The Franchise Disclosure Document: What to Look For in Australia & New Zealand

Thinking of Buying a Franchise in Australia or New Zealand?

If you’re exploring franchise opportunities in Australia or New Zealand, understanding the Franchise Disclosure Document (FDD) is essential. This legal document outlines the franchise system, costs, obligations, and support, giving you the information you need to make a confident investment.

Yet many new buyers feel overwhelmed by the legal jargon. So let’s break it down: what the FDD includes, what to question, and how to use it to protect your interests when considering a franchise for sale.

What Is a Franchise Disclosure Document?

A Franchise Disclosure Document, or FDD, is a legal document a franchisor must provide before you buy into their system. It’s designed to give full transparency around how the franchise operates and what you’ll be committing to.

  • In Australia, it’s mandatory under the Franchising Code of Conduct and must be provided at least 14 days before you sign anything.
  • In New Zealand, there’s no specific franchise law, but ethical franchisors follow the Franchise Association of New Zealand (FANZ) Code and still issue disclosure documents.

If you’re serious about buying a franchise in either country, the FDD is your franchise blueprint.

When Should You Receive the FDD?

In Australia, the franchisor must provide the FDD at least 14 days before you:

  • Sign the franchise agreement, or
  • Pay any non-refundable fee

This gives you time to:

  • Review the document thoroughly
  • Seek legal or financial advice
  • Ask the right questions

If the document is delayed, vague, or missing, consider it a red flag.

What’s Included in a Franchise Disclosure Document?

FDDs vary by brand, but they generally include the following sections:

1. Franchisor Background

  • History of the franchise system
  • Details of directors and key personnel
  • Any prior legal or financial issues

2. Franchise Costs and Fees

  • Initial franchise fee
  • Set-up costs (equipment, fit-out, training)
  • Ongoing royalties and marketing fees
  • Extra or hidden charges

3. Territory Information

  • Will you have exclusive franchise territory?
  • How is the area defined?
  • Are other franchisees allowed to operate nearby?

4. Franchisee Responsibilities

  • Day-to-day operational duties
  • Compliance requirements
  • Supplier and product restrictions

5. Support and Training

  • Onboarding and pre-launch training
  • Ongoing business and marketing support
  • Field visits, coaching, and mentoring

6. Financial Performance

  • Historic financial data (if disclosed)
  • Average franchisee revenue (optional)
  • Cost breakdown and ROI estimates

7. Franchisee Network

  • List of existing and former franchisees
  • Franchisee contact details
  • Average tenure and reasons for exit

8. Agreement Summary

  • Contract length and renewal terms
  • Termination rights and dispute resolution
  • Any restrictions on resale

What Should You Question in the FDD?

Even if the franchise looks strong, dig deeper into these areas:

  • Revenue claims: Are figures backed by real data or anecdotal examples?
  • Support promises: What does “ongoing support” really include?
  • Hidden fees: Are there recurring admin costs or unlisted marketing contributions?
  • Franchisee turnover: Are lots of owners leaving? Ask why.
  • Exit restrictions: Are there limitations on selling your business?

A credible franchisor won’t mind your questions, in fact, they’ll welcome them.

Should You Get Legal Advice?

Absolutely. Always review the FDD with a lawyer who specialises in franchising, especially one familiar with:

  • The Franchising Code of Conduct (AU)
  • The FANZ Code of Practice (NZ)
  • Commercial contract law

Legal support will help you:

  • Spot hidden risks or unfavourable clauses
  • Compare offers between different franchise systems
  • Clarify your rights and obligations

It’s a small upfront cost for long-term peace of mind.

Questions to Ask Your Franchisor

To ensure transparency, ask:

  • How often is the FDD updated?
  • Have there been changes in the last 12 months?
  • Can I speak to current and former franchisees?
  • What happens if I underperform?
  • Are any pilot locations, new business models, or restructures coming?

These questions help you validate what’s in writing.

Final Thoughts: Read Smarter, Buy Safer

The Franchise Disclosure Document is your franchise due diligence toolkit. Whether you’re buying a café, cleaning business, or fitness studio, the FDD helps you:

  • Understand how the franchise really works
  • Ask smart questions
  • Protect yourself from costly surprises

So if you’re comparing franchises for sale in Australia or New Zealand, don’t just read the FDD, use it.

If you are a business owner looking to franchise in Australia or New Zealand, please get in contact.