Signing a Deed

The franchising industry in Australia is regulated by the Franchising Code of Conduct. Part 2 of the Franchising Code contains provisions that make it mandatory for all franchisors to disclose detailed information about their franchise to prospective franchisees in the form of a Franchise Disclosure Document (FDD). The franchisor is required to update this document annually and ensure all information disclosed is accurate.

The franchisor must provide the Franchise Disclosure Document to all prospective franchisees at least 14 days before the franchisee:

  1. enters into a Franchise Agreement;
  2. agrees to enter into a Franchise Agreement; or
  3. makes a non-refundable payment to the franchisor.

The franchisor must also provide the Franchise Disclosure Document to existing franchisees if:

  1. the Franchise Agreement is being renewed or extended; or
  2. the franchise makes a written request to see it (within 14 days).

A Franchise Disclosure Document must contain information about:

  1. the franchisor (including any predecessors);
  2. the franchisor’s management experience, including any existing franchises;
  3. the franchisor’s business history, over the last 10 years (bankruptcy and litigation);
  4. all of the franchisor’s key staff;
  5. any initial and/or ongoing fees involved in buying, opening and running the franchise;
  6. the marketing fund (where applicable);
  7. any required investments or purchases required to buy, open and run the franchise;
  8. any exclusive territory rights (the territories controlled by other franchisees);
  9. any intellectual property (trade marks, patents, copyright, logos, etc.);
  10. the ongoing responsibilities and obligations of the franchisor and the franchisee;
  11. the ongoing obligations to any suppliers of goods and/or services;
  12. any other franchisees in the system (references), including their contact information;
  13. the finances, including profit and loss statements and balance sheets for the last two financial years (where applicable).

See Also: 5 things every prospective franchisee should consider when reviewing a Franchise Disclosure Document


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