What is a Deed of Prior Representations in Franchising?

Amongst the big bundle of documents franchisees typically receive to sign is a document titled a deed of prior representations. These documents are sometimes called warranty schedules or certificates as to other statements. Whatever they are titled, they serve the same purpose and effect. Franchisees must understand what these documents entail and what considerations are crucial when signing them alongside the franchise agreement. Notably, franchisees should be aware of the legal effect once the deed of prior representations is signed.

What is a Deed of Prior Representations?

A deed of prior representations records any warranties or representations the franchisee relies on when entering into the franchise agreement that are not documented in the franchise agreement itself. Many franchisees underestimate the importance of this deed and its potential impact on their future dealings. Franchisees should meticulously consider any assurances or representations made during pre-contract discussions with the franchisor’s representatives or in provided materials. If a promise or representation motivated the franchisee to enter into the franchise agreement but is not recorded in the agreement itself, it should be documented in this deed. If not, signing the deed of prior representations typically implies that no such assurances or promises were relied upon.

What Sorts of Things are Recorded in the Deed of Prior Representations? 

There are no rules as to what can or needs to be recorded in such a deed. The purpose is to record any representation or warranty relied upon but not forming part of the franchise agreement. 

The sorts of things we typically advise our clients to record in a deed of prior representations include: 

  1. assurances as to financial performance of the network; 
  2. reference to specific financial data provided by the franchisor and relied upon by the franchisee; 
  3. promises as to the number of referrals or leads to be provided; and
  4. any promised first right of refusal with respect to additional franchises. 

Why Do Franchisors Require Franchisees to Sign a Deed of Prior Representations?

Franchisors likely use deeds of prior representations to mitigate the risk of claims of misleading and deceptive conduct under the Australian Consumer Law or common law  misrepresentation. Many franchisors face claims that pre-contract promises or assurances, which the franchisee relied upon when entering the franchise agreement, turned out to be false or unfounded. If such claims succeed, franchisors could incur significant financial penalties and damages. If a franchisee brings forth such a claim but did not document the relevant representation in the deed when entering the franchise agreement, the franchisor may present the deed as evidence that either the representation was not made or was not actually relied upon by the franchisee.

What is the Legal Effect of a Deed of Prior Representations?

Generally, parties cannot ‘contract out of the law,’. This is pertinent when considering the legal effect of a deed of prior representations. Court cases have shown that claims of misleading and deceptive conduct against franchisors can still be successful even if a deed of prior representations was signed and the relevant representation was not recorded therein. For instance, in a recent Federal Court decision, the court found the franchisor engaged in misleading and deceptive conduct despite some franchisees signing a Prior Representations Deed. While the Deed was part of the evidence, it was not conclusive, and the court had to determine reliance based on all presented evidence.

Key Takeaways

  • Purpose and Importance –  Franchisees should carefully document any extra warranties or representations not included in the franchise agreement in the deed of prior representations.
  • Protection for Franchisors – Franchisors use these deeds to protect against claims of misleading conduct by showing that no unrecorded representations were made or relied upon.
  • Legal Limitations – Despite these deeds, franchisees can still pursue claims of misleading conduct, as courts consider the deed alongside all other evidence. Franchisees should consult with a franchise lawyer to understand the implications fully.


Disclaimer: This article contains general information only and does not constitute legal advice. Magnolia Legal disclaims any liability arising from reliance on this article. Our terms of use apply