Under the Franchising Code of Conduct (the Code), a franchisor is required to update its disclosure document within 4 months after the end of each financial year. Accordingly, all franchisors with a 30 June financial year end must update their disclosure documents to reflect any changes that have occurred to their business within the last financial year by 31 October.
Updating a disclosure document takes planning and is required in order to ensure the franchisor’s ongoing compliance with the Code.
Updating the disclosure document includes review of the following:
1) the Franchisor’s financial details;
2) the Franchisor’s list of existing franchisees;
3) the Franchisor’s officers, directors of the Franchisor or other corporate details;
4) the intellectual property of the Franchisor; and
5) the Franchisee’s establishment costs (such as the details of the range of costs to start operating the franchised business, based on current practice).
Franchisors must be wary that the financial details must be up to date, noting that financial penalties may apply for non-compliance. In 2017, the Australian Competition and Consumer Commission fined Domino’s $18,000 when they had reasonable grounds to believe that Dominos had not complied with the time limits in updating the business’s financial details in their disclosure document.
We would be happy to assist in the review of your disclosure documents to ensure they are appropriately updated and Code compliant.