New Financial Year: What Do Franchisors Need to Do?
E-Alert: 1 June 2020
With the start of the new financial year almost here, do not forget to attend to your Franchising Code requirements. Here is what you need to do.
- Annual financial statement of the marketing fund (AFS)
By 31 October 2020
Prepare an AFS, detailing all the fund’s receipts and expenses for the financial year ending 30 June 2020
The AFS must include sufficient details of the fund’s receipts and expenses so as to give meaningful information about:
a) sources of income; and
b) items of advertising and marketing expenditure.
You must provide 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 over $45,000 can be imposed for non-compliance
TIP: You must prepare the AFS first and present this to the franchisees when their vote is given (see item 2)
- Franchisee vote
By 30 September 2020
Conduct a franchisee vote whether to audit the AFS
A fine of over $45,000 can be imposed for non-compliance
- Audit report
By 31 October 2020
Obtain the audit of the AFS
The auditor’s report is not required if 75% of franchisees vote against obtaining it
TIP: The franchisee vote must be made by 30 September 2020
- Disclosure document
By 31 October 2020
Update your current disclosure document
A fine of over $45,000 can be imposed for non-compliance
- Financial reports (or independent audit)
By 31 October 2020
Prepare financial reports for the last 2 financial years ending 2019 and 2020 (to be annexed to the updated disclosure document)
TIP: 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
is a proud member of:
