EOFY Franchising Code of Conduct Compliance: Key Deadlines for Franchisors
With the end of the financial year approaching, franchisors should be turning their minds to annual compliance obligations under the Franchising Code of Conduct (the Code). Missing these deadlines can expose franchisors to civil penalties, so it pays to get organised early.
Here's a summary of the key obligations and deadlines.
1. Updating Your Disclosure Document
Franchisors must update their Disclosure Document within four months of the end of each financial year - meaning the updated document must be ready by 31 October 2026 for the majority of Franchisors.
The annual update typically covers:
Current payment and expense information relating to the franchise system
Updated financial information of the franchisor (see below)
Current annual financial statements for any specific purpose funds
Material changes to the franchise system, key personnel and officers
Significant capital expenditures, franchisee payment details and other key financial information
Current details of all existing and former franchisees
Any litigation events involving the franchisor or its associates since the last update
Updated supplier rebate information and figures (see below)
2. Franchisor Solvency — Financial Statements and Audit Report
As part of the Disclosure Document update, franchisors must include current financial information about the franchisor entity. Depending on your circumstances, this will be either:
Annual financial statements for the last two completed financial years (balance sheet, profit and loss statement, etc.); or
A director signed statement of solvency confirming there are reasonable grounds to believe the franchisor can pay its debts as and when they fall due, supported by an independent audit report.
Newer franchisors who have been trading for less than two financial years have different requirements - a statutory declaration of solvency and an independent audit report on solvency as at the date of the declaration.
Action item: Begin preparing your most recent financial statements now. If you intend to rely on a statement of solvency, engage your registered company auditor early to ensure the audit report will be available by the 31 October deadline.
3. Specific Purpose Fund (SPF) Obligations
If you collect fees from franchisees for a specific purpose fund, such as a Marketing Fund or IT Fund, you have two key obligations under the Code.
Financial Statements
A financial statement must be prepared for each SPF covering the period 1 July 2025 to 30 June 2026. This must be completed by 31 October 2026, with a copy provided to franchisees within 30 days of preparation.
The financial statement must give meaningful detail of the fund's receipts and expenses including sources of income, items of expenditure, and the percentage of total income spent on each category of expense referenced in your Disclosure Document.
Audit Requirements
Unless a waiver applies, each SPF financial statement must also be audited by a registered company auditor by 31 October 2026, with the auditor's report provided to franchisees within 30 days of receipt.
The audit requirement can be waived for a financial year if 75% of Australian franchisees who contributed to the fund during that year vote in favour of waiving the audit. For FY2025/26 financial statements, any waiver vote must be completed by 30 September 2026.
Key points on the waiver:
If the 75% threshold is not reached (or no vote is held in time), the audit must proceed and be completed by 31 October 2026.
The waiver only relieves you of the audit obligation - the financial statement must still be prepared and distributed regardless.
Non-compliance with these requirements carries a civil penalty of up to 600 penalty units.
4. Rebate Disclosure
If you or an associate receives rebates, commissions or other financial benefits from suppliers in connection with goods or services acquired by your franchisees, the Code requires these to be disclosed in your Disclosure Document.
Specifically, your Disclosure Document must set out:
Whether you or an associate will receive a rebate or other financial benefit from a supplier
For each relevant supplier: the nature of the benefit, the supplier's name, and the total rebates or benefits received in the previous financial year expressed as an aggregate percentage of total group purchases from that supplier (excluding franchisor-operated units)
Whether any part of the rebate is shared with franchisees
If shared: the method for calculating how much is retained versus shared (expressed as a percentage or otherwise), and a description of each direct and indirect benefit received by franchisees
Note: You are not required to disclose the aggregate percentage figure for a particular supplier if either: (a) franchisees are permitted to source goods or services from that supplier without your approval; or (b) the entire rebate or benefit from that supplier is paid directly into a specific purpose fund for franchisees.
Action item: Begin compiling, for each relevant supplier, details of any rebates or benefits received in FY2025/26, the aggregate percentage of group purchases this represents, and whether and how any portion is shared with franchisees.
Key Deadlines at a Glance
| Obligation | Deadline |
|---|---|
| SPF audit waiver vote (if applicable) | 30 September 2026 |
| Updated Disclosure Document | 31 October 2026 |
| SPF financial statements prepared and distributed | 31 October 2026 (distribute within 30 days) |
| SPF audit completed and report distributed | 31 October 2026 (distribute within 30 days of receipt) |
Need assistance?
If you have questions about your compliance obligations or would like assistance with your Disclosure Document update, specific purpose fund reporting or rebate disclosure, the Legalite team is here to help. Contact us to get started