Skip to content

What Does a Disclosure Document Tell Me as a Potential Franchisee?

Understanding the contents of a disclosure document is paramount for you as a franchisee, as it provides crucial information necessary for making informed decisions before entering into a franchise agreement. As mandated by the Franchising Code of Conduct, franchisors are obligated to furnish you with specific documents at least 14 days prior to signing the agreement. These documents include the disclosure document itself and copies of the franchise agreement and Franchising Code of Conduct. This article explains the key purpose and features of disclosure documents. 

What is the Purpose of a Disclosure Document?

The primary purpose of the disclosure document is to equip you with comprehensive information. This enables you to assess whether entering into a franchise agreement is a prudent decision. This entails not only understanding the nature of the franchise business but also estimating the expenses and obligations that come with it.

Outlined within the Franchising Code of Conduct are the essential components that must be covered in any Disclosure Document. Familiarising yourself with these components is vital to safeguarding your interests as a franchisee.

Front page of publication
Negotiating Franchise Agreements Factsheet

When bringing on board new franchisees, it is important to negotiate agreements that strike a balance. This factsheet explains how.

Download Now

Key Components of a Disclosure Document 

A disclosure document should include details about:

  • the franchisor and the franchise business;
  • the professional background and experience of each officer of the franchisor;
  • any litigations involving the franchisor;
  • your responsibilities and obligations;
  • existing franchisees;
  • the franchise system’s intellectual property;
  • the territory and exclusivity rights associated with the proposed franchise;
  • potential operating and capital expenses that you may incur; 
  • any marketing funds; and 
  • contingency plans. 

Additionally, the document should include a statement affirming the solvency of the franchisor and its capability to settle debts promptly.

As a franchisee, you may query any information that a franchisor has disclosed to you in a disclosure document with them. This allows you to clarify any points of confusion before committing to enter into the franchise agreement.

Furthermore, you should contact other franchisees in the franchise network and raise any questions you may have with them in relation to the operation of the business, their relationship with the franchisor, and other relevant information. This allows you to gain an understanding of the franchise network and the franchisor from a different perspective, which can prove to be very beneficial when making a decision on whether to proceed forward.

Continue reading this article below the form
Loading form

Key Takeaways 

The Franchising Code of Conduct requires a disclosure document to provide comprehensive information about a franchise system to protect you as a franchisee and to ensure you are making an informed decision. Investing in a franchise can be a major investment both financially and in relation to the amount of time you are committing to operate the franchise business. As you would expect to do with all other key investments, undertaking thorough due diligence and being fully informed is extremely important. Therefore, the disclosure document is your key resource in this regard, and you should not underestimate or ignore it. 

If you have any questions regarding disclosure documents, our experienced franchise lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 1300 544 755 or visit our membership page.

Register for our free webinars

Demystifying M&A: What Every Business Owner Should Know

Online
Understand the essentials of mergers and acquisitions and protect your business value. Register for our free webinar.
Register Now

Social Media Compliance: Safeguard Your Brand and Avoid Common Pitfalls

Online
Avoid legal pitfalls in social media marketing and safeguard your brand. Register for our free webinar.
Register Now

Building a Strong Startup: Ask a Lawyer and Founder Your Tough Questions

Stone & Chalk Tech Central, Level 1 - 477 Pitt St Haymarket 2000
Join LegalVision and Bluebird at the Spark Festival to ask a lawyer and founder your startup questions. Register now.
Register Now

Construction Industry Update: What To Expect in 2026

Online
Stay ahead of major construction regulatory changes. Register for our free webinar.
Register Now
See more webinars >
Ramsha Naz

Ramsha Naz

Lawyer | View profile

Ramsha is a Lawyer at LegalVision within the Franchising and Leasing team. She graduated from the University of New South Wales with a Juris Doctor.  Ramsha has previous extensive experience working in Property Law and assisting with Corporate and Commercial Law matters.

Qualifications: Juris Doctor, Graduate Diploma of Legal Practice, University of New South Wales.

Read all articles by Ramsha

About LegalVision

LegalVision is an innovative commercial law firm that provides businesses with affordable, unlimited and ongoing legal assistance through our membership. We operate in Australia, the United Kingdom and New Zealand.

Learn more

We’re an award-winning law firm

  • Award

    2025 Future of Legal Services Innovation Finalist - Legal Innovation Awards

  • Award

    2025 Employer of Choice - Australasian Lawyer

  • Award

    2024 Law Company of the Year Finalist - The Lawyer Awards

  • Award

    2024 Law Firm of the Year Finalist - Modern Law Private Client Awards

  • Award

    2022 Law Firm of the Year - Australasian Law Awards