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Changes to the Franchising Code

Changes to the Franchising Code

30/06/2022

Are you a franchisor? By 14 November 2022, you will be required to upload key disclosure information to the Franchise Disclosure Register for prospective franchisees to view.

The Franchise Disclosure Register is a free self-service tool to help prospective franchisees make informed decisions before entering into a franchise agreement. It gives prospective franchise buyers, current franchisees and professional advisers access to information that is important to know when making business decisions.

This Register is hosted by the Australian Government and all franchise content on the Register is published by franchisors and not by the Australian Government.

On 1 April 2022 the Franchising Code of Conduct was amended to insert a new clause 53 dealing with the Franchise Disclosure Register – Competition and Consumer (Industry Codes—Franchising) Amendment (Franchise Disclosure Register) Regulations 2022.

From 15 November 2022 prospective franchisees will be able to search, view and compare information and contact a franchisor about opportunities to buy into the franchise.

Source: https://franchisedisclosure.gov.au/

All franchisors operating in Australia should check if they are required to register.

To register, franchisors must create a franchise profile using their myGovID. For a link to the Franchise Disclosure Register and to get started creating your profile –  https://franchisedisclosure.gov.au/

The information that must be disclosed includes, the franchisor’s name, ABN, registered address and principal place of business, business phone number and email address and the name under which the franchisor carries on business in Australia relevant to the franchise.

The Australian and New Zealand Standard Industrial Classification (ANZSIC) division and subdivision codes for the industry in which the business of the franchise operates must be disclosed. This means that all franchisors need to ascertain which ANZSIC divisions and subdivision codes apply to their business.

We recommend obtaining legal advice before uploading a disclosure document, franchise agreement or key facts sheet.

More areas of the Franchising Code carry penalties and penalties have increased

From 15 April 2022 more clauses of the Code carry a penalty and penalties for breaching the Franchising Code increase.

When a penalty applies, in most cases the maximum penalty will be up to $133,200. However, for certain provisions, greater financial penalties apply

You can find more information about the specific changes to the Code on the Federal Register of Legislation website.

Information statement must be provided within 7 days

If someone expresses an interest or formally applies to buy a franchise, franchisors must give them a copy of the information statementFrom 15 April 2022, this must happen no later than 7 days after a prospective franchisee expresses an interest.

If you have any questions or for further information on the changes to the Franchising Code please contact John Dorazio.

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