A mediation adviser is to be appointed for this Part by the Minister.

A franchise agreement entered into on or after 1 October 1998 must provide for a complaint handling procedure that complies with clauses 29 and 30.

A party to a franchise agreement who has a dispute with another party to the franchise agreement may start the procedure under clause 29.

A party to a franchise agreement who has a dispute with another party to the franchise agreement may, at any time, choose to use the procedure under clause 26 or 27.

(1)

The complainant must tell the respondent in writing:

(a)

the nature of the dispute; and

(b)

what outcome the complainant wants; and

(c)

what action the complainant thinks will settle the dispute.

(2)

The parties should then try to agree about how to resolve the dispute.

(3)

For mediation under a franchise agreement:

(a)

if the parties cannot agree under subclause (2) within 3 weeks, either party may refer the matter to a mediator; and

(b)

if the parties cannot agree about who should be the mediator, either party may ask the mediation adviser to appoint a mediator.

(4)

For mediation under this code, either party may ask the mediation adviser to appoint a mediator.

(5)

Subject to subclause (5A), the mediator may decide the time and place for mediation.

(5A)

Mediation under this code must be conducted in Australia.

(6)

The parties must attend the mediation and try to resolve the dispute.

(7)

For subclause (6), a party is taken to attend mediation if the party is represented at the mediation by a person who has the authority to enter an agreement to settle the dispute on behalf of the party.

(1)

The mediation adviser must, within 14 days after referral under paragraph 29 (3) (b) or subclause 29 (4), appoint a mediator for the dispute.

(2)

After mediation under this code has started, the mediator must tell the mediation adviser, within 28 days, that mediation has started.

(1)

This clause applies if:

(a)

at least 30 days have elapsed after the start of mediation of a dispute; and

(b)

the dispute has not been resolved.

(2)

If either party asks the mediator to terminate the mediation, the mediator must do so.

(3)

Subject to subclause (2), the mediator may terminate the mediation at any time unless satisfied that a resolution of the dispute is imminent.

(4)

If the mediator terminates the mediation of a dispute under this clause, the mediator must issue a certificate stating:

(a)

the names of the parties; and

(b)

the nature of the dispute; and

(c)

that the mediation has finished; and

(d)

that the dispute has not been resolved.

(5)

The mediator must give a copy of the certificate to:

(a)

the mediation adviser; and

(b)

each of the parties to the dispute.

(1)

This Part does not affect the right of a party to a franchise agreement to take legal proceedings under the franchise agreement.

(2)

The parties are equally liable for the costs of mediation under this Part unless they agree otherwise.

(3)

The parties must pay for their own costs of attending the mediation.

1.1 On the first page:

(a)

in bold upper case:

DISCLOSURE DOCUMENT FOR FRANCHISEE OR PROSPECTIVE FRANCHISEE; and

(b)

the franchisor's name, ABN, ACN or ARBN, business address and phone number; and

(ba)

the signature of the franchisor, or of a director, officer or authorised agent of the franchisor; and

(c) the preparation date of the disclosure document; and

(d)

the following statement:

This disclosure document contains some of the information you need in order to make an informed decision about whether to enter into a franchise agreement.

Entering into a franchise agreement is a serious undertaking.

A franchise agreement is legally binding on you if you sign it.

You are entitled to a waiting period of 14 days before you enter into this agreement.

If this is a new franchise agreement (not a renewal, extension or transfer) of an agreement, you will be entitled to a 7 day `cooling off' period after signing the agreement, during which you may terminate the agreement without cost.

Take your time, read all the documents carefully, talk to other franchisees and assess your own financial resources and capabilities to deal with the requirements of the franchised business.

You should make your own enquiries about the franchise and about the business of the franchise.

You should get independent legal, accounting and business advice before signing the franchise agreement.

It is often prudent to prepare a business plan and projections for profit and cash flow.

You should also consider educational courses, particularly if you have not operated a business before.

