We have set out below a number of the approaching Key Franchise Dates, related primarily to a franchisor's end of financial year reporting and disclosure obligations.
In April this year, the penalty provisions of the Franchising Code of Conduct (the Franchising Code) were amended, and there has been a substantial increase in the penalties that may be payable under the Franchising Code, for a failure to comply with certain Franchising Code requirements.
In addition, further obligations have been included in the Franchising Code (such as the requirement to create a profile in the Franchise Disclosure Register).
Marketing Fund
If you operate a Marketing Fund you should make a note of the follow Key Dates:
30 September 2022 - if you do not intend to audit the Marketing Fund, 75 per cent of contributing franchisees must have agreed not to audit the Marketing Fund Annual Financial Statement for the financial year ended 30 June 2022 by 30 September 2022.
31 October 2022 - an annual financial statement detailing all of the Marketing Fund's receipts and expenses for the last financial year (the Marketing Fund Annual Financial Statement) must be prepared by 31 October 2022 (noting the level of detail required as set out in our recent marketing fund article).
The maximum penalty for a failure to prepare the Marketing Fund Annual Financial Statement as required by the Code is now $133,200.00.
31 October 2022 - the Marketing Fund Annual Financial Statement must also be audited by a registered company auditor by 31 October 2022 (unless 75 per cent of contributing franchisees have agreed otherwise by 30 September 2022).
The maximum penalty for a failure to audit the Marketing Fund Annual Financial Statement as required by the Code is now $133,200.00.
A copy of the Marketing Fund Annual Financial Statement and a copy of the Audit of the Marketing Fund Annual Financial Statement must be provided to each franchisee within 30 days of the preparation of the statement and the audit respectively.
The maximum penalty for a failure to provide franchisees with a copy of the Marketing Fund Annual Financial Statement and a copy of the audit of the Marketing Fund Annual Financial Statement as required by the Code is now $133,200.00.
Franchise Disclosure Register
14 November 2022 - franchisors caught by clause 53C or 53D of the Code must create a franchise profile in the Franchise Dislcosure Register by 14 November 2022 (essentially if you have provided a current disclosure document under clause 9 of the Code on or before 31 October 2022 or you are proposing to enter into a franchise agreement with a prospective franchisee).
You will need a Digital Identity (MyGovID) to register.
The maximum penalty for a failure to provide the required information to the Franchise Disclosure Register is $133,200.00.
Disclosure Document Update
31 October 2022 - the annual disclosure document update must be completed by 31 October 2022.
A franchisor is required to update its disclosure document after the end of the financial year unless:
- the franchisor entered into 1 or less franchise agreements in the financial year; and
- the franchisor does not intend to enter into a franchise agreement in the following financial year.
The maximum penalty for a failure to update your disclosure document as required by the Franchising Code is now $133,200.00.
Remember, you will need to confirm in the Franchise Disclosure Register whether you are required to update your disclosure document under the Franchising Code.
Key Franchise Dates
- 30 September 2022 - 75 per cent of contributing franchisees must have agreed not to audit the Marketing Fund Annual Financial Statement;
- 31 October 2022 - an annual financial statement detailing all of the Marketing Fund's receipts and expenses for the last financial year must be prepared (remember to allow enough time for the financial statement to be audited if an audit is required);
- 31 October 2022 - if an audit is required, the Marketing Fund Annual Financial Statement must also be audited by a registered company auditor;
- 31 October 2022 - the annual disclosure document update must be completed;
- 14 November 2022 - franchisors caught by clause 53C or 53D of the Code must create a franchise profile in the Franchise Dislcosure Register.
Disclaimer
The information in this article is general in nature and is not intended to address the circumstances of any person or other entity. Although we do our best to provide timely and accurate information, we do not guarantee that the information in this article is accurate or that it will continue to be accurate in the future.
