FRANCHISE COUNCIL OF AUSTRALIA | ANNUAL REPORT 2011 - 2012
Franchise Council of Australia Ltd ABN 17 002 789 988 and Controlled Entities
ExECutivE DirECtor’s rEport
ChAirmAN’s mEssAgE
stAtE prEsiDENt’s mEssAgE - WA state Chapter
stAtE prEsiDENt’s mEssAgE - viC/tAs state Chapter
stAtE prEsiDENt’s mEssAgE - sA state Chapter
stAtE prEsiDENt’s mEssAgE - QLD/Nt Chapter
stAtE prEsiDENt’s mEssAgE - NsW/ACt state Chapter
WomEN iN FrANChisiNg Forum
FrANChisEE Forum
EDuCAtioN Forum
LEgAL CommittEE
EthiCs CommittEE
stAtE ChAptEr CommittEE mEmBErs
NAtioNAL pArtNErs
NotiCE oF ANNuAL gENErAL mEEtiNg
DirECtor’s rEport
stAtEmENt oF ComprEhENsivE iNComE For thE yEAr ENDED 30 JuNE 2012
stAtEmENt oF FiNANCiAL positioN As At 30 JuNE 2012
stAtEmENt oF CAsh FLoW For thE yEAr ENDED 30 JuNE 2012
stAtEmENt oF ChANgEs iN EQuity For thE yEAr ENDED 30 JuNE 2012
NotEs to thE FiNANCiAL stAtEmENts For thE yEAr ENDED 30 JuNE 2012
DirECtors’ DECLArAtioN
AuDitor’s iNDEpENDENCE DECLArAtioN
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the strategy set by the FCA Board over the past four years has been clear and consistent: maintain a favourable and stable operating environment that allows franchise business owners to do what they do best, with the least interference and distraction, and make sure the right programs are in place to support a growing pool of fully aware franchisees, who are able to get the funding they need to launch into business and improve their performance over time.
the strategy is not just sensible, it is a direct response to the key
issues facing every emerging franchise system and many of the
established brands as well.
in fact, the annual survey done for the past four years by
pricewaterhouse Coopers (pwC) with the cooperation of the
FCA has identified consistent challenges confronting the top
200 franchise systems in Australia/New Zealand. the top two
challenges identified in those four annual pwC surveys have
been availability of quality franchisees and the ability to source
funding to get those potential franchisees into business.
through the pwC surveys, our top franchise systems have been
sending a clear message: We have latent growth . the (outstanding)
growth we have experienced could be even greater, had we more
quality potential franchisees available and more finance available to
help them launch their business-owning careers.
i will come back to the FCA strategic response to this message in
a moment. But it is worth pausing to note just how impressive the
growth achieved by our established systems has been.
Four years ago, the world was reeling from the impact of the
global financial crisis. the us and many European countries of
much greater scale than Australia are still reeling. in a period
when a number of countries have had successive years of
economic contraction, Australia has fared relatively well, with
annual growth of around 3%.
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And what is the comparison for those pwC surveyed top 200
Australia/NZ franchise brands? top line growth of more than
11% every year since 2008/09. What an amazing performance.
And what’s more, those systems were not surprised by this
achievement. When others were crying doom and gloom, they
predicted the growth a year out – and then got it, year after
year, despite the extremely tough times in retail!
so when those businesses say ‘we could do more’, governments,
mps and others with an interest in economic prosperity
(i.e. everyone!) should be asking ‘what can we do to help?’.
unfortunately, a handful of politicians have been doing the
opposite. FCA chairman, stephen giles, and i have talked at
length about the background to these unwelcome attempts
to interfere with the highly successful franchising formula
we have in Australia – a formula we can confidently claim to
be the world’s best. so, i won’t dwell on that topic here. it is
an ongoing task, in which we have had good success after a
long battle in WA, a comprehensive outcome in Queensland
(where the battle was much smaller and shorter) and strong
government support in victoria and NsW. the battle is
ongoing in south Australia, where we do face the threat of a
different set of franchising rules being trumpeted by a NsW
academic, the sA Deputy small Business Commissioner, Frank
Zumbo. (yes, that is right, a sydney-based academic from the
university of NsW is the deputy small Business Commissioner
in sA and is involved in dispute resolution in sA). And we face a
possible review of the Franchising Code of Conduct next year.