2.1 The franchisor's name, ABN, ACN or ARBN, address of registered office and principal place of business in Australia.

2.2 The name under which the franchisor carries on business in Australia relevant to the franchise.

2.3 A description of the kind of business operated under the franchise.

2.4 The name, ABN, ACN or ARBN, address of registered office and principal place of business of each associate of the franchisor that is a body corporate (if any).

2.5 The name and address of each associate of the franchisor that is not a body corporate (if any).

2.6 For each director, secretary, executive officer, or partner of the franchisor who is likely to have management responsibilities for the franchisor's business operations in relation to the franchise — name, position held and qualifications (if any).

3.1 A summary of the relevant business experience in the last 10 years of each person, other than an executive officer, mentioned in item 2.6.

3.2 A summary of relevant business experience of the franchisor in the last 10 years, including:

(a)

length of experience in:

(i)

operating a business that is substantially the same as that of the franchise; and

(ii)

offering other franchises that are substantially the same as the franchise; and

(b)

whether the franchisor has offered franchises for other businesses and, if so:

(i)

a description of each such business; and

(ii)

for how long the franchisor offered franchises for each such business.

4.1 Details of:

(a)

current proceedings by a public agency, criminal or civil proceedings or arbitration, relevant to the franchise, against the franchisor in Australia alleging:

(i)

breach of a franchise agreement; or

(ii)

contravention of trade practices law; or

(iii)

contravention of the Corporations Law; or

(iv)

unconscionable conduct; or

(v)

misconduct; or

(vi)

an offence of dishonesty; and

(b)

proceedings against the franchisor under:

(i)

section 127A or 127B of the Workplace Relations Act 1996; or

(ii)

section 106 of the Industrial Relations Act 1996 of New South Wales; or

(iii)

section 276 of the Industrial Relations Act 1999 of Queensland.

4.2 Whether the franchisor or a director of the franchisor has been:

(a)

in the last 10 years — convicted of a serious offence, or an equivalent offence outside Australia; or

(b)

in the last 5 years — subject to final judgment in civil proceedings for a matter mentioned in paragraph 4.1 (a); or

(c)

in the last 10 years — bankrupt, insolvent under administration or an externally-administered body corporate in Australia or elsewhere.

4.3 For items 4.1 and 4.2 — the following details (where relevant):

(a)

the names of the parties to the proceedings;

(b)

the name of the court, tribunal or arbitrator;

(c)

the case number;

(d)

the general nature of the proceedings;

(e)

the current status of the proceedings;

(f)

the date of order or undertaking under section 87B of the Act;

(g)

the penalty or damages assessed or imposed;

(h)

the names of the persons who are bankrupt, insolvent under administration or externally administered;

(i)

the period of the bankruptcy, insolvency under administration or external administration.

5.1 For any agreement under which the franchisor must pay an amount, or give other valuable consideration, to a person who is not an officer, director or employee of the franchisor in connection with the introduction or recruitment of a franchisee — the name of the person.

6.1 Number, sorted by State, Territory or region, of:

(a)

existing franchised businesses; and

(b)

existing franchisees; and

(c)

businesses owned or operated by the franchisor in Australia that are substantially the same as the franchise.

6.2 For each existing franchisee:

(a)

business address, if this is not the franchisee's residential address; and

(b)

business phone number; and

(c)

year when the franchisee started operating the franchised business.

6.3 However, if there are more than 50 franchises, the franchisor may instead give details under item 6.2 for all franchisees in the State, region or metropolitan area in which the franchise is to be operated.

6.4 For each of the last 3 financial years and for each of the following events — the number of franchised businesses for which the event happened:

(a)

the franchise was transferred;

(b)

the franchised business ceased to operate;

(c)

the franchise agreement was terminated by the franchisor;

(d)

the franchise agreement was terminated by the franchisee;

(e)

the franchise agreement was not renewed when it expired;

(f)

the franchised business was bought back by the franchisor;

(g)

the franchise agreement was terminated and the franchised business was acquired by the franchisor.

