When the Franchise Disclosure Register was introduced in 2022, most franchisors viewed it as little more than another compliance obligation.
That was understandable. After all, the Register was introduced primarily to assist prospective franchisees by providing access to key information about franchise systems before they commit to one of the most significant financial decisions of their lives.
What many franchisors fail to appreciate, however, is that the Register has evolved into something much more than a compliance requirement.
Used properly, it is one of the most powerful competitive intelligence tools available to franchisors. Ignored, it is increasingly becoming a compliance trap attracting the attention of the ACCC.
More Than a Compliance Exercise
Most franchisors think of the Franchise Disclosure Register as a regulatory obligation.
Prospective franchisees, however, increasingly use it as a first-stop due diligence resource. Before they ever enquire through your website, download an information pack or speak with a franchise recruitment manager, many are already reviewing your Register profile.
That means your Register entry is often the first impression a prospective franchisee receives of your brand.
More interestingly, it is also one of the most useful competitive intelligence resources available to franchisors.
The reason is simple: the information required to be published on the Register is precisely the sort of information franchisors have historically struggled to obtain about their competitors.
A Franchise Disclosure Register profile should reveal:
- the size of the franchise network;
- the number of franchisees;
- the number of company-owned outlets;
- the states and territories in which the system operates;
- proposed expansion locations;
- establishment costs;
- franchise fees;
- royalty structures;
- marketing fund contributions;
- supplier restrictions;
- renewal rights;
- dispute resolution mechanisms;
- goodwill arrangements;
- restraint provisions; and
- whether the franchisor can unilaterally vary the franchise agreement.
Twenty years ago, a franchisor may have spent months attempting to gather this type of information about competing systems.
Today, much of it is publicly available and searchable through a single government-maintained platform.
In many respects, the Register now functions as a publicly available snapshot of a franchise system’s commercial model, growth profile and recruitment proposition.
For newer franchisors, the Register can provide valuable insight into how established systems structure their franchise offering.
For mature systems, it can assist with benchmarking franchise fees, establishment costs, marketing contributions, growth strategies and recruitment positioning against competitors operating in the same sector.
Questions such as:
- Are our establishment costs competitive?
- How do our royalties compare with similar systems?
- Are our marketing contributions above or below market?
- How do our supplier arrangements compare?
- What geographic markets are competitors targeting for expansion?
- How does our franchise offering compare when viewed through the eyes of a prospective franchisee?
can often be explored by reviewing publicly available Register profiles.
Of course, this cuts both ways.
Just as you can review your competitors, they can review you.
Accordingly, franchisors should view their Register profile not merely as a compliance obligation, but as part of their broader franchise recruitment and brand positioning strategy.
The Initial Registration Requirement
The Register obligations are contained in Part 6 of the Franchising Code of Conduct.
Section 92 imposes an initial obligation on franchisors to provide information for inclusion on the Register.
Broadly speaking, where a franchisor proposes to enter into a franchise agreement and is required to provide a disclosure document to a prospective franchisee, the franchisor must ensure prescribed information is included on the Register.
That information includes:
- the franchisor’s name;
- the name under which the franchisor carries on business in Australia;
- the franchisor’s ABN (if applicable);
- the address of the franchisor’s registered office and principal place of business;
- the franchisor’s telephone number and email address;
- applicable ANZSIC industry classifications; and
- any additional information prescribed by the legislation.
Importantly, the information must be provided at least 14 days before the franchisor enters into the franchise agreement with the prospective franchisee.
Failure to comply attracts a civil penalty of 600 penalty units.
For new franchisors, this requirement is often overlooked during the excitement of recruiting the first franchisee. Unfortunately, it is precisely the type of technical breach that can result in regulatory attention.
The Annual Update Obligation
For existing franchisors, the ongoing obligation under section 93 is arguably even more important.
Once information has been included on the Register, franchisors must annually either:
- confirm that the information remains correct; or
- update any information that is inaccurate, incomplete or out of date.
Importantly, this obligation applies even where there have been no material changes.
The deadline is frequently misunderstood.
The annual confirmation or update must occur on or before the 14th day of the fifth month following the end of the franchisor’s financial year.
For franchisors operating on a standard 30 June financial year, this means the deadline is generally 14 November each year.
Again, non-compliance attracts a civil penalty of 600 penalty units.
If your annual disclosure document update process does not already include a review of the Register, it should.
The New Franchising Code Means More Information Is Public
The Register has become even more important under the new Franchising Code.
Amongst other things, franchisors are now required to disclose additional information regarding whether:
- a director, associate or director of an associate has been convicted of certain serious offences;
- a director or associate has been subject to specified civil judgments;
- a director or associate has experienced bankruptcy or insolvency events within the relevant period; and
- the franchise agreement provides for arbitration of disputes.
The policy direction is clear.
Regulators want prospective franchisees to have access to more information before making investment decisions.
As a result, the Register is becoming an increasingly significant source of information about franchise systems and the people behind them.
The ACCC Is Paying Attention
Historically, some franchisors treated Register compliance as an administrative task of relatively low importance.
Recent enforcement activity suggests that approach is becoming increasingly risky.
Recently, a Harvey Norman franchisor paid a penalty for allegedly failing to include mandatory information on the Register at least 14 days before entering into a franchise agreement with a prospective franchisee.
According to the ACCC, this conduct breached section 92 of the Franchising Code.
In announcing the infringement notice, ACCC Deputy Chair Catriona Lowe stated:
“Entering a franchise agreement is a significant financial decision and the register contains important information to inform this decision. Franchisees should be able to rely on the fact that all relevant information has been disclosed on the register.”
More importantly, she also warned:
“The franchising sector should be on notice that failure to comply with the Franchising Code of Conduct may result in enforcement action by the ACCC.”
The ACCC appears to be following through on that warning.
Recently, both Cash Converters Pty Ltd and Mobile Travel Agents Pty Ltd reportedly paid penalties for allegedly failing to comply with the annual update obligations contained in section 93.
Whilst those penalties were relatively modest, they demonstrate a willingness by the ACCC to pursue technical compliance failures that many franchisors may previously have regarded as low risk.
More broadly, franchisors should remember that disclosure compliance remains a key regulatory focus. Recent years have seen increasingly significant penalties imposed on franchisors for failures to comply with the Franchising Code and related compliance obligations.
The days of treating disclosure compliance as a purely administrative exercise are well and truly over.
Practical Tips for Franchisors
As part of your annual compliance review, franchisors should ensure:
- their Franchise Disclosure Register entry has been reviewed;
- annual update deadlines have been diarised;
- Register information aligns with the current disclosure document;
- contact details remain accurate;
- any new disclosure requirements under the current Code have been addressed;
- responsibility for maintaining the Register has been clearly allocated internally; and
- the Register is periodically reviewed as part of competitor benchmarking exercises.
Many franchisors already devote significant resources to monitoring competitors. The Register provides a free and publicly available source of information that should form part of that process.
Final Thoughts
The Franchise Disclosure Register is often viewed as a compliance obligation aimed exclusively at prospective franchisees.
That view misses a significant opportunity.
The Register has become one of the most transparent sources of information about Australian franchise systems ever created. Prospective franchisees are using it. Competitors are using it. Increasingly, the ACCC is scrutinising it.
For franchisors, the lesson is simple.
Treat the Register as both a compliance obligation and a strategic asset.
Review your competitors. Benchmark your system. Understand how your franchise offering compares in the market. Ensure your information is accurate and up to date.
And most importantly, do not assume that because the Register has been around for a few years, the regulator has lost interest.
Recent enforcement activity suggests exactly the opposite.