this battle to overcome moves for unhelpful legislative
intervention is central to the job of maintaining a favourable and
stable operating climate for franchise businesses. it is therefore
a key element of the implementation of the strategy i mentioned
at the start of this report. stephen giles mentions many more
aspects in his Chairman’s report, including the Franchisee
success Club, the AFL retired player initiative, the franchisee
funding push and the retail Leasing Code of Conduct.
All these initiatives are aimed at enhancing the credibility
of the sector, highlighting its success for franchisors and
franchisees and thereby building confidence for the potential
new entrants to the sector.
our education initiatives aim to ensure that when the new
entrants arrive, they do with their ‘eyes wide open’ and can
source relevant, ongoing education to improve their business
management capability and profitability. Education programs
are also targeted to ensure franchisor businesses have the
right options available for staff and senior executives to build
their skills, expertise and adaptability.
to execute our extensive event calendar and all our other
programs, FCA relies upon the support of many volunteers and
partners.
on behalf of everyone at the FCA, i say thank you to all the
volunteer committees (details are included later in this Annual
report). A special thanks goes to chairman, stephen giles, and
Legal Committee Chair, Derek sutherland, who have done a
power of high quality voluntary work for the good of the sector
nationally and in individual states.
Finally, my thanks go to our partners and event sponsors.
Without the backing of our partners franchisebusiness.com.au
(directory website), pacnet (communications provider), and
Whirlwind print (print and marketing services), we simply
would not be able to do the things we do to help make
franchising a great place to be. the support of NAB (National
Awards sponsor) and Franklyn scholar (Academy sponsor) is
also highly valued.
these partners and sponsor companies have not only provided
long term, outstanding service to the sector, their people have
made it a pleasure to do business and be associated with them.
We look forward to more of the same in 2013 and beyond.
Steve Wright
Executive Director
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my greatest ongoing frustration over the many years i have served on the FCA Board is that the Australian franchise sector rarely gets the credit it deserves.
the franchise sector does not just represent franchising, it represents
successful small business in every sector. to test this theory, look at
the market leaders in almost every sector – food, bakery, convenience
stores, fuel, motor vehicle retail, real estate, bedding, homewares,
health and beauty, pharmacy, pool servicing, lawnmowing, home
services etc., and try and find a successful small business of any size
and scale that is not involved in franchising. small businesses that
do not operate under the franchise model simply cannot compete
effectively in what is a highly competitive market featuring major
supermarket chains, department stores and online retailers.
if the government had invented franchising it would be trumpeting
its economic, social, job creation and diversity achievements from
the highest places. the franchise sector is a major contributor to the
Australian economy:
• $128 billion in annual turnover.
• Earning $300 million each year in export income.
• 1100 franchise systems.
• 70,000 franchisees.
• sector employment of around 700,000 people.
the indirect economic impact of franchising has been estimated at
almost $4 billion annually.
Franchising operates across Australia, making an important
contribution not just in capital cities but in regional centres and rural
Australia. strong systems and compliance, and substantial charitable
and community involvement make the franchise sector an excellent
corporate citizen at federal, state and local community level.
the franchise sector continues to outperform the general Australian
economy, with recent reports by pricewaterhouseCoopers and
smartCompany also noting a general level of optimism amongst
Australian franchise systems for the forthcoming year. Franchised
businesses enjoy faster growth and lower failure rates. on average,
they enjoy around twice the success rate, and are 30% quicker to
become cash flow positive, compared to traditional small business.
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And they last, with the average tenure of a franchisee six
to seven years, and 95% of franchisees renewing their
agreements at end of term.
