The Franchise Information Statement: What It Tells You, and What It Leaves Out
- Neda Whelan (LLB, LLM, GDLP)
- 3 hours ago
- 6 min read
Introduction
Most people who come to see me about buying a franchise have already read a great deal of marketing material and very little law. The first legal document they receive, often without much ceremony, is the franchise information statement. It usually arrives by email, it is short, and it is easy to set aside alongside the brochures.
The franchise information statement is the only document in the entire acquisition process written by the regulator rather than by the party selling you the business. Everything else you are given, from the disclosure document to the franchise agreement itself, is prepared by the franchisor.
I spent years as General Counsel inside national franchise networks, which means I have sat on the side of the table that issues these statements as well as the side that receives them. This article explains what the statement is, when a franchisor must give it to you, and what it contains.
Why the franchise information statement matters
Australian franchising law begins from a candid premise, which is that the parties to a franchise agreement do not hold the same information. The franchisor knows how the system performs, which sites have struggled, how many franchisees left last year and why. The buyer only knows what they have been told. The Competition and Consumer (Industry Codes – Franchising) Regulations 2024, addresses that gap through a sequence of mandatory disclosures. The information statement sits at the very front of that sequence.
The Code requires the statement to reach a prospective franchisee before the persuasive documents do, at the moment when interest has been expressed but nothing has been committed. It is the regulator speaking to a buyer who has not yet spent money, signed a confidentiality deed, or grown attached to a particular site. In my experience that timing does more work than the content of the statement itself.
Key legal points to understand
When the statement must be given, and in what order
Section 22 of the Code requires a franchisor to give the information statement to a prospective franchisee as soon as practicable after that person formally applies or expresses an interest in acquiring a franchised business, and in any event no later than seven days after they do so. The ACCC guidance on the information statement also makes the ordering explicit, which is that the statement must be given before any other document about the franchise.
That ordering requirement is the one franchisors most often trip over. A network that emails its disclosure document and a draft agreement with the information statement added in for the first time, has not complied with the Code and breached the sequencing limb. Do note, however, that the obligation does not apply where an existing agreement is simply being renewed or extended.
What the statement actually contains
The statement is published by the ACCC and is not a document the franchisor drafts or may alter. It explains in plain language what franchising is and what the commercial risks of owning a franchised business are, sets out the research and preparatory tasks a prospective franchisee should complete, and lists the questions worth asking before entering a franchise agreement. The first page of the prescribed disclosure document reinforces the connection, directing the reader to consider the disclosure document together with the information statement they have already received.
Read properly, it is a due diligence agenda issued by the regulator. Most buyers read it as a formality. The buyers who do best treat the questions in it as items to be answered in writing by the franchisor.
What the statement deliberately leaves out
Here is the limitation that matters. The franchise information statement is generic. It is the same document for a coffee franchise in Richmond and a national trade services network, and it says nothing whatsoever about the system you are actually considering. It will not tell you whether this franchisor is solvent, whether your proposed territory is protected, what happens to your investment at the end of the term, whether the restraint of trade clause will keep you out of your own industry, or how the lease and the franchise agreement interact if one of them fails.
Those answers live in the disclosure document, the franchise agreement and the ancillary documents, which together commonly run past a hundred pages. Our guide to the Franchising Code disclosure document requirements covers what that second layer must contain, and our note on franchise financial due diligence deals with the numbers behind it. The information statement tells you that risk exists. It cannot tell you where yours sits.
What this means for franchisors
For franchisors, the exposure is real and easily avoided. The obligation to provide the information statement is a civil penalty provision, carrying a maximum of 600 penalty units per contravention for a body corporate, which in current terms runs into the hundreds of thousands of dollars.
One further point deserves attention, because I have seen this still hanging around in a few franchise document packs. The Key Facts Sheet does not exist under the 2024 Code. Its content was absorbed into the Franchise Disclosure Register profile. Any franchisor process, checklist or website page still referring to a Key Facts Sheet as a current obligation is describing law that no longer applies and should be reviewed.
Practical guidance and next steps
If you have received a franchise information statement, note the date. It marks the formal beginning of your due diligence period, and the sequence of documents that follows is itself evidence of how carefully the network handles compliance. If you were asked to sign a confidentiality deed or pay a deposit before the statement arrived, that is worth raising early, and it tells you something about the system beyond the immediate breach.
Work through the questions in the statement and put them to the franchisor in writing. Written answers are useful in themselves and revealing in their absence. Then move to the documents that carry real consequence, because the disclosure document, the franchise agreement and the lease (where applicable) are where your money is committed. You are entitled to a waiting period of at least 14 days before signing or paying non-refundable money.
If you are a franchisor, audit the first 48 hours of your enquiry process. In most networks the compliance gap is not a drafting problem but a workflow one, sitting with whoever answers the first email.
How we can help
At Whelan Lawyers, franchise matters are handled by a senior practitioner from beginning to end. There are no junior hand-offs and no template reviews. Having previously served as General Counsel to national franchise networks, Neda Whelan brings the perspective of someone who has drafted these systems as well as challenged them, which tends to make for faster and more commercially useful advice.
We advise prospective franchisees across franchising law, including disclosure document review and franchise business sales and purchases. If you have received an information statement and want to know what the rest of the documents actually commit you to, get in touch and we will review them with you before you sign, not after.
Frequently asked questions
Is the franchise information statement the same as the disclosure document?
No. They are separate documents with different authors and different purposes. The information statement is a short, generic guide published by the ACCC and given at the enquiry stage. The disclosure document is prepared by the franchisor in the form prescribed by the Code, is specific to that system, and must be given at least 14 days before you sign or pay non-refundable money.
What happens if a franchisor does not give me the information statement?
Failure to provide the information statement, or providing it after other franchise documents, contravenes the Code and exposes the franchisor to a civil penalty of up to 600 penalty units per contravention. You can report the conduct to the ACCC. In practice the more immediate significance for a buyer is what the failure suggests about the network’s wider compliance discipline.
Do I need an information statement if I am renewing my existing franchise?
No. The obligation in section 22 of the Code does not apply where a franchise agreement is being renewed or extended. Other disclosure obligations continue to apply on renewal, so renewal is not a document free process, and it remains worth reviewing what has changed in the system since you first signed.
Does receiving the information statement start the 14 day waiting period?
No. The 14 day period runs from the day the franchisor gives you the disclosure document, the proposed franchise agreement and a copy of the Code. The information statement comes earlier and does not start that clock.
Disclaimer: This article provides general information only and is not legal advice. The law is complex and varies based on individual circumstances. You should seek specific legal advice about your particular situation before making any decisions about legal matters.
Neda Whelan
Neda Whelan is the Founder and Principal of Whelan Lawyers. With over a decade of experience as former General Counsel for major national networks such as Clark Rubber and Jim's Group, she provides practical, commercial-first legal strategies for franchisors and business owners.
