If you’re a franchisor managing a marketing fund, it’s important to understand your obligations under the Franchising Code of Conduct. These funds, contributed to by franchisees, must be handled with transparency and in strict accordance with the Code.

In addition to referencing the fund in the Franchise Agreement, franchisors must:

• Include details of the marketing fund in the Disclosure Document;
• Maintain financial records outlining the fund’s income and expenses;
• Hold all marketing contributions in a separate bank account;
• Make their own contributions to the fund (if required by the agreement);
• Use the fund exclusively for marketing or advertising purposes that benefit the franchise network.

Financial Reporting Requirements

Section 15 of the Franchising Code outlines specific rules about financial transparency.

Within four months of the end of each financial year, franchisors must prepare detailed financial statements for the marketing fund. These statements must clearly outline all receipts and expenditures, particularly how the funds were spent on marketing activities.

Once these statements are prepared, franchisors must provide a copy to each contributing franchisee within 30 days.

Audit Obligations

Unless an audit exemption is valid, the financial statements must be audited by a registered company auditor within four months of the end of the financial year.

Franchisees must receive a copy of the audit report within 30 days of the report being finalised. The cost of the audit is paid from the marketing fund, not the franchisor personally.

There is, however, an option to bypass the audit requirement: if at least 75% of Australian franchisees contributing to the fund vote in favour of not auditing, and this vote occurs within three months of the financial year-end, then no audit is required for that period.

Need Assistance?

At SRJ Walker Wayland, we understand the importance of staying compliant with your marketing fund obligations under the Franchising Code. For tailored advice and assistance, please contact:

Andrew Bingley
SRJ Walker Wayland – Audit Manager
📞 (07) 3490 9988 | 0432 969 332
✉️ andrew.bingley@srjww.com.au
🌐 www.srjww.com.au