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Australian Franchise Advertising Funds Under Attack

The age old question on how so many Australian franchisors syphon advertising funds continues.

"It comes as advertising funds across the $170 billion franchise sector are under scrutiny, with evidence building that some franchisors are misusing the funds to artificially boost profits. Some industry experts estimate that more than $1 billion a year is collected from franchisees in marketing fees.

Under the Franchising Code, a franchisor must prepare an annual financial statement for each advertising fund, detailing all the fund's receipts and expenses for the past financial year then releasing a set of audited accounts.

It sounds good in theory, but the reality is the marketing fund accounts are often scant in detail, lack transparency and are left to the franchisor's discretion, including how much they allocate to overheads and administrative costs. This lack of rigorous external governance means they can be easily manipulated and misused – and they are."  Adele Ferguson: Fairfax Media

Australia's war on rogue franchising appears to be heating up again. The questions will ultimatley come down to how much of an effort victims will put in to get a Franchising Tribunal up and running and how much money the Franchise Council of Australia will pay another small business minister to block those efforts. 

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