Pre-contractual disclosures for franchises
by
Norton Rose
The Franchising Code of Conduct requires all franchisors to provide a disclosure document and certain other material to prospective franchisees at least 14 days prior to signing a franchise agreement or receiving any non-refundable payment. Franchisors are required to update their disclosure document within three months of the end of each financial year.
Matters required to be disclosed include details of:
- the business experience and any litigation or criminal matters involving the franchisor or any director of the franchisor;
- all existing franchisees;
- the intellectual property which the franchisee will be permitted to use;
- the franchisee’s territory and the site to be occupied by the franchisee;
- the supply of goods by and to the franchisee;
- any marketing fund operated by the franchisor;
- the payments to be made by the franchisee including start-up costs and ongoing fees;
- the conditions of the franchise agreement; and
- earnings information and financial records of the franchisor.
The franchisor should instruct a solicitor to prepare the disclosure document, as it is an important legal document and preparation requires extensive knowledge of the Franchising Code of Conduct.
See the buying a franchise and running a franchise pages for additional information.
This article was created by Deacons and appears courtesy of Austrade . 27.06.2007
FCA Member
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Tel: 03 8686 6000
Fax: 03 8686 6505
