AUSTRALIA Law and Practice Contributed by: Warren Scott, Stewart Levitt, Erik Purcell and Lachlan Speirs, ARCHER SCOTT Lawyers
2. Franchise Disclosure 2.1 Mandatory Disclosure
Monetary penalties can be imposed by the ACCC where the franchisor fails to provide a disclosure doc - ument or where the disclosure is found to be deficient. 2.3 Franchise Disclosure Exemptions There are no exemptions from the requirement to pro - vide disclosure documents on the basis that a fran - chisee is considered sophisticated. Historically, there was an exemption for the grant of a single franchise, intended to allow an international franchisor to enter into a master franchise agree - ment for Australia without the need to comply with the Franchising Code. This exemption has now been abolished. 2.4 Franchise Disclosure Language/ Translation Requirements In Australia, disclosure documents should be pre - pared in English, which is the national language of Australia. There is no requirement for translation into any other languages. Pursuant to Chapter 2, Part 7, Division 2 of the Fran - chising Code, most franchisors are required to register on the ACCC Register and to provide certain informa - tion about the franchise offer. 3.2 Franchise Registration Process The registration process requires certain franchisors to create a franchise profile on the ACCC Register. Each year, those franchisors who are required to be on the Register also need to confirm or update their franchise profile before the 14th day of the fifth month following the end of the franchisor’s financial year. 3.3 Consequences of a Failure to Register Financial penalties apply for a failure to obtain and maintain the registration. 3. Franchise Registration 3.1 Mandatory Registration
The provision of a disclosure document is mandatory when granting or extending a franchise agreement. The form of the disclosure document is mandated in the Franchising Code of Conduct. In addition to the disclosure document itself, the fol - lowing are mandatory: • the franchisor must give certain information and documents to a potential franchisee before a fran - chise agreement is signed; • the franchisor must give the franchisee specific information and documents during the franchise agreement; • franchisees can back out of new franchise agree - ments within a certain timeframe, known as the cooling-off period; • franchisors and franchisees must act in good faith towards each other; • franchisors and franchisees can resolve a franchis - ing dispute without going to court; • specific steps must be followed if either the fran - chisor or franchisee wants to end the franchise agreement early; and • franchisors must create a franchise profile and publish key disclosure information on the franchise disclosure register. 2.2 Consequences of a Failure to Disclose Where a franchisor fails to provide a disclosure docu - ment at all, the franchise agreement is voidable (rather than being void). The franchisee can apply to the court for termination of the agreement and for damages to be awarded. Where a franchisor provides a disclosure document but it omits some required information, the remedies available to the franchisee will depend on the nature and extent of the shortcomings. Termination will only be ordered where the omissions or shortcomings are sufficiently material to justify that outcome; otherwise, damages may be awarded with or without termination.
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