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Franchisors must deliver what they promise – a look at the ‘UFC Gym’ situation

Over the last couple of years, the Franchising Code of Conduct has increased the disclosure obligations on franchisors. However, franchisors have always had to make sure that, in simple terms, they deliver what they promise to franchisees.

Under the Australian Consumer Law, franchisors can be liable where they engage in misleading or deceptive conduct – which can include promising an amount of start-up costs without a reasonable basis.

The Federal Court recently found that this is what took place within the ‘UFC Gym’ system in Australia.

The Franchise Disclosure Register is Now in Force

In late 2021, the much-anticipated Franchise Disclosure Register was announced by the government of the day. Around that time, Holman Webb dove into what the register would look like, and what franchisors would need to do to prepare for its introduction. See our November 2021 article ‘The Franchise Disclosure Register – What is it and When Does it Begin?’.  The register is now in force.

Key Takeaways:
  • Franchisors must, if they haven’t already, create a profile on the Franchise Disclosure Register as soon as possible and provide the mandatory information.
  • The profile and information provided should be updated at least annually. Franchisors should also take care to make sure the information provided is consistent with their disclosure document and key facts sheet.

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