. If a franchisor does not already have a myGovID or experience issues logging in, they can visit myGovID.gov.au. The myGovID must be linked to the franchisor’s Australian Business Number (ABN). Franchisors will also need to be authorised to act on behalf of the ABN, which can be done via myGovID’s Relationship Authorisation Manager.
who can help with registration?
Franchisors can authorise representatives to access the Register on behalf of the franchisor (for example, a lawyer). If a franchisor wishes to appoint a representative, it will need to authorise the representative to act on its behalf for interactions with the Department of the Treasury which can be given via myGovID’s Relationship Authorisation Manager.
what information is required to be disclosed
Franchisors must disclose on the Register the following information:
- the franchisor’s name;
- the name under which the franchisor carries on business in Australia relevant to the franchise;
- the franchisor’s ABN (if applicable);
- address/es for the franchisor’s registered office and principal place of business in Australia;
- the franchisor’s business telephone number and email address;
- the ANZSIC division and subdivision codes for the industry in which the business operated under the franchise operates; and
- any information required to be included in a disclosure document if the information is not personal information that relates to an individual other than the franchisor and information that relates to a particular franchisee, or a particular site occupied by a franchisee, including the following:
- how long has the franchisor operated the franchise or franchise system in Australia;
- the number of franchisees in the system (including franchisor operated businesses);
- which states/territories the franchisor currently operates in;
- whether the franchise system restrict franchisees from choosing suppliers;
- Information about payments and costs;
- whether the franchisor’s standard form franchise agreement allow the franchisor to vary the agreement without the franchisees’ consent;
- what the standard term of a franchise agreement is;
- whether franchisees are given the option to renew a franchise agreement;
- whether franchisees are entitled to compensation for goodwill in the business; and
- whether franchisees are subject to a restraint of trade (or similar) clause.
Franchisors can choose to include additional information on the Register if:
- the information relates to the franchise system of the franchisor or is relevant to prospective franchisees or existing franchisees; and
- the information is not:
- personal information that relates to an individual other than the franchisor; and
- information that relates to a particular franchisee or a particular site occupied by a franchisee.
Franchisors can only include the following documents on the Register:
- the disclosure document;
- the Key Facts Sheet; and
- the standard form franchise agreement.
redaction of information
Franchisors may redact information from the documents they upload to the Register if the information in those documents is of a commercial nature and is commercially sensitive.
Further, franchisors must redact personal information that relates to an individual other than the franchisor and information that relates to a particular franchisee, or a particular site occupied by a franchisee.
ongoing obligations
Franchisors have a continued obligation to update the Register or confirm that all information on the Register is current at least once every financial year, by the 14th day of the fifth month following the end of the financial year.
Franchisors also have an obligation to disclose disclosure documents and key fact sheets provided in the financial year in which they are given.
penalties
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.
need assistance?
Franchisors should review these changes and the new Register, determine if the amendments apply, and understand their requirements.
We strongly recommend all franchisors seek legal assistance about the impact of these changes and what steps franchisors need to take to ensure they are in full compliance by 14 November 2022.
If franchisors are considering uploading their disclosure document, key facts sheet or franchise agreement to the Register, they should also seek legal advice on what information can and should be redacted.
Given the timeline, we suggest franchisors familiarise themselves with the Register soon and create their profile. For franchisors operating on a standard financial year, we recommend the relevant disclosure information be uploaded to the Register after the end of the financial year at the same time as the annual update of disclosure documents. For franchisors whose financial year follows the calendar year, we recommend fully updating the Register as soon as possible.
For assistance with complying with and updating the Register or if you wish to appoint us as an authorised representative to update the Register, please reach out to our national Franchising team who can help advise and assist with the process.
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national franchise disclosure register now open: what do franchisors need to do
The highly-anticipated Franchise Disclosure Register (Register) is now available. It comes after the Federal Government made amendments to the Competition and Consumer (Industry Codes – Franchising) Regulation 2014 (Code) which includes the incorporation of the Register. The Register will assist prospective franchisees by placing greater obligations on the information franchisors must make available to the public.
what is the franchise disclosure register
The Register was initially announced as part of the Australian Federal Government’s 2021 / 2022 budget, with $4.3 million committed to the development of a Franchise Disclosure Register. The amendments to the Code have since been finalised and commenced on 1 April 2022.
The purpose of the Register is to increase transparency and accountability within the franchise sector.
The amendments to the Code require a review of the amendments to be undertaken on or after 15 November 2023, with a report to be given on or before 30 June 2024. During the review, franchisors and other franchise industry stakeholders will have an opportunity to make submissions on these amendments and its operation in practice.
what do franchisors need to know
There are some key items for franchisors to take note of in regards to the Franchise Disclosure Register.
- Franchisors must upload key disclosure information to the Register by 14 November 2022.
