Updating Your Franchise Disclosure Document: What You Need To Know

If you’ve set up a franchise in New Zealand, you’ll be aware that there are a number of legal requirements you need to comply with. Laws around franchising can be quite complex, so it’s crucial to stay informed about your obligations. 

One of your key obligations involves your Disclosure Document – this is provided to a person who is considering entering into a franchise agreement, and it discloses all the pertinent details about your franchise system. 

It’s essentially your means of being completely transparent with potential franchisees before they commit to any decisions. 

What Is In A Franchise Disclosure Document?

A Franchise Disclosure Document in New Zealand will typically outline key information about the franchise system, such as:

• Costs involved in starting and operating the franchise
• Details of current and former franchisees
• Information on any legal proceedings involving the franchise 

This makes it much easier for potential franchisees to make informed decisions. 

However, as a franchisor in New Zealand, you need to update your Disclosure Document annually. It’s advisable to engage a lawyer to assist you with this to ensure your document is up-to-date and accurately reflects any recent changes and all the relevant details for the potential buyer. 

What Are My Other Obligations?

Both franchisors and franchisees in New Zealand have a number of obligations aimed at ensuring the success of the business. These include:

• Acting in good faith
• Complying with your Franchise Agreement
• Meeting financial commitments
• Engaging in the appropriate dispute resolution process 

As a franchisor, you’ll want to act in the best interests of the franchise. For instance, when selling a franchise, you’ll aim to secure the best price for the business and select a suitable buyer. You also need to ensure that all relevant documents, including your Disclosure Document, are current. 

The franchisor will provide extensive guidance on how they expect the business to be managed, so franchisees must adhere to this model. A franchise thrives when everyone cooperates and works towards the common objectives, which are usually established by the franchisor at the outset of the business relationship. 

Other obligations for franchises in New Zealand are set out in the Franchising Code of Practice. 

Who Can Update My Disclosure Document?

It’s prudent to consult a lawyer before amending your franchise documents. At Sprintlaw, our lawyers collaborate with you to ensure that our services are tailored to your business’ specific needs. 

Our Franchise Disclosure Document Update package includes:

• Revising your Franchise Disclosure Document
• Phone consultations with a Sprintlaw lawyer who will advise you on the legal issues relevant to you and your documents
• A complimentary amendment to the final draft we provide you 

Need Help?

Updating your Disclosure Document is quick and hassle-free with the right legal support. Our lawyers can work closely with you and guide you through the process to ensure you don’t overlook any critical steps or details. 

If you would like a consultation on your options moving forward, you can reach us at 0800 002 184 or [email protected] for a free, no-obligations chat.

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