Franchise Law Update

Changes at a glance

• There is a new Franchise Disclosure Register (Register).
• Franchisors must create a profile on the Register and include key disclosure information.
• Franchisors must comply by 14 November 2022.
• The Register will be available to the public online, free of charge, from 15 November 2022.
• There are ongoing obligations on franchisors to update the information on the Register.
• There are penalties for non-compliance.
• The purpose of the Register is to give prospective franchise buyers, current franchisees and professional advisers access to information that is important to know when making business decisions.
• The Register is in addition to existing disclosure requirements and practices under the Franchising Code of Conduct (Code).

New Register

By 14 November 2022, franchisors must create a franchise profile and include key disclosure information on the new Register, which will be hosted by the Australian Government. The 14 November deadline applies to franchisors who have given a disclosure document to a franchisee or a prospective franchisee on or before 31 October 2022.

Franchise buyers, current franchisees, professional advisers and public users will be able to search and use the Register free of charge from 15 November 2022.

For new franchisors to whom the 14 November deadline does not apply, they 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.

Creating a Digital Identity

Franchisors must have a Digital Identity to be able to log in to the Register. A Digital Identity can be created using the Australian Government’s Digital Identity app, called myGovID.

The required information

Franchisors must publish the following information in their profiles on the Register:

1. their name, trading name and ABN (if they have one);

2. the address(es) of their registered office and principal place of business in Australia, as well as their business telephone number and email address;

3. the ANZSIC division and subdivision codes for the industry in which the business operated under the franchise operates; and

4. any other information required to be provided by the government.

Optional publications

Franchisors can choose to publish their disclosure document, key facts sheet and standard form franchise agreements on the Register. If they do so, they must first redact certain information from the documents, including personal information and information relating to a particular franchisee or a particular site being occupied by a franchisee. Franchisors may also redact information of a commercial nature that is commercially sensitive.

Ongoing obligations

Franchisors must update the information published on the Register in line with existing update requirements to disclosure documents under the Code.

Penalties

Civil penalties of 600 penalty units apply for failing to publish the required information on the Register, and for failing to update or confirm it each year. Currently, this equates to $133,200 for each act of non-compliance.

This update is intended to provide general guidance only. If you require legal advice about your specific obligations relating to the Franchise Disclosure Register, or your obligations under the Code more generally, please contact a member our legal team.