Franchising also provides universal opportunities. some areas
of employment remain largely inaccessible to people from
a non-English speaking background, but franchising is truly
multi-cultural. Without any government assistance, franchisors
provide access to training, support and opportunity that is far
more targeted and relevant than any government assistance
program. And those franchisees engage as employees people
from their own communities, extending the positive reach of
franchising. you only have to look at some of the wonderful
success stories on the Franchisee success Club website to see
the wonderful impact franchising has had on many lives.
(www.franchise.org.au/franchisee-success-club.html)
yet despite our best efforts, most of our politicians, public
servants and members of the media remain frustratingly
ignorant of the benefits of franchising, and the economic and
social contribution franchise systems make to Australian life.
it is a constant battle to get the media to print the numerous
success stories, or take a considered look at franchising.
With that in mind, we this year introduced our FrAN-Connect
program, which aims to harness the collective connections of
people within our sector to disseminate the good news about
franchising more broadly. We also prepared briefing materials
to ensure people were armed with the right information,
and understood the key issues. We continued our Franchisee
success Club, which now boasts over 200 members, so there
was a ready source of great news stories of personal triumph.
We also launched an exciting new initiative with the AFL to
seek to create a new pool of potential franchisees. these
discussions originally focused on indigenous players, but soon
spread to encompass all players.
We continue to press government to introduce legislation
modelled on the us small Business Act, that will provide
improved access to finance for potential franchisees that lack
the collateral to borrow to purchase a business, but meet
all other criteria. responses have been encouraging, as the
positive evidence since the program was introduced in the us
in 1953 is compelling. (yes, 1953 – this is hardly a new idea!)
on the political front, we continue to oppose efforts for
unnecessary state-based regulation of franchising. Apart
from south Australia, we seem to have been successful,
and even in sA we remain confident that the inherent logic
of our arguments will prevail in due course. there is simply
no rational argument to impose a state-based regulatory
framework and bureaucracy on top of the existing highly
effective federal regulatory framework. the high penetration
and success of Australian franchising, and the remarkably
low levels of disputation, justify Australia’s claim to world’s
best practice. in Australia, the level of disputation is around
1-2% of franchisees, with over 80% of all franchising disputes
being resolved by the Franchising Code of Conduct’s mediation
process. this is a stunning result, and compares with the us
disputation rate of around 8%, with many of those matters
involving costly litigation or arbitration.
Australia has the most comprehensive regulatory framework
in the world for franchising. this clearly plays a major role in
ensuring the health of the franchise sector, and in keeping
disputes to a minimum. the Franchising Code of Conduct
features a comprehensive prior disclosure regime that
gives information and confidence to new entrants and is
supported by specific provisions addressing issues such as
transfer, end of term arrangements and termination, and
including a mediation-based dispute resolution framework.
the Code is supplemented by prohibitions in the Competition
and Consumer Act on misleading or deceptive conduct and
unconscionable conduct, with all these requirements policed
in a highly effective manner by the Australian Competition
and Consumer Commission. in addition, national and state
small Business Commissioners provide low-cost mediation and
assistance with disputes.
We have continued our efforts to actively lobby government
to improve the business environment for small business
generally, and have championed the following initiatives:
• a retail Leasing Code of Conduct to curb the excesses of
major shopping centres;
• the introduction of a small Business Act to improve small
business access to finance and government contracts and
reduce the dominance of large corporations;
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• simplifications in the gst and BAs processes and the business
taxation system generally;
• exemptions for small businesses from onerous workplace relations
requirements;
• reductions in unnecessary penalty rates for casual labour; and
• lower energy costs, improved pricing for small business and lower
government red tape.
the FCA represents over 40,000 franchised businesses and the
leading franchise systems and advisors. the vast majority of the top
200 franchise systems are members, and 40% of our membership
comprises advisers/suppliers and franchisees. the FCA has over 200
members inducted into its Franchisee success Club. During the year
we have provided a range of formal and informal educational programs
and networking activities for our members - over 150 events across
Australia last year. We have also improved the quality of Australian
franchising through franchisee pre-entry education programs,
monitoring of behavior through the FCA’s member standards, new
member assessment and ongoing educational workshops and forums.
the FCA also produces a range of educational booklets, texts and
publications.
this has required investment ahead of the curve, and as a consequence
we have incurred an operating loss this year. however, our balance
sheet reserves remain strong, and if our 2012 national convention is the
success we expect, we will have substantially recovered last year’s loss
and restored our reserves in a matter of 4 months.
