Australian Newsagency Blog

A blog on issues affecting Australia's newsagents, media and small business generally.

Newsagency marketing groups / franchises and marketing funds

Mark Fletcher
June 23rd, 2014 · No Comments

I’ve been asked a couple of times recently about marketing fees they pay to their franchise / newsagency marketing group and the obligations of the groups to disclose how the funds are spent.

One business owner told me their group, which operates under a franchise agreement, has refused to provide any visibility of marketing funds collected from members and how they have been spent. The group in question is collecting well over half a million dollars a year.

The law is clear on marketing funds for groups that fall under the franchise code of conduct.

Here is what the Trade Practices (Industry Codes – Franchising) Regulations 1998 says about this:

17            Marketing and other cooperative funds

(1)   If a franchise agreement provides that a franchisee must pay money to a marketing or other cooperative fund, the franchisor must:

(a)    within 4 months after the end of the last financial year, prepare an annual financial statement detailing all of the fund’s receipts and expenses for the last financial year; and

(b)    have the statement audited by a registered company auditor within 4 months after the end of the financial year to which it relates; and

(c)    give to the franchisee:

(i)    a copy of the statement, within 30 days of preparing the statement; and

(ii)    a copy of the auditor’s report, if such a report is required, within 30 days of preparing the report.

(2)   A franchisor does not have to comply with paragraph (1) (b) for a financial year if:

(a)    75% of the franchisor’s franchisees in Australia, who contribute to the fund, have voted to agree that the franchisor does not have to comply with the paragraph; and

(b)    that agreement is made within 3 months after the end of the financial year.

(3)   The agreement referred to in paragraph (2) (a) will remain in force for 3 years, and franchisees must vote, at the end of that time, in accordance with paragraph (2) (a), for the agreement to remain in force.

(4)   If a franchise agreement provides that a franchisee must pay money to a marketing or other cooperative fund, the reasonable costs of administering and auditing the fund must be paid from the fund.

If you are in a marketing group or any franchise group and contributing to a marketing fund, they have an obligation to report to you. If they have not been doing this you can report them to the ACCC.

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Category: Ethics · Newsagency management

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