New Financial Year: What Do Franchisors Need to Do?

Written by: Georgie Jensz

New Financial Year: What Do Franchisors Need to Do?

With the start of the new financial year fast approaching, here are some reminders and practical tips to assist you in preparing for this. We strongly encourage you to attend to these Franchising Code requirements as soon as possible.

  1. Annual financial statement of the marketing fund (AFS)
    By 31 October 2016 – Prepare an AFS, detailing all of the fund’s receipts and expenses for the financial year ending 30 June 2016. The AFS must include sufficient details of the fund’s receipts and expenses so as to give your franchisees meaningful information about:

a)    sources of income; and
b)    items of advertising and marketing expenditure.

You must provide to your franchisees with a copy of:
a)    the AFS within 30 days of preparing it; and
b)    if applicable, the auditor’s report of the AFS within 30 days of preparing it.

A fine of around $45,500 can be imposed for non-compliance.

You must prepare the AFS first and present this to the franchisees when the franchisee vote is given (see item 2).

  1. Franchisee vote
    By 30 September 2016- Conduct a vote of all franchisees whether to audit the AFS.

A fine of around $45,500 can be imposed for non-compliance.

  1. Audit report
    By 31 October 2016- Audit the AFS.

The auditor’s report is not required if 75% of franchisees vote against obtaining it.

Remember: The vote must be made by 30 September 2016.

  1. Disclosure document
    By 31 October 2016- Update your current disclosure document.

A fine of around $45,500 can be imposed for non-compliance.

  1. Financial reports (or independent audit)
    By 31 October 2016- Prepare financial reports for the last 2 financial years (which must be annexed to the updated disclosure document).

Financial reports need not be annexed if a statement as to the franchisor’s solvency is supported by an independent audit provided by a registered company auditor within 4 months after the end of the financial year to which it relates. The audit must be annexed to that statement and both included in the updated disclosure document.

Questions?

If you have any questions about this article or would like us to assist you, please do not hesitate to contact: