REMINDER: 31 October 2015 deadline for updating franchise documents

Wrays would like to remind its franchisor clients of the upcoming deadline for updating their franchise disclosure documents and for preparing marketing fund statements. 

Under the new Franchising Code of Conduct, which came into effect on 1 January 2015, franchisors must meet new Code requirements in relation the information that they provide to their prospective and established franchisees.

Up to now, there has been a transitional period in place to allow franchisors to continue using their existing disclosure document, but this transitional period ends on 31 October 2015.  From 1 November 2015, all disclosure documents must meet the new Code requirements.

If you have not already done so, it is essential that you review and update your disclosure document immediately, to ensure that you are in compliance with the new Code before the transitional period ends on 31 October 2015.  Failure to review and upgrade documents could result in substantial civil penalties.

We would also like to remind franchisor clients of important obligations which were imposed by the new Code in relation to franchise marketing funds, which must be complied with by 31 October 2015.  Under the new Code, if a franchise agreement requires a franchisee to pay money to a marketing fund, the franchisor must maintain a separate bank account for the fund, provide additional disclosure to the franchisee about the status and expenses of the fund and must contribute to the fund for franchisor owned businesses.  Franchisees must prepare an annual financial statement detailing all of the fund’s receipts and expenses for the last financial year, and have that statement audited, within four months of the end of the financial year, ie, by 31 October 2015.

If you are yet to update your disclosure document, or if you have any other questions about the requirements of the new Code, please contact Judith Miller to discuss how Wrays can assist you.

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