We remain indebted to our head office team and our army of volunteers
at chapter level, who make it possible to achieve the ambitious goals
we set ourselves. my personal thanks to our partners, and the many
members whose engagement and support makes this such a wonderful
collaborative and high energy sector. my thanks also to my fellow
Directors, and my best wishes to incoming Chairman, michael paul, who
i am sure will continue his outstanding contribution to the FCA during
his term.
With best wishes,
Stephen Giles
Chairman
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since our last Agm things have returned to a sort of normality over here in WA – if you can call the challenges facing the retail sector normal.
i am of course, referring to the legislative activities that have come
to be the order of the day over the last couple of years. Whilst there
continue to be rumblings from both the ALp and even the Nationals,
these have not resulted in any legislative changes.
in line with most other states, we have seen the introduction of a
small Business Commissioner who also heads up the small Business
Development Corporation (sBDC). Despite the initial concerns that
this might lead to a more interventionist approach, this does not
appear to be the case, with the FCA still enjoying a good working
relationship with the sBDC.
if the response i get from the taxi drivers over East is anything to go
by, there is an impression that everything in the West is booming.
Whilst it’s probably true to say that business is generally good over
here, it certainly hasn’t returned to the pre-gFC glory days.
some evidence of this is the increase in enquiries reported by
service-based franchises, usually an indication of an insecure
employment market. the demand for these services continues to
be high and with around 1000 people a week coming in to WA, this is
likely to be the case for some time to come.
A further indication of the challenges facing franchising is the
reduced attendance at local FCA educational events. Whilst this
would seem to be counter intuitive, the fact is that many see training
and education as a cost rather than an investment, and therefore it
becomes one of the first areas to be cut when things tighten up.
Whatever the economic conditions, there will always be success
stories which is why the annual state awards night is the highlight
of the events calendar. this years event was no exception, thanks
to our awards sponsor NAB and a great group of award participants.
good luck to all the WA winners at the National Awards in Canberra.
on behalf of the Board and the WA franchising community, i would
like to thank the WA Chapter Committee who give of their time and
energy to improving the sector in WA.
Mike Stringer
sate president (WA)
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We have again experienced some challenging trading conditions for business
over the last year and an ever changing political landscape, but despite
this it is great to see the franchising sector has continued to perform
very well. this has also been a busy year for the victorian state Chapter
of the FCA and we have been working hard to engage with the franchise
community generally and appropriately represent our members at all levels
of government and with key stakeholders. in preparing for the year we spent
considerable time setting our key objectives and planning our program
of activities and events for the year to ensure they are aligned with FCA’s
National office and importantly, that they meet our members’ expectations
and needs. this process also resulted in the Chapter collectively setting our
mission statement, values, vision and purpose.
What is our purpose? to provide the FCA and our members with outstanding service and representation.
the Committee is very mindful of the tougher trading conditions and how
busy and valuable your time is, so in conjunction with the National office we
have worked hard to further streamline our events calendar to ensure we
deliver timely, relevant and educational topics with practical concepts, ideas
and outcomes that you could effectively use to improve your business. these
have also proved to be a great forum for networking with your peers in the
sector. the victorian state Conference was a great example of the quality
events being delivered to our members.
i would like to take this opportunity to thank all the FCA member firms
and individuals who have hosted these events and importantly, all of the
members who have shown support with their attendance and participation.
the next big event to diarise is NFC12 at the Canberra Convention Centre
from 7 - 9 october 2012 and i look forward to seeing you there.
please also join me in acknowledging and congratulating the hard-working
and dedicated state Chapter Committee members (past and present) for
their time and support over the year. Also, our achievements would not have
been possible without the wonderful support of the FCA National office.
We look forward to representing you all in the coming year and wish you
every success in your business.
