ACCC franchising model disclosure document guidance

About this Guidance

The Guidance is as a valuable resource for franchisors and prospective franchisees. Created by the Australian Competition and Consumer Commission (ACCC), this Guidance serves as a guideline for compliance with the legal obligations associated with franchising in Australia, specifically regarding the disclosure document.

Franchising Code of Conduct and its requirements

The Franchising Code of Conduct regulates parties to “franchise agreements”. The Franchising Code of Conduct is a mandatory industry code of conduct that has the force of law under the Competition and Consumer Act 2010.

The Franchising Code was the first national standard regulations of its kind in the world when introduced in July 1998.

The purpose of the Franchising Code of Conduct is to regulate the conduct of participants in the franchise sector toward one another.

Franchisors are, under Franchising Code of Conduct, required to provide prospective franchisees with:

• A key fact sheet summarising vital information about the franchise.
• The necessary disclosure document that adheres to the format specified in Annexure 1 of the Competition and Consumer (Industry Codes—Franchising) Regulation 2014.
• A written franchise agreement

When is the disclosure document needed?

Before entering into an agreement:

A franchisor must provide a potential franchisee with a copy of the disclosure document at least 14 days before the franchisee:

• enters into the franchise agreement.
• makes a non-refundable payment.

Annual request:

An existing franchisee can request a copy of the disclosure document from the franchisor once every 12 months.

Upon significant changes:

Franchisors are obligated to provide an updated disclosure document if there are significant changes in the franchise system that may affect their business.

Annual update:

Additionally, franchisors are obligated to update the disclosure document annually within four months after the end of each financial year, ensuring that all information remains accurate and relevant. However, if a franchisor has entered into only one or no franchise agreements during the last financial year, and does not intend to enter into any franchise agreements in the upcoming financial year, they are not obligated to update the disclosure document unless the franchisee requests an update.

For further information on the disclosure document, please refer to the official ACCC website.

How this Guidance can benefit a user

All franchising businesses in Australia are required to provide disclosure documents to their franchisees. The disclosure document is essential for ensuring that franchisors provide comprehensive and accurate information to potential franchisees before entering into any agreements. It equips prospective franchisees with comprehensive information to help them make informed decisions about entering into a franchise agreement by outlining critical details about the franchise, including:

• The franchisor's identity and business operations.
• Key facts that prospective franchisees need to consider.
• Contact details and business-related information of all former and current franchisees.
• Specific information regarding leases, transfer of franchises, and other pertinent details.

The guidance outlines a specific format that disclosure documents must follow, including required headings and numbering as per Annexure 1 of the Code. This ensures consistency across various franchises.

This guidance serves as a standardised template that franchisors can use to fulfill their legal obligations while providing prospective franchisees with necessary information.

It specifies the essential information that must be included, such as franchisor details, business experience, litigation history, and financial details, helping to cover all critical aspects relevant to prospective franchisees.

Accessing this Guidance

Please note that this Guidance is based on the ACCC's version, copied from their official website and converted to Word format. All rights are reserved by the ACCC. For further information and access to the official ACCC model disclosure document, please visit the ACCC's website at Franchising model disclosure document.

This Guidance is available free of charge in Word format for easy editing and customisation. We encourage all franchisors to utilise this resource as part of their commitment to transparency and compliance with ACCC regulations.