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Treasury has recently released an exposure draft of the Competition and Consumer (Industry Codes—Franchising) Amendment (Franchise Disclosure Register) Regulations 2021 (the Regulations). The Regulations will amend the Franchising Code of Conduct (the Code) by establishing a single, public Register through which franchisors will provide specific business information and documents about their franchise systems, for potential franchisees to access and make informed decisions prior to entering into franchise agreements. The proposed Regulations align with the recommendations made by the Parliamentary Joint Committee’s report, Fairness in Franchising, to improve transparency in the operation of franchise systems.

Key features of the Register

Form of the Register

The Register will be an online, electronic platform that is available to the public, free of charge (clause 53).

The Register will not be any form of endorsement of franchisors or the information presented. Government staff will assist in managing the Register but will not assess or examine the information or documents on the Register (clause 53 and clause 53B).

Information included on the Register

Each franchisor, or their agent, will be required to present information and documents about their franchise system on their individual profiles on the Register (clause 53A and 53G).

To be included on the Register, franchisors must provide:

  • Identification information about their franchise system, such as the name of the franchisor and trading name of the franchise (clause 53C).
  • An updated disclosure document, if they have previously provided potential franchisees with a disclosure document before or on 30 June 2022 (clause 53C). Sensitive information can be redacted from the disclosure document, such as information regarding finance arrangements, and past and predicted earnings.
  • Any other information requested by the Secretary that franchisors are currently obliged to provide to franchisees, under the Code (clause 53C(5)). 

Obligation to update information provided

Once included in the Register, franchisors must:

  • Keep up to date the information and documents provided on the Register on a yearly basis, where the franchisor is obliged to update their disclosure documents under the Code (clause 53(D)).
  • Provide materially relevant facts, as listed in section 17(3) of the Code, that are not presented in the disclosure document published on the Register after 30 June 2022 (clause 53(E)).
  • If applicable, provide a notice on the Register explaining why they are not required to update their disclosure document under the Code (clause 53F).

Ensuring compliance

The Australian Competition and Consumer Commission will supervise franchisors’ compliance with their obligations pertaining to the Register, stipulated in the Code (clause 53B).

Civil penalties may apply where franchisors do not comply with their obligations to provide and update required information and documents.

The exposure draft is open to submissions until 29 October 2021, with the Regulations then intended to commence on 31 March 2022. Franchisors will be able to voluntarily create a profile and publish their existing disclosure documentation from early 2022, and all franchisors will be required to do this by 31 October 2022.

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