Gary Carter
state president (viC/tAs)
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the committee is quite frustrated on how to get more attendances
at the events. Whilst they agree that the topic is very important, the
committee feels that they will get more attendances if we can find a
cheaper alternative which should attract more attendees. it may also
encourage attendees to bring more people from their office.
Following the Board meeting in Brisbane, it was agreed that the sA
committee will trial the next breakfast at the Naval and military club
which had good attendances in previous years. if this is not suitable
we have got a price from the majestic roof garden hotel for a private
room including Av for $27.50 per head.
the president will report back to the board after the next breakfast.
hall of Fame Lunchthe event was very good; we had a about 40 attendees which was
disappointing but again we think that due to business conditions cost
is an issue.
Awards Nightthis was a successful night with about 90 attendees, quite a few
had nominated for awards and this is definitely the key to get the
numbers.
Next Event the next even is the Christmas event which is always well attended
by about 70-80 people.
Mark Langford
state president (sA)
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A year of mixed results and sentiments probably best describes 2012. Whilst some within the Franchise Community have found conditions challenging, others have managed growth / continued growth and even to thrive in a tough environment.
the current climate for business is certainly one of contrasts and this also extends
beyond that of the franchise realm.
in the past 12 months we have seen a change of our state government here in
Queensland while, just as significantly, others have introduced their own state-based
legislation with implications for our industry and its members. the internet also
continues to be a hotspot for many, as demonstrated by the virtual furore around
“e-tailing” and the potential effect upon the traditional retail business model in
particular (under which many franchised businesses operate). this controversial
(and somewhat enigmatic) issue has divided consumers and businesses alike, who
amongst them see variously the potential benefits, disadvantages, opportunities and
threats that come from its undercurrent.
many in business have also wrestled with surrounding issues including the direction
or position of federal government, governments of the various states in matters,
and their respective economic performances. Encouragingly over-all though, despite
challenges and the seemingly uncertain environment, well-managed businesses still
appear to be finding a way forward.
similarly in 2012, the Queensland Chapter of the Franchise Council has continued to
move steadily forward, particularly by engaging with its members through events
and activities such as round tables, breakfasts, CEo dinners and a successful state
Conference. We’ve also had a record number of awards nominations, events dinners
and attendances to same, which will undoubtedly make for a very exciting gala
Awards Dinner at the upcoming FCA National Conference. in touching on these
areas i feel it’s also timely to express warm thanks to those who have given their
valuable support this year. thank you to my fellow Board and Committee members,
both in Queensland and nationally (and to the entire team behind the scenes),
your contribution has been greatly appreciated. Also, special mention and thanks
to retiring committee members for their efforts and involvement throughout the
extended time they’ve served the FCA and the sector.
turning to 2013, there are a few very important items immediately on the agenda in
the form of the next review of the existing Franchise Code of Conduct, along with the
propositions of state-based franchise legislation and seeking retail tenancy reform
under a national code. the Queensland Chapter will continue its active involvement
and representation in these and all matters concerning the Franchise Community. i
look forward positively to 2013 for the franchise sector and to working with all of my
valued colleagues for its further improvement and growth.
Ralph Edwards
state president (QLD/Nt)
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the franchise sector in NsW is strong and resilient. Despite tough retail conditions and government bureaucracy at an all-time high, most franchisors are trading profitably and coming up with unique ways to grow their brand awareness and overall profitability.
many of our franchisor members in NsW are established and savvy
franchise systems and it has been a challenge to stage good events with
real ‘franchise’ content. the Chapter has continued to run a number of
breakfast and round table events which have been well attended. the
stand out breakfast was undoubtedly the ‘hall of Fame’ breakfast, which
saw many CEos, franchise founders and hall of Famers attend. Although
numbers attending NsW breakfasts are not what they used to be 5 years
ago, the feedback from members who have attended has been excellent
and the Chapter is already planning some exciting events for late 2012 and
early 2013.
the highlight event of the year for me was the NsW gala awards dinner.
there were over 125 people who attended from many different franchise
systems. All award categories were well supported and the smiles of those
who won an award was priceless. i anticipate that next year’s event will be
even bigger, and i urge franchisors to encourage their star franchisees to
enter the awards. in all the doom and gloom stories that are constantly
reported, the winning of an award can make all the difference.
