Following the amendments to the Franchising Code of Conduct in 2021, the Franchise Disclosure Register (FDR) was established in November 2022. The FDR is administered by the Department of the Treasury and is accessible to the public, allowing prospective franchisees to access information about franchise opportunities.
The FDR aims to provide greater transparency to prospective franchisees of the available franchise opportunities, the franchisors and their franchise network. By allowing access to disclosure information, prospective franchisees are able to conduct their due diligence and make an informed decision before initiating contact with a franchisor.
Consequently, the FDR is expected to improve the reputation of the franchising industry within Australia by encouraging better disclosure practices and compliance.
All franchisors operating in Australia are required to register and maintain a profile on the FDR unless an exemption applies. For example, master franchisors with only one master franchisee in Australia and no intention to grant further franchises are exempt from maintaining a profile on the FDR.
It is important to note that even those franchisors who are exempt from updating their disclosure document under clause 8(7) of the Franchising Code of Conduct, must still register and update their profile on the FDR each year.
To register and maintain your profile on the FDR, you must:
As a result of the introduction of the FDR, franchisors have an obligation to publicly disclose prescribed information about their franchise network, including:
The FDR also requires a franchisor to provide certain information about the franchise network and franchise opportunity, such as the number of existing franchisees, the States or Territories in which the franchise system currently operates, and the types of establishment and ongoing fees and costs associated with the franchised business. This information is similar to the information set out in the disclosure document and key facts sheet.
When updating your profile on the FDR, you can either amend your existing profile or create a new version that will supersede last year’s version. However you should be aware that the previous version(s) can still be viewed in the ‘Superseded Profiles’ section.
In addition, the FDR gives franchisors the option to upload a copy of their disclosure document, key facts sheet, and standard franchise agreement for public access, however a franchisor may redact from these documents:
Uploading the standard franchise documents is not mandatory and is at the franchisor’s discretion whether to make these documents publicly available.
As a franchisor, you should note that the obligation to update the FDR is in addition to your existing obligations to update your disclosure document and key facts sheet each year and provide copies of these documents to a prospective franchisee with the franchise agreement as part of the disclosure process, as outlined in the Franchising Code of Conduct.
However, it is important that you comply with the obligation to update the FDR on or before 14 November each year.
Should you require legal assistance or have any questions about the requirement to update the Franchise Disclosure Register, please contact the Gadens franchising team.
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Joanne Moss, Partner
Andrew Barr, Associate