As you are aware the current Franchising Code of Conduct is coming to an end and a New Franchising Code of Conduct will take effect from 1 April 2025.
Section 63(1) is a new prohibition on franchisors disclosing personal contact information about former franchisees in their Disclosure Documents unless:
- at least 14 days before disclosing the information to a prospective franchisee, you have advised each former franchisee that they may request that their information not be disclosed; and
- they have not made such a request.
This provision applies to Disclosure Documents given on or after 1 April 2025 if they contain personal information about former franchisees. Personal information is the franchisee’s contact details – name, location, telephone number and email details
What you need to do
- You should determine which former franchisees have left the network in the last 3 financial years and have already made a written request for their personal information not to be disclosed in your Disclosure Document and those who have not made such a request.
- You must write to/email all former franchisees that have left the network in the last 3 financial years who have not made a written request that their personal information not be disclosed in your Disclosure Document, and notify such former franchisees that they can make that written request.
- Develop a template form of notice to enable franchisees to make a written request as to whether their personal information is to be disclosed in your Disclosure Document. We recommend that the template form of notice be included in the notice/email sent to former franchisees to enable franchisees to easily make the written request if they wish to.
- You must allow for a period of at least 14 days from the time you write to/email former franchisees before you disclose their personal information in your Disclosure Document. This means that you must write/email former franchisees by 17 March 2025 if you wish to issue a Disclosure Document or otherwise disclose a former franchisee’s details on 1 April 2025.
- You must retain a copy of notice/email sent to each franchisee and any written requests made by former franchisees for at least 6 years.
Please also note you must not engage in conduct that may influence a former franchisee to make or not make a request for their personal information details to be disclosed in your Disclosure Document. It is purely voluntary for them to make that request. Your obligation is to merely tell former franchisees that they can make a written request. Noncompliance may attract a penalty of 600 penalty units (currently $198,0000) per offence (i.e. for each former franchisee).
Process Changes
- Your internal procedures should ensure that any franchisee leaving the network is notified of their right to make a written request.
- Draft a template form to send franchisee leaving the network so that they can make a request as to whether their personal information is to be disclosed.
- This template should be provided with any consent to transfer a franchise and any agreement for the surrender or termination of a franchise agreement.
- For non-consensual mutual terminations, such as when a termination notice is issued the termination notice should include the notice required under section 63(1) of the Franchising Code of Conduct that the former franchisee may give a written request that the former franchisee’s personal information not be disclosed to a prospective franchisee.
- On and after 1 April 2025 you must disclose at Item 6.4/6.5 of your Disclosure Document the name, location, telephone number and email address of former franchisees (who left the network in last 3 financial years) unless they have made a written request that their details not be disclosed, provided you’ve given the notice/form and complied with section 63(1). We recommend that a report be maintained for this purpose.
Next Steps
MST Lawyer’s Franchising Team can assist you with drafting the communication to franchisees, notice template notice/form for franchisees to complete and sign and developing or adapting your processes. Please contact us at franchisinginstructions@mst.com.au should you require our assistance noting the 17 March 2025 deadline.
To arrange a consult with our experienced Franchising team please contact:
Raynia Theodore: raynia.theodore@mst.com.au
Louise Wolf: louise.wolf@mst.com.au
Esther Gutnick: esther.gutnick@mst.com.au
What is Section 63 (1)
Section 63(1) of the Franchising Code of Conduct in Australia essentially states that a franchisor cannot disclose a former franchisee’s personal information to a prospective franchisee unless they have first informed the former franchisee in writing, at least 14 days prior, that they have the right to request that their information not be disclosed; and the former franchisee has not made such a request.
- Protects former franchisee privacy:
This section aims to protect the privacy of former franchisees by giving them control over whether their personal details can be shared with potential new franchisees.
- Written notification required:
A franchisor must send a written notification to a former franchisee before disclosing their details, informing them of their right to opt out.
- 14-day timeframe:The notification must be given at least 14 days before any disclosure of personal information.
