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You want to buy a franchise but have you got an information statement yet?

Sarah Stowe

One of the key documents you will receive as a franchise buyer is the information statement.

This short document, it’s just two pages long, outlines what you as a prospective franchisee need to know about franchising. It’s a standard document with the contents prescribed in the Franchising Code of Conduct and is intended to help you make an informed decision.

It is essential reading because it provides:

  1. Guidance on how to research or conduct due diligence before you decide to sign a franchise agreement.
  2. Highlights of the aspects of franchising that most commonly lead to misunderstandings and disputes.
  3. Facts on how the Australian franchising sector is governed.
  4. Pointers on where to find good sources of information so you can best understand your rights and obligations.
  5. Insights into the sort of arrangements typically found in a franchise system.
  6. A spotlight on the risks which may result from any franchise relationship.

When you get the information statement

This document needs to be in your hands soon after you have expressed a serious interest or submitted a formal application to buy a franchise. That means the franchisor must send you an information statement once you have submitted an online application form for a franchise.

What do you do next?

Use the information statement as a checklist, particularly when you are reviewing the franchise agreement and the franchisor’s disclosure document.

For instance, the information statement will highlight the issues of exclusive territories and termination of the franchise agreement, so ensure these points are included within the disclosure document.

It’s important to conduct thorough due diligence or research – after all, most franchise investments require significant financial commitment – and the information statement is just a simple tool to help you in the process.

  • The Australian Competition and Consumer Commission (which regulates the Franchising Code of Conduct) has a copy of the information statement if you would like to view this before approaching a franchisor. 

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