Franchisors, it’s time to think about updating your Disclosure Document!
As a franchisor, under the Franchising Code of Conduct (Code), you’re required to update your Disclosure Document annually, within four months after the end of the financial year. If the financial year for your franchise business wrapped up on 30 June, then you will need to update your Disclosure Document on or before Monday 31 October, 2016.
You will no doubt also be aware of the new Unfair Contracts Regime that’s due to commence in November of this year. Accordingly, you should as a matter of course review your Franchise Agreement for any ‘unfair contract terms’ and consider whether any amendments are required. You can read more about unfair contract terms in our recent article, ‘Is your franchise ready for the new unfair contract regime? ’.
In regards to your Disclosure Document, even if you aren’t actively recruiting franchisees, there is always the possibility that either a franchisee or the Australian Competition and Consumer Commission will request a current version to be provided. Therefore it is important from both a compliance and risk management point of view to update your Disclosure Document in line with the requirements of the Code.
This is also a good time to make any changes to your Franchise Agreement that may be warranted. In particular, you should consider if your franchise business wishes to grant or limit the ability for it or franchisees to make online sales; what end of term arrangements you wish to impose; what dispute resolution mechanisms you wish to incorporate into the Franchise Agreement and how the marketing fund (if applicable) will be operated and audited.
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