Skip to content

What Are the New Lease Disclosure Requirements Under the Franchising Code of Conduct?

Recent updates to the Franchising Code of Conduct (the Code) have altered some of the disclosure requirements that apply in the event that a franchisee is to enter into a lease with the franchisor or occupy premises leased by the franchisor. This article will outline when franchisors must provide these documents in accordance with the Code’s disclosure requirements and the other implications of these statutory changes.

What is Considered a Lease?

As a franchisor, the Code requires you to comply with the new franchising lease disclosure requirements, if you:

  • or your associate, enter into a lease for the premises; and
  • subsequently propose that the franchisee either:
    1. subleases the premises; or
    2. occupies the premises through a license to occupy; or
  • own and directly lease premises to a franchisee from which they conduct or will conduct the franchised business. 

It is important to note that franchisors must comply with these requirements, even in the event that they do not enter into a formal sublease or otherwise with the relevant franchisee. For instance, these obligations still apply where a franchisor just grants the franchisee rights to occupy the premises.

Essentially, suppose a franchisor or its associate lease or own the premises, and you allow the franchisee to occupy the premises (regardless of how that is documented). In that case, the franchisor must comply with the new lease disclosure requirements. 

What Documents Do You Need to Provide?

In the event that a franchisor satisfies the above criteria, there is a requirement for them to provide extensive lease documents to the franchisee. The franchisor needs to provide these documents in conjunction with all disclosure documents in order to trigger the 14-day disclosure period.

Moreover, the documents that are required vary based on whether the franchisee: 

  • enters into a ‘lease’ with the franchisor or its associate for the premises; or
  • occupy the premises without a lease. 

The below table summarises the required documents in each circumstance:

Franchisee ‘leases’ the premises directly from the franchisor (or an associate of the franchisor) 

Franchisee occupies, without a lease, premises leased by the franchisor (or an associate of the franchisor)

Either a copy of the:

  • lease; or
  • agreement to lease

Either a copy of the:

  • lease; or

  • agreement to lease

Details of any incentive or financial benefit that the franchisor or its associate is entitled to receive as a result of the lease or agreement to lease, and who is providing that incentive. 

Details of any incentive or financial benefit that the franchisor or its associate is entitled to receive as a result of the lease or agreement to lease and/or as a result of the franchisee’s right to occupy the premises. 

 

A copy of the document that gives the franchisee the right to occupy the premises

 

Written details of the conditions of occupation.

Front page of publication
Franchisor Financial Disclosure Factsheet

This factsheet sets out the three key financial disclosure obligations every franchisor needs to comply with.

Download Now
Continue reading this article below the form
Loading form

How Do These Changes Affect Franchisors?

In the event that a franchisor must provide the lease documents as outlined above, they will need to ensure that they provide these at the same time as the disclosure documents. This is because the mandatory 14-day disclosure period will not be considered to have commenced until they provide these documents. 

Further, suppose a party amends or changes the lease documents after the franchisor originally provides them to the franchisee. In that instance, the 14-day cooling-off period will ‘restart’ from when the franchisor provides these updated documents to the franchisee. Therefore, you should be aware of this as it could delay the commencement of the franchised business.

If a franchisor does not provide lease documents when required, this will be a failure to comply with the disclosure requirements. As a result, it will amount to a breach of the franchising Code and can potentially attract civil penalties. In addition, a failure to provide the required lease documents may provide the franchisee with a cause of action with which to pursue the franchisor. For example, this can occur if that franchisee has an argument available that they would have done something differently had the disclosure been provided. 

Key Takeaways

Given the 2021 changes to the Code, non-compliance with these provisions may result in large penalties. It can also provide franchisees with the right to terminate the franchise agreement. Therefore, it is important that franchisors seek legal advice in the event that they or one of their associates have entered into a lease or owns premises occupied by a franchisee. Doing so will ensure that the franchisor is in compliance with their disclosure requirements. If you need help with understanding your franchising lease disclosure obligations, LegalVision’s 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.

Frequently Asked Questions

What documents are required when a franchisee enters into a ‘lease’ for the premises?

As a franchisor, you must provide a copy of the lease or lease agreement. You also must provide details of any incentive or financial benefit that the lease or agreement to lease entitles you to recieve, and who is providing that incentive. 

What documents are required when a franchisee occupies the premises without a lease?

As a franchisor, you must provide a copy of the lease or lease agreement. You also must provide details of any incentive or financial benefit that the lease, agreement to lease or franchisee’s right to occupy the premises, entitles you to recieveIn addition, you must provide a copy of the document that gives the franchisee the right to occupy the premises and written details of the conditions of occupation.

Register for our free webinars

ACCC Merger Reforms: Key Takeaways for Executives and Legal Counsel

Online
Understand how the ACCC’s merger reforms impact your legal strategy. Register for our free webinar.
Register Now

Ask an Employment Lawyer: Contracts, Performance and Navigating Dismissals

Online
Ask an employment lawyer your contract, performance and dismissal questions in our free webinar. Register today.
Register Now

Stop Chasing Unpaid Invoices: Payment Terms That Actually Work

Online
Stop chasing late payments with stronger terms and protections. Register for our free webinar.
Register Now

Managing Psychosocial Risks: Employer and Legal Counsel Responsibilities

Online
Protect your business by managing workplace psychosocial risks. Register for our free webinar.
Register Now
See more webinars >
Annalise Catania

Annalise Catania

Senior Lawyer | View profile

Annalise is a Senior Lawyer in LegalVision’s Franchising and Leasing teams. She enjoys building relationships with her clients and providing them with commercially viable advice. Annalise also has experience dealing with intellectual property and commercial matters.

Qualifications: Bachelor of Laws, Graduate Diploma of Legal Practice, Bachelor of Global Studies, Australian Catholic University.

Read all articles by Annalise

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