Note   An event may be counted more than once if more than 1 paragraph applies to it.

6.5 The franchisor is taken to comply with item 6.4 if the franchisor supplies details as far as the franchisor is aware that relate to events that happened before 1 July 1998.

7.1 For any trade mark used to identify, and for any patent, design or copyright that is material to, the franchise system (intellectual property):

(a)

description of the intellectual property; and

(b)

details of the franchisee's rights and obligations in connection with the use of the intellectual property; and

(c)

whether the intellectual property is registered in Australia, and if so, the registration date, registration number and place of registration; and

(d)

any judgment or pending proceedings that could significantly affect ownership or use of the intellectual property, including:

(i)

name of court or tribunal; and

(ii)

matter number; and

(iii)

summary of the claim or judgment; and

(e)

if the intellectual property is not owned by the franchisor — who owns it; and

(f)

details of any agreement that significantly affects the franchisor's rights to use, or to give others the right to use, the intellectual property, including:

(i)

parties to the agreement; and

(ii)

nature and extent of any limitation; and

(iii)

duration of the agreement; and

(iv)

conditions under which the agreement may be terminated.

7.2 The franchisor is taken to comply with item 7.1 for any information that is confidential if the franchisor gives:

(a)

a general description of the subject matter; and

(b)

a summary of conditions for use by the franchisee.

8.1 Whether the franchise is:

(a)

for an exclusive or non-exclusive territory; or

(b)

limited to a particular site.

8.2 For the territory of the franchise:

(a)

whether other franchisees may operate a business that is substantially the same as the franchised business; and

(b)

whether the franchisor or an associate of the franchisor may operate a business that is substantially the same as the franchised business; and

(c)

whether the franchisor or an associate of the franchisor may establish other franchises that are substantially the same as the franchise; and

(d)

whether the franchisee may operate a business that is substantially the same as the franchised business outside the territory of the franchise; and

(e)

whether the franchisor may change the territory of the franchise.

9.1 For the franchisor's requirements for supply of goods or services to a franchisee — details of:

(a)

any requirement for the franchisee to maintain a level of inventory or acquire an amount of goods or services; and

(b)

restrictions on acquisition of goods or services by the franchisee from other sources; and

(c)

ownership by the franchisor or an associate of the franchisor of an interest in any supplier from which the franchisee may be required to acquire goods or services; and

(d)

the obligation of the franchisee to accept goods or services from the franchisor, or from an associate of the franchisor; and

(e)

the franchisor's obligation to supply goods or services to the franchisee; and

(f)

whether the franchisee will be offered the right to be supplied with the whole range of the goods or services of the franchise; and

(g)

conditions under which the franchisee can return goods, and to whom; and

(h)

conditions under which the franchisee can obtain a refund for services provided by the franchisor, and from whom; and

(i)

whether the franchisor may change the range of goods or services, and if so, to what extent; and

(j)

whether the franchisor, or an associate of the franchisor, will receive a rebate or other financial benefit from the supply of goods or services to franchisees, and whether any rebate or financial benefit is shared, directly or indirectly, with franchisees.

Note   Before a requirement is made under paragraph (b) or (c), the franchisor may notify, or seek authorisation from, the Australian Competition and Consumer Commission (see Act, Part VII).

10.1 For the franchisor's requirements for supply of goods or services by a franchisee — details of:

(a)

restrictions on the goods or services that the franchisee may supply; and

(b)

restrictions on the persons to whom the franchisee may supply goods or services; and

(c)

whether the franchisee must supply the whole range of the goods or services of the franchise.

Note   Before a requirement is made under paragraph (a) or (b), the franchisor may notify, or seek authorisation from, the Australian Competition and Consumer Commission (see Act, Part VII).