- While previously it was anticipated that franchisors would need to disclose commercially sensitive information like financial statements, franchisors can redact information from the disclosure document if it is of a commercial nature and commercially sensitive, and is not otherwise required to provide such sensitive information.
- Franchisors can authorise a representative to access and update the Register on their behalf.
key deadlines
The Register is now open and Franchisors have until 14 November 2022 to include their details and key disclosure information on the Register. Failure to do so may breach the Code and the franchisor may incur a penalty of up to $133,200 as a result.
The Register will go live on 15 November 2022.
who is required to register?
A franchisor is required to be included on the Register if:
- they are required under section 8 of the Code to maintain a disclosure document; and
- they have on or before 31 October 2022 provided a copy of the disclosure document to a franchisee or prospective franchisee; and
- in the case where the franchisor is the master franchisor of a franchise system, where the master franchise system has 2 or more subfranchisors.
Franchisors who issue a disclosure document after 31 October 2022 will need to be included on the Register at least 14 days before entering into a franchise agreement with a prospective franchisee.
A master franchisor with no more than one master franchisee will not be required to register, but their master franchisee will still be required to do so.
how to register
To register, franchisors must have a myGovID to be able to log in to the Register, create a franchise profile, and to publish their key disclosure information. If a franchisor does not already have a myGovID or experience issues logging in, they can visit myGovID.gov.au. The myGovID must be linked to the franchisor’s Australian Business Number (ABN). Franchisors will also need to be authorised to act on behalf of the ABN, which can be done via myGovID’s Relationship Authorisation Manager.
who can help with registration?
Franchisors can authorise representatives to access the Register on behalf of the franchisor (for example, a lawyer). If a franchisor wishes to appoint a representative, it will need to authorise the representative to act on its behalf for interactions with the Department of the Treasury which can be given via myGovID’s Relationship Authorisation Manager.
what information is required to be disclosed
Franchisors must disclose on the Register the following information:
- the franchisor’s name;
- the name under which the franchisor carries on business in Australia relevant to the franchise;
- the franchisor’s ABN (if applicable);
- address/es for the franchisor’s registered office and principal place of business in Australia;
- the franchisor’s business telephone number and email address;
- the ANZSIC division and subdivision codes for the industry in which the business operated under the franchise operates; and
- any information required to be included in a disclosure document if the information is not personal information that relates to an individual other than the franchisor and information that relates to a particular franchisee, or a particular site occupied by a franchisee, including the following:
- how long has the franchisor operated the franchise or franchise system in Australia;
- the number of franchisees in the system (including franchisor operated businesses);
- which states/territories the franchisor currently operates in;
- whether the franchise system restrict franchisees from choosing suppliers;
- Information about payments and costs;
- whether the franchisor’s standard form franchise agreement allow the franchisor to vary the agreement without the franchisees’ consent;
- what the standard term of a franchise agreement is;
- whether franchisees are given the option to renew a franchise agreement;
- whether franchisees are entitled to compensation for goodwill in the business; and
- whether franchisees are subject to a restraint of trade (or similar) clause.
Franchisors can choose to include additional information on the Register if:
- the information relates to the franchise system of the franchisor or is relevant to prospective franchisees or existing franchisees; and
- the information is not:
- personal information that relates to an individual other than the franchisor; and
- information that relates to a particular franchisee or a particular site occupied by a franchisee.
Franchisors can only include the following documents on the Register:
- the disclosure document;
- the Key Facts Sheet; and
- the standard form franchise agreement.
redaction of information
Franchisors may redact information from the documents they upload to the Register if the information in those documents is of a commercial nature and is commercially sensitive.
Further, franchisors must redact personal information that relates to an individual other than the franchisor and information that relates to a particular franchisee, or a particular site occupied by a franchisee.
ongoing obligations
Franchisors have a continued obligation to update the Register or confirm that all information on the Register is current at least once every financial year, by the 14th day of the fifth month following the end of the financial year.
Franchisors also have an obligation to disclose disclosure documents and key fact sheets provided in the financial year in which they are given.
penalties
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.
need assistance?
Franchisors should review these changes and the new Register, determine if the amendments apply, and understand their requirements.
We strongly recommend all franchisors seek legal assistance about the impact of these changes and what steps franchisors need to take to ensure they are in full compliance by 14 November 2022.
If franchisors are considering uploading their disclosure document, key facts sheet or franchise agreement to the Register, they should also seek legal advice on what information can and should be redacted.
Given the timeline, we suggest franchisors familiarise themselves with the Register soon and create their profile. For franchisors operating on a standard financial year, we recommend the relevant disclosure information be uploaded to the Register after the end of the financial year at the same time as the annual update of disclosure documents. For franchisors whose financial year follows the calendar year, we recommend fully updating the Register as soon as possible.
For assistance with complying with and updating the Register or if you wish to appoint us as an authorised representative to update the Register, please reach out to our national Franchising team who can help advise and assist with the process.