Preparing a franchise disclosure document is an important part of your responsibility as a franchisor. Our legal team will work with you to create or update your disclosure document, ensuring it is applicable to the Franchising Code of Conduct.
A franchise disclosure document is required by law to be issued to all prospective franchisees, and is designed to give potential franchisees basic information about your business and your past experience. This information must be prepared each year in accordance with the requirements of the Franchising Code of Conduct before any franchise agreement can be signed. The disclosure document must be issued to the prospective franchisee at least 14 days before the franchise agreement is signed or any payments are made, so they are given a chance to review the documents and seek independent advice. The disclosure document is intended to provide an overview of the franchise business and costs involved. Be prepared to share some confidential details, as the Franchising Code of Conduct is quite specific about what must be included. Information such as your business experience and the contact details of existing and past franchisees will need to be disclosed, as well as financial information about your business.
You will also need to include an outline of franchisor and franchisee obligations, details relating to the marketing fund, franchise territory information, operational obligations and details regarding the use of intellectual property. The franchise disclosure document must be constructed very carefully, as it is often reviewed by the Courts in any legal dispute between franchisors and franchisees. It is also a crucial to the franchise recruitment process, as this is what potential franchisees will review prior to signing on with your franchise system. The disclosure document must always contain current information, so you should have it reviewed every year by a competent franchise lawyer. Our franchise lawyers understand the importance of the franchise disclosure document. We will work with you to ensure this sensitive information is conveyed appropriately and in compliance with the law. Applying knowledge and expertise, we can advise you on what to include, how to word it and what potential issues could arise.