11.1 The policy of the franchisor, or an associate of the franchisor, for selection of as many of the following as are relevant:

(a)

the site to be occupied by the franchised business;

(b)

the territory in which the franchised business is to operate.

11.2 Details of whether the territory or site to be franchised has been subject to a franchised business operated by a previous franchise granted by the franchisor and, if so, details of the franchised business, including the circumstances in which the previous franchisee ceased to operate.

11.3 The details mentioned in item 11.2 may be in a separate document and may be made available for inspection at a time and place mentioned in the disclosure document.

12.1 For each marketing or other cooperative fund, controlled or administered by or for the franchisor, to which the franchisee may be required to contribute, the following details:

(a)

the kinds of persons who contribute to the fund (for example, franchisee, franchisor, outside supplier);

(b)

whether the franchisor must contribute to the fund in relation to businesses owned or operated by the franchisor that are substantially the same as the franchised business and, if so, whether the contribution is worked out in the same way as for a franchisee;

(c)

how much the franchisee must contribute to the fund and whether other franchisees must contribute at a different rate;

(d)

who controls or administers the fund;

(e)

whether the fund is audited and, if so, by whom and when;

(f)

whether the fund's financial statements can be inspected by, or will be given to, franchisees;

(g)

the kinds of expense for which the fund may be used;

(h)

the fund's expenses for the last financial year, including the percentage spent on production, advertising, administration and other stated expenses;

(i)

whether the franchisor or its associates supply goods or services for which the fund pays and, if so, details of the goods or services;

(j)

whether the franchisor must spend part of the fund on marketing, advertising or promoting the franchisee's business.

Note   Subclause 17 (3) of the Code deals with compliance by the franchisor with para 12.1 (h).

Prepayments

13.1 If the franchisor requires a payment before the franchise agreement is entered into — why the money is required, how the money is to be applied and who will hold the money.

13.2 The conditions under which a payment will be refunded.

Establishment costs

13.3 Details of the range of costs to start operating the franchised business, based on current practice, for the following matters:

(a)

real property, including property type, location and building size;

(b)

equipment, fixtures, other fixed assets, construction, remodelling, leasehold improvements and decorating costs;

(c)

inventory required to begin operation;

(d)

security deposits, utility deposits, business licences, insurance and other prepaid expenses;

(e)

additional funds, including working capital, required by the franchisee before operations begin;

(f)

other payments by a franchisee to begin operations.

13.4 For item 13.3, the details for each payment must include:

(a)

description of the payment; and

(b)

amount of the payment or the formula used to work out the payment; and

(c)

to whom the payment is made; and

(d)

when the payment is due; and

(e)

whether the payment is refundable and, if so, under what conditions.

13.5 For item 13.4, if the amount of the payment cannot easily be worked out — the upper and lower limits of the amount.

Other payments

13.6 For each recurring or isolated payment payable by the franchisee to the franchisor or an associate of the franchisor or to be collected by the franchisor or an associate of the franchisor for another person:

(a)

description of the payment; and

(b)

amount of the payment or formula used to work out the payment; and

(c)

to whom the payment is made; and

(d)

when the payment is due; and

(e)

whether the payment is refundable and, if so, under what conditions.

13.7 For item 13.6, if the amount of the payment cannot easily be worked out — the upper and lower limits of the amount.

13.8 If 2 or more of items 13.1, 13.3 and 13.6 apply to a payment, the information required by those items in relation to that payment need be set out only once.

14.1 The material conditions of each financing arrangement that the franchisor, its agent or an associate of the franchisor offers to the franchisee for establishment or operation of the franchised business.

14.2 For item 14.1, the material conditions of a financing arrangement include the following:

(a)

any requirement that the franchisee must provide a minimum amount of unborrowed working capital for the franchised business;

(b)

any requirement that a franchisee must meet a stated debt to equity ratio in relation to the franchised business.

