The franchisor disclosure document

What has to be in it

The Code prescribes the content. The parts that matter most to a buyer are these.

• The franchisor's details and solvency. Including a statement by a director about the franchisor's ability to pay its debts as they fall due.
• Litigation. Current and recent proceedings involving the franchisor and its directors, including proceedings brought by franchisees and by regulators.
• Current and former franchisees. Contact details for current franchisees, and for those who have left the system in the last few years, together with the number who ceased to operate and why. This is the most valuable section in the document.
• Costs. Establishment costs, ongoing fees, marketing levies, and any other payments, with ranges and the basis on which they are calculated.
• Significant capital expenditure. Under the current Code, why the expenditure is needed, its amount, timing and nature, the anticipated outcomes and benefits, and the expected risks.
• Supply restrictions and rebates. Whether you must buy from nominated suppliers, and whether the franchisor or an associate receives a rebate or other benefit from your purchases.
• Marketing and other specific purpose funds. What you contribute, how the fund is spent, and the financial statements for it.
• Intellectual property. The trade marks and other rights you are being licensed, and their registration status.
• Territory, site and lease arrangements, and whether the franchisor may operate or grant others rights within your area.
• Earnings information, if any is given. The Code does not require it. If it is provided, the assumptions must be stated.

What is no longer required

The Key Facts Sheet, a short summary document introduced under the previous Code, was removed by the Code that commenced on 1 April 2025. Franchisors no longer prepare one and existing sheets are no longer displayed on the Franchise Disclosure Register.

Disclosure documents themselves are also no longer uploaded to the Franchise Disclosure Register. The register now holds profile information about the system, including matters such as whether the franchisor, its directors or associates have relevant convictions, civil judgments or insolvency history, and whether the agreements provide for arbitration of disputes. It is still worth searching, because it is public and free.

What has expanded is the disclosure of significant capital expenditure, and the accounting and disclosure requirements for specific purpose funds beyond marketing funds.

How to actually read one

1. Go to the franchisee list first. Call at least six current franchisees and, more importantly, several who have left. Ask what they earn, how long it took, what the franchisor is like when something goes wrong, and whether they would do it again. Former franchisees have no reason to sell you anything.
2. Count the departures. A system that lost eight of forty outlets in two years is telling you something the marketing material is not.
3. Read the litigation section. A pattern of disputes with franchisees is more significant than a single commercial dispute with a supplier.
4. Add up every payment. Initial fee, fit-out, equipment, training, stock, bond, marketing levy, technology fee, transfer and renewal fees. Then compare that total to what you were told at the information session.
5. Check the supply and rebate disclosure. If the franchisor earns a margin on what you must buy, that is a second royalty and it should be in your financial model.
6. Check the date it was prepared. A document more than four months past the end of the franchisor's financial year has not been updated as required.
7. Compare it to the agreement. They should match. Where they do not, ask in writing.

When the document is wrong

A disclosure document must not be misleading, and the obligation covers omissions as well as statements. If you have signed a franchise agreement in reliance on information that turns out to be inaccurate, you may have remedies both under the Code and under the misleading conduct provisions of the Australian Consumer Law, which apply to statements made during the sales process as well as to the document itself.

Two practical points. First, keep everything you were sent, including the version of the disclosure document you received and the date you received it. Franchisors update these documents, and proving what you were told at the time is the whole case. Second, act promptly, because remedies are affected by delay and by continuing to perform the agreement after you knew of the problem.

If you are already in a dispute with a franchisor, the Code sets out a process that must be followed. See franchise disputes.