A franchisor must provide specific information and documentation to a prospective franchisee including a disclosure document and a key facts sheet.
The franchising key facts sheet contains information provided in a franchisor’s disclosure document, essentially serving as a ‘snapshot’ of the disclosure document. A disclosure document provides useful and reliable information about the franchise, the franchisor, the franchise network.
The form of the key facts sheet is published on the ACCC website. It is completed by the franchisor and provided to a prospective franchisee at least 14 days prior to signing a franchise agreement. The key facts sheet needs to be updated by the franchisor within 4 months after the end of each financial year.
Information Contained in the Key Facts Sheet
Details about the franchisor
Including name of the franchisor, how long the franchisor has operated the franchise and a question regarding financial viability.
Details about major disputes
Including disclosing any current legal proceedings and any final judgements in civil proceedings.
Details about current and past franchisees
Including details about businesses in the franchise system and details about the following events in the last three financial years:
- A franchise was transferred
- A franchise ceased to operate
- A franchise was terminated by the franchisor
- A franchise was terminated by the franchisee
- A franchise agreement was not extended
- A franchise was bought back by the franchisor
- A franchise agreement was terminated and the business was acquired by the franchisor
Details about the territory or site for the business
Including if the franchisor can change the territory or site of the franchise, if the franchisee could be expected to face competition and if the franchisee can sell goods or services of the same type or brand online.
Details about the supply of goods and services to the franchisee
Including whether there are restrictions to franchisees choosing suppliers and whether the franchisor has an interest in any supplier.
Details about what the franchisee has to pay to operate the franchise
Including what payment (if any) the franchisor requires before the franchisee can enter the franchise agreement and the range of costs to set up the franchise business.
Details about marketing funds
Including if the franchisee must contribute to a marketing fund, what is the contribution or how is it calculated?
Details about the franchisor’s ability to change the franchise agreement
Including whether or not the franchisor can change the franchise agreement without the franchisee’s consent.
Details about earnings
Including whether or not the disclosure document includes historical earnings data and projected earnings information for the specific site/territory of the franchise business being offered.
Details about what happens at the end of the franchise agreement
Including whether the franchisee will have an option to renew the franchise agreement and if the franchisee is subject to any restraint of trade clause.
Key Takeaways
The franchising key facts sheet must be provided to a prospective franchisee in addition to a disclosure document. The key facts sheet essentially serves as a ‘snapshot’ of the disclosure document. It contains information such as details about the franchisor and details about the supply of goods and services to the franchisee.
Should you require further legal advice please contact OpenLegal by filling in the form on this page or calling 1300 337 997.
Alana is a legal intern at OpenLegal whilst studying a Bachelor of Laws at Macquarie University. Alana’s key areas of interest include commercial law and property law.
Phil is a director at OpenLegal. He has over 16 years experience working in private practice and in-house counsel in Sydney and London, giving him expertise in employment law, IP, finance, leases, dispute resolution, insurance and contracts.
