Compliance & disputes

Materially relevant facts

Materially relevant facts are significant matters, such as litigation, insolvency or changes in ownership, that a franchisor must disclose to a prospective or current franchisee, and must update promptly rather than waiting for the next annual disclosure cycle.

What it means

The Franchising Code lists categories of information a franchisor must disclose because they could reasonably affect a person's decision to buy or stay in a franchise. These include current or recent legal proceedings, judgments against the franchisor, insolvency events, and material changes to the business or its ownership.

The key feature is timeliness. A franchisor cannot sit on important new information until it refreshes its disclosure document each year. Under the 2025 Code, materially relevant facts that arise between preparing the disclosure document and actually giving it to a prospective franchisee must be included, so the franchisee receives up-to-date information.

For existing franchisees, the franchisor must notify them of certain materially relevant facts within a short period of the franchisor becoming aware of them. This keeps franchisees informed of events, such as the franchisor facing insolvency, that directly affect the value and risk of their business.

In practice

When you receive a disclosure document, check its date and ask directly whether anything material has changed since it was prepared, especially litigation, financial distress, or a pending sale of the franchisor. The obligation to disclose up-to-date material facts means a franchisor should be able to answer clearly.

For franchisors, the safest approach is a running log of potential materially relevant facts and a process to push updates to prospects and existing franchisees promptly. Failing to disclose material facts is treated as a serious breach and is an area the ACCC has flagged for enforcement.

A real example

A franchisor prepared its annual disclosure document in October. In December, before handing it to a new prospect, it is served with a class action from existing franchisees. Under the 2025 Code the franchisor must update the disclosure to include that litigation before giving it to the prospect, so the prospect can weigh that risk before committing.

Materially relevant facts — FAQs

What counts as materially relevant?

Broadly, information that could reasonably influence a decision to enter or remain in the franchise, such as legal proceedings, judgments, insolvency events, and significant changes in ownership or the business.

How quickly must a franchisor tell me?

Promptly. New material facts must be included before a disclosure document is handed to a prospect, and existing franchisees must be told within a short period set by the Code, not at the next annual update.

What if a franchisor hides a material fact?

Failing to disclose material facts is a serious Code breach that can expose the franchisor to significant civil penalties and may give the franchisee grounds to unwind or challenge the agreement.

Does this apply after I have already signed?

Yes. The obligation to keep franchisees informed of certain materially relevant facts continues during the relationship, not just before signing.

See the full franchise glossary, the Fee Index or our buyer guides.