15.1 Summary of the conditions of the franchise agreement that deal with obligations of the franchisor (or references to the relevant conditions of the franchise agreement, if attached), including:

(a)

an obligation to provide training:

(i)

before the franchised business starts; and

(ii)

during operation of the franchised business; and

(b)

any obligation that continues after the franchised business ceases to operate.

16.1 Summary of the conditions of the franchise agreement that deal with obligations for a franchisee (or references to the relevant conditions of the franchise agreement, if attached) for the following matters:

(a)

site selection and acquisition;

(b)

requirements for starting the franchised business;

(c)

development of the site, premises, vehicles and equipment;

(d)

training:

(i)

before the franchised business starts; and

(ii)

during operation of the franchised business;

(e)

opening the franchised business;

(f)

complying with standards or operating manuals;

(h)

warranties and customer service;

(i)

territorial development and minimum performance criteria;

(j)

maintenance and appearance of premises, vehicles and equipment;

(k)

insurance;

(l)

marketing;

(m)

indemnities and guarantees;

(n)

participation requirements for the franchisee or its directors, management or employees;

(o)

records and reports;

(p)

inspections and audit.

17.1 Summary of the conditions of the franchise agreement (or references to the relevant conditions of the franchise agreement, if attached) that deal with the following matters:

(a)

term of the franchise agreement;

(b)

variation;

(c)

renewal or extension;

(d)

conditions the franchisee must meet to renew or extend the franchise agreement;

(e)

termination by the franchisor;

(f)

termination by the franchisee;

(g)

the franchisee's goodwill, if any, on termination or expiry;

(h)

the franchisee's obligations when a franchise agreement is terminated, expires or is not renewed;

(i)

the franchisor's rights to sell its business;

(j)

transfer of a franchise;

(k)

mediation;

(l)

option or right of first refusal, if any, for the franchisor to buy the franchised business;

(m)

the franchisor's rights, if any, to inspect financial and other records of the franchised business;

(n)

confidentiality of the franchisee's records;

(o)

death or disability of the franchisee or a director or shareholder of the franchisee;

(p)

details of the operation or establishment of any franchisee representative body, eg Franchise Advisory Council;

(q)

restrictions on the franchisee's operation of other businesses during or after the term of the franchise agreement;

(r)

operations manual;

(s)

choice of governing law.

18.1 Summary of any requirements under the franchise agreement for the franchisee or directors, shareholders, beneficiaries, owners or partners of the franchisee to enter into any of the following agreements:

(a)

a lease, sublease, licence or other agreement under which the franchisee can occupy the premises of the franchised business;

(b)

a chattel lease or hire purchase agreement;

(ba)

an agreement under which the franchisee gains ownership of, or is authorised to use, any intellectual property;

(c)

a security agreement, including a guarantee, mortgage, security deposit, indemnity, loan agreement or obligation to provide a bank guarantee to a third party;

(d)

a confidentiality agreement;

(e)

an agreement not to carry on business within an area or for a time after the franchise agreement is terminated.

19.1 Earnings information for the franchise, if it is given, must be based on reasonable grounds.

19.2 Earnings information may be given in a separate document attached to the disclosure document.

19.3 Earnings information includes information from which historical or future financial details of a franchise can be assessed.

19.4 If earnings information is not given — the following statement:

The franchisor does not give earnings information about a [insert type of franchise] franchise.

Earnings may vary between franchises.

The franchisor cannot estimate earnings for a particular franchise.

19.5 Earnings information that is a projection or forecast must include the following details:

(a)

the facts and assumptions on which the projection or forecast is based;

(b)

the extent of enquiries and research undertaken by the franchisor and any other compiler of the projection or forecast;

(c)

the period to which the projection or forecast relates;

(d)

an explanation of the choice of the period covered by the projection or forecast;

(e)

whether the projection or forecast includes depreciation, salary for the franchisee and the cost of servicing loans;

(f)

assumptions about interest and tax.

