Disclosure Documents sit at the heart of Australia’s franchise compliance regime. They are highly prescriptive and must comply with both the form and content requirements set out in the Franchising Code of Conduct (the Code).
The Code leaves very little room for creative interpretation—especially in section 20(3), which mandates that information must:
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Be set out in the form and order of Schedule 1
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Use the headings and numbering of Schedule 1
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Include updates under the correct heading if applicable
Even if certain items in Schedule 1 are not applicable, the franchisor still has to list those headings and numbering—either within the Disclosure Document itself or as an attachment. There are also other strict requirements: stating whether significant capital expenditure will be required, giving as much detail as practicable (including rationale, costs, timing, benefits, and risks), ensuring the document is signed by the franchisor (or authorised signatory), and including a table of contents matching Schedule 1 with page numbers and any attachments.
Section 20(3) Snapshot – Key Requirements
A Disclosure Document must either:
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Follow Schedule 1 form and order in full (including all headings and numbering), or
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For non-applicable items, list the headings and numbering in an attachment
It must also:
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State whether significant capital expenditure will be required, with full details if so
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Be signed by the franchisor or an authorised person
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Include a table of contents matching Schedule 1, including any attachments
Any inconsistency with Schedule 1 is, technically speaking, a breach of the Code.
Why Even Small Errors Matter
If there’s an error—whether it’s a missing heading, an outdated figure, a typo in financial details, or a mismatch with the franchise agreement—it’s not just a box-ticking problem. The consequences can include:
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Code non-compliance – The immediate regulatory breach
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Misleading conduct risk – If the error creates a false impression or omits key information, it could breach the Australian Consumer Law
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Contract inconsistency – If the Disclosure Document conflicts with your franchise agreement, it can lead to disputes or claims for misrepresentation
Considering Whether to Inform Parties and Seek Legal Advice
When an error is discovered, one of the first questions is whether affected parties—such as prospective franchisees who have already received the Disclosure Document—should be informed. In many cases, this will be the prudent course of action, especially if the error is material or could mislead.
Before making this decision, franchisors should obtain legal advice. This ensures that:
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The nature and severity of the error is properly assessed
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Communications to franchisees are accurate and carefully worded
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Any corrective action doesn’t inadvertently create new liabilities
Being proactive and transparent, while taking advice to manage potential legal exposure, is often the best way to preserve both compliance and trust.
Practical Steps to Remedy an Error
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Confirm the extent of the error – Is it purely technical or substantive?
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Correct the document – Ensure it strictly complies with Schedule 1 and section 20(3)
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Consider the impact on prospects – Provide an updated version where appropriate
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Check for related inconsistencies – Review the franchise agreement, marketing material, and your Franchising Disclosure Register profile
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Document your actions – Keep a clear record of discovery, correction, and notifications sent
Our View
Mistakes happen. What matters is what you do next. Swiftly identifying and remedying an error not only restores Code compliance—it also helps avoid a more damaging allegation of misleading conduct. If the error is purely technical, fix it promptly and reissue where necessary. If it’s substantive, take legal advice, be upfront with franchisees or prospects, and ensure any inconsistencies with the franchise agreement are clarified. Transparency and speed are your best tools for minimising damage and protecting your credibility.