The Australian Government has published draft amendments to the Franchising Code of Conduct to support the establishment and operation of the Franchise Disclosure Register.
The amendments proceed from the 2021-22 budget commitment of $4.3 million for a new Franchise Disclosure Register, aiding prospective franchisees in making informed decisions before entering a franchise agreement.
Stuart Robert, Federal Minister for Employment, stated that the release of the planned amendments builds upon reforms to the Franchising Code of Conduct that took effect on 1st July 2021.
“The franchising sector makes a valuable contribution to the Australian economy, and the Morrison government is committed to supporting the sector through increased transparency and accountability,” said Stuart Robert.
Under the planned reforms, the register will be publicly available and free to access. Franchisors are required to upload and publish information on the register by 31st October 2022, supporting franchisees in undertaking due diligence and making informed business decisions.
The exposure draft legislation, explanatory statement, and a supporting guide are available on the Treasury website. Interested parties are invited to review the draft amendments and provide submissions to franchisedisclosureregistry@treasury.gov.au by 29th October 2021.
Things to Do Before Purchasing A Franchise
Before purchasing a franchise, it’s crucial to do your due diligence. Research the franchise system, understand the market, and consider issues specific to franchises, such as the consequences of franchise or franchisor failure.
Don’t rush into signing a franchise agreement. Take your time to understand new information and documents, and get advice if needed. Walking away is an option if you feel rushed by the franchisor.
Talk to other franchisees to gain insights into franchising as a career. Inquire about their experiences, pros and cons, and any hidden costs. Be mindful that some franchisees may not openly discuss their struggles due to ego.
Here are some questions to ask other franchisees:
- What did they learn about franchising that wasn’t apparent from their initial research?
- How long did it take to become profitable?
- Budget expectations versus actual spending.
- The toughest part of building the business.
- Supportiveness of the franchise headquarters.
- Challenges in hiring good staff.
- Would they recommend the franchise to a family member or friend based on their experience?
Consider getting professional help and advice. Hiring an accountant and a legal expert can be crucial in navigating your journey as a franchisee. They can assist in reviewing your financial health and legal aspects of the franchise arrangement before you sign the contract.
Want to start your franchising business? Download our free ebook now!