it has been an interesting and challenging first year as NsW/ACt president.
i have only been in the role since January 2012 and it is fair to say that
due to resignations and illness, our Chapter committee has had to rely
upon a select few to arrange and organise our events this year. i wish to
acknowledge and thank all of my fellow committee members for their
sustained efforts. i also wish to personally thank rod Laycock (Civic
video), who after many years has retired due to hectic work commitments.
however as the saying goes ‘life must go on’ and we have some new
committee members joining us who are passionate about franchising and i
look forward to working with them.
Sean O’Donnell
state president (NsW/ACt)
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this year, the Women in Franchising (WiF) Committee continued to support, assist and promote women working in the franchise sector.
importantly, it also responded to the Board’s directive
that it build and promote the credibility of franchising
through engaging with relevant women’s groups,
politicians and contacts. in some states, this has the
dual purpose of assisting with the fight against state
based franchise legislation.
For example, in Western Australia, a delegation of
women in franchising met with Kate Doust mLC,
the Labour opposition minister championing the
WA Franchising Bill, and discussed how best to
assist women in small business. Another delegation
attended a Liberal Women’s Council event, and at that
event were able to share their experiences with Bruce
Billson mp, the shadow minister for small Business,
Competition policy and Consumer Affairs. the WiF
Committee also engaged with members of other
relevant women’s groups, including Women’s Network
Australia and Women on Boards, by attending each
others events throughout the year.
A number of WiF events were held in different states
throughout the year, featuring diverse and inspiring
speakers and excellent opportunities for networking.
For example, in New south Wales, Naomi simson,
founder of leading online gift retailer, redBalloon,
was keynote speaker at a very popular event; in
Queensland, the founders of successful national
franchise endota spa, Belinda Fraser and melanie
gleeson, shared their story; and in Western Australia,
Kate grieve, the first woman on the Board of the
Fremantle Dockers Football Club and Christine
matthews, the CEo of WA Cricket Association inspired
their audience. Excellent feedback was received in
respect of all events, including from the men that
attended!
the Committee also continued with the development
of a mentoring program with the roll-out of an
optional buddy program for all new members
facilitated by the state chapter committees. We look
forward to receiving feedback regarding this new
program.
the state winners of the Women in Franchising
Awards were announced at the Excellence in
Franchising award events in each state and we
congratulate and wish each of them the best of luck
for the announcement of the national winner at
NFC12 in october. We look forward to encouraging
more women in franchising to participate in the
awards next year so that we can continue to promote
the success of women in franchising.
Finally, i would like to thank all of the members
of the WiF Committee for their participation and
contributions throughout the year.
Tamra Seaton
Chairperson
Women in Franchising Committee
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this year has been a year of consolidation for the Franchisee Forum.
We launched the Franchisee success Club Forum at NFC11 in
melbourne. With attractively subsidised rates, about 60 people
attended for the afternoon sessions which included FCA award winning
franchisees, michael Caddy (mr rental) and matt Walker (grill’d) along
with re-Anna Chatman (Franchise relationships) and motivational
speaker matt mcKeon.
the FCA has partnered with Franklyn scholar, one of Australia’s
largest rtos, to provide educational programs to franchising systems
nationally.
Franchisee Success Club
the Franchisee success Club has been extremely successful in
highlighting franchisee success stories. in 2011, the Franchisee success
Club passed the milestone of 200 members and continues to grow.
Retail leasing code
the FCA is continuing the work through discussions with government,
industry leaders, other associations and stakeholders to develop a retail
tenancy Code of Conduct; the aim being to adopt some of the good
aspects of the Franchising Code into the retail leasing area.
if we can work with landlords in a more collaborative and constructive
way, we can achieve a win-win for franchisees and for the shopping
centre owners.
the FCA will be holding an industry policy Forum at NFC12 to discuss
this initiative further and actions to be taken throughout 2012 – 2013.
