November deadlines approaching for Directors and Franchisors

Director ID Number

Overview

All directors of a company, registered Australian body or registered foreign company, appointed before 31 October 2021 are reminded that they must apply for a director ID before 30 November 2022.

When must certain directors must apply for a Director ID

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How to apply for a Director ID

Directors can apply for a director ID through the Australian Business Registration Service. To do so, directors will need to set up a myGovID to verify their identity. To do so they will need at least two of the following:

• driver’s licence or learner’s permit;
• passport (not more than three years expired)
• birth certificate;
• citizenship certificate;
• medicare card;
• visa (using foreign passport); or
• immicard.

Following this, directors will need to provide their tax file number, residential address and information from any of the following two documents to verify their identity:

• bank account details;
• an ATO notice of assessment;
• super account details;
• a dividend statement;
• a Centrelink payment summary; or
• a PAYG payment summary.

Applicants applying from outside Australia must complete a paper application.

Failure to apply for a director ID when required to do so can attract a criminal penalty of $13,200 and a civil penalty of $1,100,000. Applying for multiple directors IDs and misrepresenting a director ID both attract a criminal penalty of $26,640 or one-year imprisonment or a civil penalty of $1,100,000.

If you require any assistance in applying for a director ID please contact our office.

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Franchising Disclosure Register

Overview

Franchisors will be required to upload key information to the franchise disclosure register by 14 November 2022.

Key Points

• By 14 November 2022, franchisors who have provided a disclosure document to a prospective franchisee on or before 31 October 2022 will be required to publish key disclosure information about their franchise.
• After feedback on the original exposure draft, franchisors will not be required to upload their disclosure document, template franchise agreement and key facts sheet to the register.
• Where a franchisor decides to upload these documents to the register, it will be able to redact commercially sensitive information.

Fairness in Franchising

A ‘Fairness in Franchising’ report submitted to parliament in March 2019 placed increased focus on the transparency of franchisors to their prospective franchisees and highlighted the need for a publicly available register.

The primary objective of the register is stated to be to improve the ability of franchisees to make informed decisions about entering a franchising network by enabling them to easily compare information about different franchising networks.

Franchising Code of Conduct amendments

Following the concerns raised by the franchising community, including the use of commercially sensitive information and personal information of franchisees amendments to the Franchising Code of Conduct were made in April this year.

The changes require franchisors to provide basic details to the register, unless the Secretary of the Treasury decided further information was required.

Franchisors will be required to provide the following:

• the name and business name of the franchisor in Australia;
• the ABN of the franchisor;
• the address of the franchisor's registered office and principal place of business;
• the franchisor's phone number and email address;
• the ANZSIC division and subdivision codes for the industry in which the business operated under the franchise operates (if applicable); and
• any other information that is not redactable information that the Secretary requires the franchisor to disclose.

Franchisors will have the option, but not be required, to disclose their disclosure document, standard form franchise agreement and key facts sheet.

It is important to note that franchisors will be required to update the information included on the register on an annual basis and that it may become a requirement in the future for franchisors to include further documents, such as disclosure documents, franchise agreements and key facts sheets.

Redaction of Commercially Sensitive and Personal Information

‍Under the amendments to the Franchising Code of Conduct information that is of a commercial nature or commercially sensitive will be able to be redacted.

This ability to redact information from template disclosure documents, key facts sheets and franchise agreements means franchisors should consider whether it would be beneficial to file such documents with the register. Whilst not a requirement, having these documents publicly available may attract potential franchisees and create an air of transparency.

The following information, which is often contained in franchise documentation, should be considered commercially sensitive:

• details of a franchisor's intellectual property;
• nature of rebates or financial benefits received from suppliers;
• restrictions on goods or services franchisees must supply;
• details of online sales, including profit sharing with franchisees;
• details of establishment and operating costs;
• marketing fund information;
• earnings information;
• solvency statements; and
• financial reports.

Publishing the Required Information

‍To be able to publish the required information, franchisors will need to create a franchise profile on the register and obtain authorisation to act on behalf of their ABN for interactions with the Department of Treasury.

Franchisors will be required to provide the information to the register where they:

• are proposing to enter into a franchise agreement with a prospective franchisee;
• are required to provide a copy of the disclosure document to the prospective franchisee; or
• the franchisor is the master franchisor in a master franchise system - the master franchise system has 2 or more sub franchisors.

Where franchisors do not provide the required information, they will face significant penalties of up to $133,200.

Conclusion

‍Franchisors should be aware of their obligation to submit certain information to the register. Whilst the information currently required is not particularly onerous, franchisors that fail to do so will incur harsh penalties.

Franchisors should also consider (subject to redaction of commercially sensitive information) whether they wish to make their disclosure document, template franchise agreement and key facts sheet publicly available to attract potential franchisees.

For assistance with the requirements of the new franchise disclosure register or franchisor disclosure requirements more generally, please contact our office.

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‍This article in no way constitutes legal advice. It is general in nature and is the opinion of the author only. You should seek legal advice tailored to your individual circumstances before acting on anything related to this article.