20.1 A statement as at the end of the last financial year, signed by at least 1 director of the franchisor, whether in its directors' opinion there are reasonable grounds to believe that the franchisor will be able to pay its debts as and when they fall due.

20.2 Financial reports for each of the last 2 completed financial years that have been prepared by the franchisor in accordance with sections 295 to 297 of the Corporations Law.

20.3 Item 20.2 does not apply if:

(a)

the statement under item 20.1 is supported by an independent audit provided by a registered company auditor within 12 months after the end of the financial year to which the statement relates; and

(b)

a copy of the independent audit is provided with the statement under item 20.1.

21.1 Any information given under clause 18 of the code that has changed between the date of the disclosure document and the date the disclosure document is given under the code.

22.1 Copy of proposed franchise agreement may be attached.

22.2 Copy of the code may be attached.

22.3 Any other information that:

(a)

the franchisor wants to give; and

(b)

does not contradict information required to be given.

23.1 On the last page of the disclosure document:

(a)

a statement to the effect that the prospective franchisee may keep the disclosure document; and

(b)

a form on which the prospective franchisee can acknowledge receipt of the disclosure document.

1.1 On the first page:

(a)

in bold upper case:

SHORT FORM DISCLOSURE DOCUMENT FOR FRANCHISEE OR PROSPECTIVE FRANCHISEE; and

(b)

the franchisor's name, ABN, ACN or ARBN, business address and phone number; and

(c)

the signature of the franchisor, or of a director, officer or authorised agent of the franchisor; and

(d) the preparation date of the disclosure document; and

(e)

the following statement:

This disclosure document contains some of the information you need in order to make an informed decision about whether to enter into a franchise agreement.

Entering into a franchise agreement is a serious undertaking.

A franchise agreement is legally binding on you if you sign it.

You are entitled to a waiting period of 14 days before you enter into this agreement.

If this is a new franchise agreement (not a renewal, extension or transfer) of an agreement, you will be entitled to a 7 day `cooling off' period after signing the agreement, during which you may terminate the agreement without cost.

Take your time, read all the documents carefully, talk to other franchisees and assess your own financial resources and capabilities to deal with the requirements of the franchised business.

You should make your own enquiries about the franchise and about the business of the franchise.

You should get independent legal, accounting and business advice before signing the franchise agreement.

It is often prudent to prepare a business plan and projections for profit and cash flow.

You should also consider educational courses, particularly if you have not operated a business before.

2.1 The franchisor's name, ABN, ACN or ARBN, address of registered office and principal place of business in Australia.

2.2 The name under which the franchisor carries on business in Australia relevant to the franchise.

2.3 A description of the kind of business operated under the franchise.

2.4 The name, ABN, ACN or ARBN, address of registered office and principal place of business of each associate of the franchisor that is a body corporate (if any).

2.5 The name and address of each associate of the franchisor that is not a body corporate (if any).

2.6 For each director, secretary, executive officer, or partner of the franchisor who is likely to have management responsibilities for the franchisor's business operations in relation to the franchise — name, position held and qualifications (if any).

3.1 Details of:

(a)

current proceedings by a public agency, criminal or civil proceedings or arbitration, relevant to the franchise, against the franchisor in Australia alleging:

(i)

breach of a franchise agreement; or

(ii)

contravention of trade practices law; or

(iii)

contravention of the Corporations Law; or

(iv)

unconscionable conduct; or

(v)

misconduct; or

(vi)

an offence of dishonesty; and

(b)

proceedings against the franchisor under:

(i)

section 127A or 127B of the Workplace Relations Act 1996; or

(ii)

section 106 of the Industrial Relations Act 1996 of New South Wales; or

(iii)

section 276 of the Industrial Relations Act 1999 of Queensland.

3.2 Whether the franchisor or a director of the franchisor has been:

(a)

in the last 10 years — convicted of a serious offence, or an equivalent offence outside Australia; or

(b)

in the last 5 years — subject to final judgment in civil proceedings for a matter mentioned in paragraph 3.1 (a); or

(c)

in the last 10 years — bankrupt, insolvent under administration or an externally-administered body corporate in Australia or elsewhere.

