The pre-signing capex conversation (s47): how to run it and prove it happened

• The discussion covers spending disclosed under s20(4) and items 14(1A) and 14(1B), which disclosure documents created from 1 November 2025 must include.
• It must happen before a new agreement, a renewal, or an extension of the term or scope.
• It must deal with the franchisee's own geographical area, not a network average.
• The Code sets no format and requires no signed record, but without notes you'll struggle to show it happened if the ACCC or a franchisee asks.
• It runs alongside the 14-day consideration period and the s26 and s27 statements, and all of them must be complete before you sign.

Section 47 only requires the discussion to happen before you enter into, renew or extend. This sequence keeps it useful to the franchisee and avoids restarting the 14-day clock by accident.

1. The prospective franchisee formally applies or expresses interest, and you give them the ACCC's information statement within 7 days (s22).
2. You give the disclosure document, including the item 14 capex disclosure, a copy of the Code and the agreement in the form it will be signed. The 14-day consideration period starts (s23).
3. Hold the s47 discussion once they've had time to read the disclosure document, and early enough in the 14 days for them to take your answers to their advisers.
4. If the discussion leads to a change in the agreement, give them the changed agreement. Unless it's a minor change listed in s23(7), such as one they asked for, the 14 days restart (s23(6)(b)).
5. If you give earnings information during or after the discussion, such as projected sales for their site, the 14 days restart from that day (s23(6)(c)).
6. Collect the s26 statement and, for a new agreement, the three s27 advice statements.
7. Sign only once the consideration period has ended and the discussion has happened.

Send the agenda in advance so the franchisee can bring their advisers' questions.

1. Confirm the date of the disclosure document and walk through each capex item in item 14(1B): nature, rationale, amount or range, timing or trigger, benefits and risks.
2. Say which items are certain and which are only possible, and what would trigger the possible ones.
3. Explain how you expect each item to be funded: by the franchisee directly, from a specific purpose fund, or with finance.
4. Discuss the franchisee's area: comparable local sites, catchment, competition from businesses not associated with you (item 9(2)(f)), local rent and wage costs, and any landlord refurbishment clauses.
5. Explain the circumstances in which you consider the spending is likely to be recouped, such as how long that typically takes and the turnover it assumes, and what could stop it happening.
6. Compare that timing with the remaining term and any renewal option, and link it to your s44 obligation to give a reasonable opportunity to make a return.
7. Say whether you'll consider the spending in end-of-term arrangements (item 18(1)(g)), and how you've treated franchisees' spending over the last 3 financial years (item 18(2)).
8. Invite questions, note the answers, and agree when you'll send a written summary.

• Send a written agenda beforehand that names the disclosure document by date and lists the capex items to be covered.
• Record the date, time, format (in person, phone or video), who attended and how long it ran.
• Take minutes that cover each capex item and the area-specific points about recouping it, not just 'capex discussed'.
• Email the minutes to the franchisee, invite corrections and keep their reply.
• File any payback workings or local data you relied on. Documents that support statements in the disclosure document must be kept for at least 6 years after it was last given (s37(2)).
• Keep anything the franchisee gives you in writing under the Code, and every document you give them under it, for at least 6 years (s37(1) and (3)).
• Store it all in the deal file with the receipt form, the s26 and s27 statements and the consideration period dates.
• Be ready to produce it: the ACCC can require a franchisor to give it records the Code requires it to keep, within 21 days (Competition and Consumer Act s51ADD).

• Treating the disclosure document as the discussion. Section 47 requires a discussion; handing over a document isn't one.
• Using network averages. The Code asks about recouping the spending having regard to the franchisee's geographical area.
• Restarting the clock without noticing. New earnings information after the documents are given resets the 14 days (s23(6)(c)), and it must be given in or attached to the disclosure document (Schedule 1 item 20).
• Promising outcomes you can't support. Projections without a reasonable basis can be misleading under the Australian Consumer Law.
• Forgetting renewals and extensions. Section 47 applies to both, not only to new franchisees.
• Leaving it to a broker or recruiter without an agenda, so no one can show what was said.
• Holding it after signing, or skipping it because nothing seems to have changed.
• Requiring spending later that was never disclosed, which s60 prohibits unless one of its other routes applies.

• The franchisee's own trading history gives you real data for the area-specific discussion, so use it.
• Your end-of-term notice is due at least 6 months before expiry for terms of 6 months or more (s36), which leaves time for the disclosure document and the discussion.
• If you intend to extend, the notice must say the franchisee may request a disclosure document (s36(3)).
• The s27 advice statements don't apply to renewals or extensions, but the s26 statement does.
• Say whether you'll take account of capital spending the franchisee made in the current term (item 18(1)(g)), and how you've treated others' spending in the last 3 financial years (item 18(2)).
• For renewals and extensions from 1 November 2025, s44 applies too, so spending required in the new term needs a fair chance of being recouped within it.

• The disclosure document answers item 14(1A) and, where relevant, gives the item 14(1B) details.
• A written agenda went to the franchisee before the meeting.
• The discussion covered each item and the franchisee's own area.
• Any earnings information given was logged, and the 14-day period recalculated.
• Minutes went to the franchisee, and their reply or corrections are on file.
• All records are in the deal file and kept for at least 6 years.
• No agreement, renewal or extension was signed before the discussion.