Hey, don’t forget under the Code franchisors must give their franchisees specific information on time. Here are some important timeframes to include in your franchise recruitment and management processes:
Not later than 7 days – give the prospective franchisee the prescribed Information statement for prospective franchisees | ACCC (but provide earlier if practicable)
At least 14 days prior to a prospective franchisee signing the franchise agreement or paying non-refundable money franchisor must provide its franchise pack (disclosure document, final franchise agreement, key facts sheet, if applicable a copy of the lease/offer to lease and disclosure statement) and don’t forget to:
- get a prospective advice certificate signed
- provide updated financial reports/solvency statements before signing (if applicable)
- have a meeting about significant capital expenditure (if applicable)
- restart disclosure if earnings information is provided after the franchise pack is given
- give to prospective franchisees Fair Work Handbook (not a Code requirement but a good idea to include!)
(slightly different rules for transfer not involving signing a new franchise agreement)
Within 1 month of the franchisor signing the lease/agreement for lease – give to the franchisee a copy of the lease, agreement to lease, occupation licence (if applicable) and details of landlord incentives given to franchisor or its associate (i.e., fit out contributions).
Within 1 month of occupation – where there is an occupation licence, give to the franchisee a copy of the lease, details of occupation, details of landlord incentives given to franchisor or associate.
At least 14 days prior to prospective franchisee signing franchise agreement or when available, other agreements e.g., security agreement.
14 days (or 2 months if no annual update required under cl 8(7) Code) – provide a current disclosure document and key facts sheet on written request by an existing franchisee (if request made not more than once in 12 months)
Within a reasonable time but not more than 14 days of becoming aware disclose in writing to franchisees a materially relevant fact i.e., change in control of franchisor, associate or franchise system (Big penalties apply important to be across all materially relevant facts that must be disclosed)
Within 14 days of signing the franchise agreement franchisees can exercise their ‘cooling off’ right and terminate (there are slightly different rules if an occupancy licence or transfer not involving a new franchise agreement is involved).
42 days after receiving franchisee’s request in writing or the last date further information provided by franchisee where allowed for under the Code – respond in writing on whether you approve or not a sale (otherwise consent is deemed! Consent cannot be unreasonably withheld).
Within 4 months after the financial year end – prepare the marketing fund statement with meaningful information and get this audited (unless 75% of franchisees vote otherwise 3 months after the financial year end).
Within 4 months after the financial year end – update your disclosure document and key facts sheet. (Tip start early on preparing financial reports).
within 30 days of preparation – provide to franchisees marketing fund statement and if applicable, audit report of the marketing fund statement.
At least 6 months before franchise ends – provide end of term written notice to the franchisee as set out in the Code. (There are different rules if the term is less than 6 months).
The Reasonable time to be given to a franchisee to remedy breach if franchisor proposes to terminate. (Reasonable written notice to set out breach, time period and actions required to remedy. And notice must include ‘franchisor proposes to terminate if not remedied’).
Reasonable time to be given in writing and reasons for it if terminating in accordance with franchise agreement and no breach.
7 days’ written notice of termination for particular grounds (e.g., franchisee abandonment)
28 days after receiving a franchisee’s written proposal to terminate – franchisors must provide a substantive written response.
14th day of 5th month after the financial year – update register details.
The above checklist is a reminder of certain rules that should be looked at in more detail as relevant. Please seek legal advice for your specific circumstances
