Franchisors registered on the Franchise Disclosure Registry (FDR) may have received an email from Treasury advising that as of 22 June 2023, amendments had been made to the FDR. The changes are in line with the Franchisors’ obligations under the Competition and Consumer (Industry Codes – Franchising) Regulation 2014 (Code). The changes, outlined below, will affect all new Franchisors’ creating profiles on the FDR as well as existing Franchisor’s who already have profiles when they update their information, which is required to be done by the 14th day of the fifth month following the end of the franchisors financial year (for those with 30 June end of financial year this means 14 November). This article will provide an overview of the key changes to the FDR.
Change – New question
A new question has been added:
- “Is the franchisor required to update their disclosure document for the last financial year?”
The apparent purpose of this new question is to ensure compliance with the obligations under the Code, noting that ‘current’ information must be maintained on the FDR and the information must be confirmed and/or updated annually. Importantly, some franchisors may not be required to update their disclosure document, and they should seek advice from a franchise lawyer as to whether they are obliged to update their disclosure document and what steps they need to take in respect of the FDR.
Change – Amendments to questions
Some questions that were on the initial FDR have seen some slight wording changes as set out in the table below. In practical terms the changes should not materially change the information which is already on the FDR but franchisors should carefully read each question and ensure their answer is accurate.
| Original | Amended |
|---|---|
| How long has the franchisor operated the franchise or franchise system in Australia? | How long has the franchise or franchise system operated in Australia? |
| Does the franchise system restrict franchisees choosing suppliers? | Does the franchise system restrict franchisees choosing suppliers other than the franchisor? |
| What payment does the franchisor require before the franchisee can enter the franchise agreement, if any? | Does the franchisor require payment before the franchisee can enter the franchise agreement? |
| What are the payments franchisees have to make to the franchisor during the term of the franchise agreement? | What payments does a franchisee need to make to a franchisor, or an associate of the franchisor, during the term of the franchise agreement? |
The amendments to questions should hopefully create more neutrality in the question being asked and responses given, and a simpler user experience for Franchisors’. Currently the way Franchisors have answered some questions has varied significantly.
Furthermore, additional responses and further information is now required for particular questions. Those amendments include:
| Question | Responses required |
|---|---|
| Number of businesses in the franchise system? | - Franchisees; - Franchisor owned or operated units; or - Franchised business (new option) |
| Does the franchisor require payment before the franchisee can enter the franchise agreement? | - If Yes, please detail why the money is required, how the money is to be applied, who will hold the money, and the conditions under which a payment will be refunded; or - No |
Updated version of the Key Facts Sheet
The Key Facts Sheet has transferred from a smart form to a fillable PDF which can be accessed from this link on the ACCC website current PDF form. If you intend to use the fillable PDF, we recommend that rather than saving the document at this link to your system, that you use the link each time you prepare a Key Fact Sheet to ensure the most current version of the Key Facts Sheet is always used.
Conclusion
Franchisors are reminded that the information contained on the FDR is required to be updated annually, in addition to updating requirements in respect of Disclosure Documents and Key Facts Sheets. It should also be remembered that the time to update the FDR is different (and longer) to the requirement to update a Disclosure Document and Key Facts Sheet.
HWL Ebsworth has a dedicated franchising law team with recognised expertise across the country that can assist you with all your business requirements, including navigating the complexities of the Franchising Code of Conduct. Please contact us if you would like more information about the services we provide.
This article was written by Sean O’Donnell, Partner and Melissa Ramsden, Special Counsel.
