On or before 14 November 2022, franchisors operating a franchise system in Australia will need to create a franchise profile and publish key disclosure information about their franchise on the new Franchise Disclosure Register. 

WHAT IS THE NEW FRANCHISE DISCLOSURE REGISTER AND WHAT ARE FRANCHISORS REQUIRED TO DO?

In Australia, the new Franchise Disclosure Register is to be administered and hosted by the Department of the Treasury. The Register is intended to give prospective franchisees, current franchisees and professional advisers access to information that is important to know in connection with making business decisions about franchises, and to increase franchisor transparency and access to disclosure information. Members of the public and current and prospective franchisees will be able to search published franchise profiles on the Register from 15 November 2022.

The Franchise Disclosure Register will operate in addition to existing disclosure requirements and obligations under the Franchising Code of Conduct. Without limitation, franchisors will still need to make all disclosures required in accordance with the Code to franchisees and prospective franchisees.

The obligation to provide information for inclusion on the Register will apply to a franchisor that has created a disclosure document and provided a copy to a prospective franchisee or franchisee pursuant to clause 9 of the Franchising Code of Conduct on or before 31 October 2022. If there is a master franchise system, the master franchisor must provide the required information to the Register. However, master franchisors are exempt from having a profile on the Register if they only have one Australian sub-franchisor and no intention to grant further franchises.

Franchisors operating on a July to June financial year will be required to create and publish a profile on the Register by 14 November 2022. Franchisors operating on a non-Australian financial year (e.g., a January to December financial year) will also be initially required to create and publish a profile for their most recent financial year by 14 November 2022.

In addition to the requirement to have a published profile on the Franchise Disclosure Register by no later than 14 November 2022, franchisors will be required to maintain and update their profiles and disclosure information on the Register each year within 14 days following their annual obligation to update their disclosure document. Franchisors are required under the Franchising Code of Conduct to update their disclosure document within four months after the end of each financial year. An exception to this obligation applies under clause 8(7) of the Code for those franchisors that did not grant more than one franchise during the relevant financial year and do not intend to enter another franchise agreement in the following financial year. However, franchisors subject to this exception will still need to maintain a presence on, and update, their Register profile each year.

Franchisors will need to take care in compiling and publishing information on the Register and ensure that information published is accurate and not misleading or deceptive, as well as consistent with the franchisor's Disclosure Document, Franchise Agreement and Key Facts Sheet.

HOW DO FRANCHISORS ACCESS THE REGISTER TO COMPLY?

Obtain myGovID

Franchisors will need to have a Digital Identity and obtain a MyGov ID to be able to log in to the Register. They will also need to link their Digital Identity to their ABN in Relationship Authorisation Manager (RAM). RAM is an authorisation service that allows an authorised person to act on behalf of a business online when linked with the myGovID of that business.

Prepare a Franchise Profile

After logging in to the Franchise Disclosure Register using their MyGov ID, franchisors will need to create and manage a franchise profile on the Register for their franchise.

The franchise profile will need to include the following basic profile information:

• Name of the franchisor;

• Name under which the franchisor carries on business in Australia;

• ABN (if any);

• Business email address and contact phone number of the franchisor;

• Address(es) of the franchisor (i.e., for franchisor's registered office and principal place of business in Australia);

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

• Financial year in which the franchisor operates.

For franchisors that are required to update their disclosure document, the profile must also include the following additional information:

• How long the franchisor has 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 restricts franchisees choosing suppliers;

• Information about payments and costs;

• Whether the franchisor’s standard form franchise agreement allows the franchisor to vary the agreement without franchisees’ consent;

• What is the standard term of franchise agreements;

• 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 also choose to publish their Disclosure Document, Key Facts Sheet and standard form franchise agreements on the Register if they wish to do so. However, franchisors are required to redact sensitive information prior to publishing any of these documents and may also redact information from those documents that is of a commercial nature and is commercially sensitive.

BE PREPARED

Franchisors who fail to meet their obligations could be issued with an infringement notice or could expose themselves to civil penalties. It is therefore important that all franchisors are aware of the requirements and comply with their obligations under this new regime. 

Franchisors will therefore need to:

• Ensure they have obtained a MyGov ID;

• Begin compiling the necessary information to create their franchise's profile;

• Ensure the profile has been created and published on the Register by 14 November 2022; and

• Take care to continue to update the franchisor's published profile on the Register at least once annually within 14 days of the fifth month following the end of that franchisor's financial year.