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When a Franchisor isn't required to update a Disclosure Document

Posted on 20 November 2014

Our review of the changes to the Franchising Code of Conduct continues today looking at when franchisor will not be required to update a disclosure document.

The standard rule is that a disclosure document must be updated within 4 months of the end of financial year.

However, after 1 January, 2015 a franchisor is relieved of the obligation to update its disclosure document if:

1. the franchisor entered into or 1 or no franchise agreements during the year; and

2. the franchisor does not intend to enter into another franchise agreement in the following year.

Presumably this wil mean franchisors who are winding up a franchise or who have reached the maximum number of franchises they intend to grant.

But it may not be all smooth sailing.  If a current franchisee requests a copy of the current disclosure document, the franchisor will have to prepare one and give it to that franchisee but, in those circumstances they will have 2 months to comply with the request (as opposed to 14 days which is the normal time limit).

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