3.3 For items 3.1 and 3.2 — the following details (where relevant):

(a)

the names of the parties to the proceedings;

(b)

the name of the court, tribunal or arbitrator;

(c)

the case number;

(d)

the general nature of the proceedings;

(e)

the current status of the proceedings;

(f)

the date of order or undertaking under section 87B of the Act;

(g)

the penalty or damages assessed or imposed;

(h)

the names of the persons who are bankrupt, insolvent under administration or externally administered;

(i)

the period of the bankruptcy, insolvency under administration or external administration.

4.1 For any trade mark used to identify, and for any patent, design or copyright that is material to, the franchise system (intellectual property):

(a)

description of the intellectual property; and

(b)

details of the franchisee's rights and obligations in connection with the use of the intellectual property; and

(c)

whether the intellectual property is registered in Australia, and if so, the registration date, registration number and place of registration; and

(d)

any judgment or pending proceedings that could significantly affect ownership or use of the intellectual property, including:

(i)

name of court or tribunal; and

(ii)

matter number; and

(iii)

summary of the claim or judgment; and

(e)

if the intellectual property is not owned by the franchisor — who owns it; and

(f)

details of any agreement that significantly affects the franchisor's rights to use, or to give others the right to use, the intellectual property, including:

(i)

parties to the agreement; and

(ii)

nature and extent of any limitation; and

(iii)

duration of the agreement; and

(iv)

conditions under which the agreement may be terminated.

4.2 The franchisor is taken to comply with item 4.1 for any information that is confidential if the franchisor gives:

(a)

a general description of the subject matter; and

(b)

a summary of conditions for use by the franchisee.

5.1 Whether the franchise is:

(a)

for an exclusive or non-exclusive territory; or

(b)

limited to a particular site.

5.2 For the territory of the franchise:

(a)

whether other franchisees may operate a business that is substantially the same as the franchised business; and

(b)

whether the franchisor or an associate of the franchisor may operate a business that is substantially the same as the franchised business; and

(c)

whether the franchisor or an associate of the franchisor may establish other franchises that are substantially the same as the franchise; and

(d)

whether the franchisee may operate a business that is substantially the same as the franchised business outside the territory of the franchise; and

(e)

whether the franchisor may change the territory of the franchise.

6.1 For each marketing or other cooperative fund, controlled or administered by or for the franchisor, to which the franchisee may be required to contribute, the following details:

(a)

the kinds of persons who contribute to the fund (for example, franchisee, franchisor, outside supplier);

(b)

whether the franchisor must contribute to the fund in relation to businesses owned or operated by the franchisor that are substantially the same as the franchised business and, if so, whether the contribution is worked out in the same way as for a franchisee;

(c)

how much the franchisee must contribute to the fund and whether other franchisees must contribute at a different rate;

(d)

who controls or administers the fund;

(e)

whether the fund is audited and, if so, by whom and when;

(f)

whether the fund's financial statements can be inspected by, or will be given to, franchisees;

(g)

the kinds of expense for which the fund may be used;

(h)

the fund's expenses for the last financial year, including the percentage spent on production, advertising, administration and other stated expenses;

(i)

whether the franchisor or its associates supply goods or services for which the fund pays and, if so, details of the goods or services;

(j)

whether the franchisor must spend part of the fund on marketing, advertising or promoting the franchisee's business.

Note   Subclause 17 (3) of the Code deals with compliance by the franchisor with paragraph 6.1 (h).

Prepayments

7.1 If the franchisor requires a payment before the franchise agreement is entered into — why the money is required, how the money is to be applied and who will hold the money.

