The franchisor compliance manual

Updating and requests for the disclosure document

Updating the disclosure document

Once you have entered into a franchise agreement, the Code requires you to update your disclosure document within four months after the end of each financial year.

However, you are not required to update your disclosure document if you did not enter into more than one franchise agreement during the last financial year (including transferring, renewing or extending a franchise agreement) and you do not intend to enter into another agreement in the following financial year (the disclosure exemption).

The disclosure exemption will cease to apply if a franchisee requests a copy of your disclosure document (see below). If a franchisee requests a disclosure document in these circumstances, you must update the disclosure document so that it reflects the position of the franchise as at the end of the financial year before the financial year in which the request is made.

Requests for a disclosure document

Under the Code, your franchisees can request, and you must provide, a copy of your disclosure document once every 12 months. This request must be made in writing. The Code specifies that you must provide a franchisee with a copy of your latest disclosure document within 14 days of the franchisee’s request.

If you do not have an updated disclosure document because you were covered by the disclosure exemption, the Code allows you up to two months to update the disclosure document and provide a copy to the franchisee.

Materially relevant facts

There are some important matters that may arise after you have provided a franchisee or prospective franchisee with a disclosure document. As a franchisor, you must provide your franchisees and prospective franchisees with updated disclosure of matters that are materially relevant facts.

A ‘materially relevant fact’ is a key piece of information about a franchisor or its franchise system, which could have an effect on a franchisee’s business. Materially relevant facts include:

  • changes in majority ownership or control of the franchisor, franchise system, or an associate of the franchisor
  • certain court proceedings or judgements against the franchisor or one of its directors
  • a change in the intellectual property, or ownership or control of the intellectual property, that is material to the franchise system.

If your disclosure document does not include a materially relevant fact, you must tell a franchisee or prospective franchisee about it, in writing, within a reasonable time (but not more than 14 days) after you become aware of it.

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