The Franchise Disclosure Document explained

It exists to fix an imbalance: the franchisor knows everything about the system and you know almost nothing. The document forces the material facts onto the table before your money is committed. Treat it as evidence to test, not a brochure to admire.

The Code gives you a consideration period of at least 14 days: the franchisor can't sign the agreement until 14 days after you receive the disclosure document, the proposed franchise agreement and a copy of the Code, and any payment you make in that time must be refunded within 14 days if you ask in writing. For a first-time buyer the period can't be waived, and a franchisor cannot rush you through it.

Separately, after you sign you have a 14-day cooling-off period during which you can terminate and have your money returned, less the franchisor's reasonable expenses. The disclosure period is your time to investigate; cooling-off is your safety net if something changes your mind.

The disclosure document runs to many items. These are the ones that most often decide whether a franchise is a good deal:

• Establishment costs and fees: the initial fee, fit-out, equipment, working capital, plus ongoing royalty and marketing levy. Add them up as an all-in figure, not the headline fee.
• The franchisor's financial position: a solvency statement and, in many cases, financial reports. A franchisor in distress is a risk to every franchisee under it.
• Existing and former franchisees: names and contact details, and how many left, were terminated or were bought back in recent years. High churn is a red flag no marketing can hide.
• Territory: whether your territory is exclusive, and whether the franchisor can open other outlets or sell online into your area.
• Litigation and offences: current proceedings, and any relevant convictions or judgments.
• Marketing fund: how the levy is spent and whether accounts are provided.
• Supply restrictions and rebates: whether you must buy from set suppliers, and whether the franchisor earns rebates on what you buy.
• End of term: what happens when the agreement ends, including any restraint of trade and whether you are compensated for goodwill.

Since 2022, franchisors must also publish key information on the ACCC Franchise Disclosure Register. The Register is a useful first screen: it lets you compare systems and see high-level cost, network and contact information for free, before you ever contact the franchisor.

But the Register is self-reported by franchisors and is not independently verified by the ACCC, and it is a summary. The full disclosure document you receive during the 14-day period is the authoritative record, and it contains detail the Register does not. Use the Register to shortlist and the disclosure document to decide.

• Churn: more franchisees leaving than joining, or repeated terminations and buy-backs.
• A non-exclusive territory the franchisor can crowd, or unrestricted online sales into your area.
• Vague or missing marketing-fund accounts.
• Heavy supplier restrictions combined with franchisor rebates on your purchases.
• A restraint of trade at the end of term with no goodwill compensation.
• Any pressure to sign before the 14 days is up.

1. Read it in full, twice. The second read is where the questions surface.
2. Have an accountant model the all-in cost and the cash you need before the site is profitable.
3. Have a franchise lawyer review the agreement and the document together.
4. Call at least three current and two former franchisees from the list, ask them what they wish they had known.
5. Check the franchisor's Register entry and confirm the figures match the document; ask about any difference.

The disclosure document is not a formality to sign past. It is the best-quality information you will ever get about the system, handed to you at exactly the moment you still have the power to walk away.