7.2 The conditions under which a payment will be refunded.

Establishment costs

7.3 Details of the range of costs to start operating the franchised business, based on current practice, for the following matters:

(a)

real property, including property type, location and building size;

(b)

equipment, fixtures, other fixed assets, construction, remodelling, leasehold improvements and decorating costs;

(c)

inventory required to begin operation;

(d)

security deposits, utility deposits, business licences, insurance and other prepaid expenses;

(e)

additional funds, including working capital, required by the franchisee before operations begin;

(f)

other payments by a franchisee to begin operations.

7.4 For item 7.3, the details for each payment must include:

(a)

description of the payment; and

(b)

amount of the payment or the formula used to work out the payment; and

(c)

to whom the payment is made; and

(d)

when the payment is due; and

(e)

whether the payment is refundable and, if so, under what conditions.

7.5 For item 7.4, if the amount of the payment cannot easily be worked out — the upper and lower limits of the amount.

Other payments

7.6 For each recurring or isolated payment payable by the franchisee to the franchisor or an associate of the franchisor or to be collected by the franchisor or an associate of the franchisor for another person:

(a)

description of the payment; and

(b)

amount of the payment or formula used to work out the payment; and

(c)

to whom the payment is made; and

(d)

when the payment is due; and

(e)

whether the payment is refundable and, if so, under what conditions.

7.7 For item 7.6, if the amount of the payment cannot easily be worked out — the upper and lower limits of the amount.

7.8 If 2 or more of items 7.1, 7.3 and 7.6 apply to a payment, the information required by those items in relation to that payment need be set out only once.

8.1 Summary of the conditions of the franchise agreement that deal with obligations of the franchisor (or references to the relevant conditions of the franchise agreement, if attached), including:

(a)

an obligation to provide training:

(i)

before the franchised business starts; and

(ii)

during operation of the franchised business; and

(b)

any obligation that continues after the franchised business ceases to operate.

9.1 Summary of the conditions of the franchise agreement that deal with obligations for a franchisee (or references to the relevant conditions of the franchise agreement, if attached) for the following matters:

(a)

site selection and acquisition;

(b)

requirements for starting the franchised business;

(c)

development of the site, premises, vehicles and equipment;

(d)

training:

(i)

before the franchised business starts; and

(ii)

during operation of the franchised business;

(e)

opening the franchised business;

(f)

complying with standards or operating manuals;

(g)

warranties and customer service;

(h)

territorial development and minimum performance criteria;

(i)

maintenance and appearance of premises, vehicles and equipment;

(j)

insurance;

(k)

marketing;

(l)

indemnities and guarantees;

(m)

participation requirements for the franchisee or its directors, management or employees;

(n)

records and reports;

(o)

inspections and audit.

10.1 A statement as at the end of the last financial year, signed by at least 1 director of the franchisor, whether in its directors' opinion there are reasonable grounds to believe that the franchisor will be able to pay its debts as and when they fall due.

10.2 Financial reports for each of the last 2 completed financial years that have been prepared by the franchisor in accordance with sections 295 to 297 of the Corporations Law.

10.3 Item 10.2 does not apply if:

(a)

the statement under item 10.1 is supported by an independent audit provided by a registered company auditor within 12 months after the end of the financial year to which the statement relates; and

(b)

a copy of the independent audit is provided with the statement under item 10.1.

11.1 On the last page of the disclosure document:

(a)

a statement to the effect that the prospective franchisee may:

(i)

keep the disclosure document; and

(ii)

ask the franchisor for the information referred to in the following sections of Annexure 1:

* Section 3 — Business experience * section 5 — Payments to agents * section 6 — Existing franchises * section 9 — Supply of goods or services to a franchisee * section 10 — Supply of goods or services by a franchisee * section 11 — Sites or Territories * section 14 — Financing * section 17 — Summary of other conditions of agreement * section 18 — Obligation to sign related agreements * section 19 — Earnings information * section 21 — Updates * section 22 — Other relevant disclosure information; and

(b)

a form on which the prospective franchisee can acknowledge receipt of the disclosure document.