Materially relevant facts: the 14-day notice rule with a $10 million penalty tier

• The notice must be in writing and go to both franchisees and prospective franchisees (s34(2)).
• For proceedings, judgments and group claims, it must give the parties' names, the court or tribunal, the case number and the general nature of the proceedings (s34(4)).
• New item 21 solvency statements or financial documents must be given as soon as reasonably practicable, and to a prospect before they sign (s34(1)).
• Breaches sit in the Code's higher tier: for a company, the greatest of $10 million, 3 times the benefit or 10% of turnover; $500,000 for an individual (s17).
• That tier isn't new: the old Code has applied it to these obligations since 2022.

Each item needs a notice only if the disclosure document doesn't already mention the matter. The list reaches the franchisor, its directors, its associates and their directors.

1. A change in majority ownership or control of the franchisor, an associate of the franchisor, or the franchise system (s34(3)(a)).
2. Proceedings by a public agency, a judgment in criminal or civil proceedings, or an arbitration award in Australia against the franchisor, a franchisor director, an associate or an associate's director, alleging breach of a franchise agreement, a contravention of the Competition and Consumer Act or the Corporations Act, unconscionable conduct, misconduct, an offence of dishonesty, or a contravention of s558B(1) or (2) of the Fair Work Act (s34(3)(b)).
3. Civil proceedings in Australia against any of those people by at least 10% of your Australian franchisees, or 10 of them if that is lower (s34(3)(c)).
4. A judgment against the franchisor or an associate in Australia, not discharged within 28 days, of at least $100,000 for a small proprietary company or $1,000,000 for any other company (s34(3)(d)).
5. Any judgment against the franchisor or an associate in a matter listed in item 4 of Schedule 1, the litigation item (s34(3)(e)).
6. The franchisor or an associate becoming a Chapter 5 body corporate, meaning externally administered. The notice must give the name and address of the administrator, controller, liquidator or restructuring practitioner (s34(3)(f) and (5)).
7. A change in the intellectual property, or its ownership or control, that is material to the franchise system (s34(3)(g)).
8. The existence and content of any court-enforceable undertaking the franchisor or an associate gives the ACCC under s87B of the Competition and Consumer Act, and any Federal Court order made about it (s34(3)(h)).

• 10% or 10 franchisees: with 60 Australian franchisees, 10% is 6, which is lower than 10, so proceedings by 6 franchisees trigger a notice. With 250 franchisees, 10% is 25, so the lower figure of 10 applies.
• Unpaid judgments: a $120,000 judgment against a franchisor that is a small proprietary company, not discharged within 28 days, triggers a notice. Against a larger company, it does so only if it reaches $1,000,000 or concerns an item 4 matter, such as a breach of a franchise agreement.
• Associates count: ASIC proceedings alleging a Corporations Act contravention against a director of a related company that supplies your franchisees can trigger a notice, because the list extends to associates and their directors.
• Ownership: selling 51% of the franchisor's shares to a new investor is a change in majority ownership. A new chief executive, on their own, isn't on the list.
• Already disclosed: if the current disclosure document already mentions the matter, s34(2) doesn't require a separate notice, but item 22 must show any s34 information that has changed when you next give the document.

1. Day 0 is when the franchisor becomes aware. Set up monitoring so legal, finance, company secretarial and brand teams report triggers the day they happen.
2. Check whether the current disclosure document already mentions the matter; s34(2) applies only if it doesn't.
3. Draft the written notice. For proceedings, judgments and group claims, include the parties' names, the court or tribunal, the case number and the general nature of the proceedings (s34(4)).
4. For external administration, include the name and address of the administrator, controller, liquidator or restructuring practitioner (s34(5)).
5. Get a quick legal review, then send it to every franchisee and every prospective franchisee in your pipeline within a reasonable time, and no later than day 14.
6. Record how and when each notice was sent, and keep the records for at least 6 years (s37(3)).
7. Show the change under item 22 whenever you give the disclosure document before the next annual update, then build it into that update.
8. At your next Register confirmation (s93), check whether answers such as insolvency or civil judgments need updating.

• It applies when a solvency statement or declaration under item 21 is made, or an item 21 document comes into existence, such as new financial reports or an audit, and it isn't in the updated disclosure document.
• You must give franchisees and prospective franchisees a copy as soon as reasonably practicable.
• For a prospective franchisee, you must give it before they enter into the agreement.
• It sits in the same higher penalty tier as s34(2).
• The ACCC's model disclosure document guidance warns that giving a prospect outdated financial details risks penalties, so send new year-end documents to your pipeline as soon as they're signed.

• For a company, the greatest of $10 million; 3 times the value of the benefit reasonably attributable to the contravention, if a court can work it out; or, if it can't, 10% of adjusted turnover for the 12 months ending at the end of the month of the contravention (s17).
• For an individual, up to $500,000 per contravention.
• The same tier applies only to s34(1) and (2), s45 and s46 (new car dealerships) and s64 (franchisee associations). Most other obligations are capped at 600 penalty units, $218,400 from 1 July 2026.
• The ACCC's model disclosure document guidance notes it can also issue infringement notices for these continuous disclosure obligations.
• The ACCC's tools also include administrative resolution, court-enforceable undertakings and court action.

• Waiting for a final outcome. Proceedings by a public agency, and group proceedings by franchisees, are triggers when they're brought, not only when they're decided.
• Telling prospects but not existing franchisees, or the reverse.
• Forgetting associates and the directors of associates.
• Giving a verbal briefing. The notice must be in writing.
• Counting business days. Plan on 14 calendar days from when you become aware.
• Missing the lower $100,000 threshold that applies to small proprietary companies.
• Not updating item 22 before giving the disclosure document to the next prospect.

• The eight s34(3) triggers are on the board agenda and in the risk register.
• Legal, finance and company secretarial teams know to report a trigger the same day.
• A notice template covers the details s34(4) and (5) require.
• The distribution list includes every franchisee and every current prospect.
• Item 22 and the next annual update pick up each change.
• New item 21 documents go to the pipeline before anyone signs.