If you have not already updated your 2011 Disclosure Document and your financial year end was 30 June you are in breach of the Franchising code of Australia.
Under section 6 of the Code, franchisors must update their whole Disclosure Document within 4 months of the end of the financial year, which for most franchise systems is 31 October 2011.
Key points to remember are:
Any franchisee entering into an agreement after 31 October 2011, whether it be as a result of the grant of a new franchise, a resale, a renewal or just as a result of parties entering into an agreement that varies a prior franchise agreement; must have been given the current franchise documentation i.e. updated to at least 1 July 2011, at least 14 days prior to the signing of such documents.
Existing franchisees have the right to request, once every 12 months, that a current Disclosure Document be provided to them. This demand must be met within 14 days of their demand.
The ACCC can as part of their audit powers require a copy of the past and current Disclosure Document and related franchise materials at any time, and franchisors must generally comply within 21 days.
Disclosure Document review
It is recommended that the whole disclosure document should be reviewed with relevant sections updated as required, but pay particular attention to:
Marketing Fund update:
Prepare an annual financial statement for the marketing fund, and have the financial statement audited by a registered company auditor within 4 months of the end of the financial year.
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