Franchisors, it’s time to update your disclosure documents
It is hard to believe that we are in September, and for most franchise networks in Australia, the challenges and uncertainty presented by the COVID-19 crisis are ongoing. While many networks continue to grapple with ever changing restrictions and lockdowns, it is important for franchisors not to lose sight of run of the mill regulatory compliance requirements.
Under the Franchising Code of Conduct (Code), franchisors are required to update their franchising disclosure documents on an annual basis. For franchisors operating on a 30 June financial year, their updates need to be completed by 31 October 2020.
For some networks, this may be the first dislcosure document update following the release of the Australian Competition and Consumer Commission’s model franchising disclosure document, as well as changes to the Code specific to the automotive sector that came into effect on 1 June 2020 (Automotive Amendments) and the Government’s response to The Parliamentary Joint Committee’s Fairness in Franchising report that was released on 20 August 2020.
With that landscape in mind, here are our top picks for the key areas of disclosure that you should pay particular attention to this year.
|1. Be specific about supply chain details and supply restrictions|
|2. Bolster disclosures around payments and costs that may be incurred by the franchisee|
|3. Give meaningful information in relation to marketing fund expenditure|
|4. Revisit your disclosures in relation to end of term arrangements|
|5. Consider specific disclosures in relation to COVID-19 impacts|
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