ONE of the main criticisms of the franchising code of conduct is the cost of providing disclosure documents.
Australian Competition and Consumer Commission small business officer Siobhan O’Gara said there is a requirement to provide a disclosure document to all franchisees, regardless of when they entered into their franchising arrangement, once every 12 months.
“However, the Office of Small Business, part of Peter Reith’s department, and the ACCC have developed a compliance manual,” she said.
“It contains a hard copy and a disk, which provides franchisors with a standard disclosure document, and they fill in their own details.
“Once you’ve got that on computer, it only has to be updated once a year, when new financial figures are available, or when any change in material facts occurs — including a change of directors or the fact that the franchisor’s company has been sold.
“A franchisee can only request a disclosure document once every 12 months. Most of the information that is required is information that franchisors should have readily available to them through their records.
“Naturally, the first disclosure document will be time consuming, but it’s not necessary for franchisors to engage a solicitor. They can do it using the compliance manual.”
There are two disclosure documents in the new code: Annexure 1, which is very detailed, must be completed by the franchisor.
Annexure 2 is less detailed and must be supplied by a franchisee who is transferring or selling the franchise business to an incoming franchisee.