Tony Melhem
Franchise Council of Australia
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During Fy12, the FCA’s Franchise Academy implemented a number of education initiatives for the benefit of franchisors and franchisees.
1. the establishment of an exclusive education
partnership with a nationally registered training
organisation (Franklyn scholar) to support
the development of a skilled franchise sector
workforce by:
a. harnessing existing vocational education and
training sector capacity for the benefit of FCA
members;
b. identifying the role of the rto and Australian
Apprenticeship Centres in delivering and
supporting workplace training, assessment and
continuing professional development;
c. maximising education and training opportunities
and access for FCA members; and
d. up-skilling and multi-skilling through innovative
and accelerated qualification pathways.
2. Coinciding with the appointment of Franklyn
scholar, the FCA secured funding from the Federal
government under the National Workforce
Development Fund, to deliver a subsidised dual
qualification – Diploma of management and
Diploma in retail management. A number of FCA
franchisors have taken up the opportunity to roll
out this nationally accredited vocational education
program to their entire network of franchisees
and store managers as part of their in-house
professional development programs supported by
Franklyn scholar.
3. the establishment of an education technology
partnership with World manager to educate
franchises on the value of technology in the
workplace. As part of the new FCA technology
partnership, World manager offers franchise
brands the opportunity to be taken nationally
into the corporate cloud in only 60 days with no
set up costs. the focus of this partnership will be
on what franchises can and should be doing with
technology within their business. At FCA events
in the coming year, World manager will be hosting
forums and speakers sharing technology stories
and franchise success. in the Franchise Academy
monthly newsletters, there will be regular stories
on how franchises are using technology to advance
their communications or operations performance.
the Franchise Academy continued to deliver on
previously successful programs including:
a. Eyes Wide open seminar for potential new
franchisees and franchisors across all major
capitals in Australia; and
b. marketing of education supplier programs
including Franchise Advisory Centre short courses
and griffith university’s online pre-entry franchise
education program.
over the course of the next 12 months the Franchise
Academy will focus on:
a. guiding the strategic direction for the development
of accredited vocational education resources and
event related programs;
b. identifying existing and emerging needs for FCA
members and priority audiences;
c. providing membership perspective and feedback to
inform the FCA Board’s contribution to building the
“Body of Knowledge” within the FCA community;
d. engage in generative discussions that provide
a platform for continuous evolution and
improvement of the FCA’s role in education related
activities; and
e. deliver relevant qualifications for the benefit
of employees in franchise systems that are the
educational ‘touch points’ with franchisees, e.g.,
Field staff, Network managers, etc.
Jim Cornish
Chair
Education
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FRANCHISE COUNCIL OF AUSTRALIA | ANNUAL REPORT 2011 - 2012
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the Legal Committee has been very active during the year by contributing to a number of activities.
the input by members of the Legal Committee was
provided by teleconferences that were well attended.
the contributions from the Legal Committee are
always helpful and they enable the FCA to hear
feedback and consider the views of senior members
of the Legal Committee and formulate opinions and
validate FCA policy positions on many things including
legislative reforms.
the Legal Committee meetings have traditionally
been used as a forum to provide updates to the
Legal Committee members on FCA policy and for
members to raise important developments affecting
the sector, particularly in relation to the vast amount
of legislative reform being undertaken at state and
Commonwealth levels.
unfortunately the state based legislative reform
proposals in sA and WA have now spread to NsW
by the introduction of another private members
Bill. these state based proposals have been an
unnecessary distraction and pre-empt the next
Commonwealth review of the Franchising Code
of Conduct. No doubt that review will require the
involvement of, and contributions from, many
members of the FCA Legal Committee in the year
ahead.
Earlier this year, the Legal Committee determined
that it would be beneficial for the FCA to be proactive
with the impending review of the Code which is
scheduled to take place in 2013. As a consequence,
the Legal Committee has been preparing a detailed
written submission to provide to the Commonwealth
which will be submitted when the review is
announced. that submission will identify common
issues of concern amongst practitioners and offer
practical solutions to improve the language and
application of the Code.
i particularly want to thank rebecca Bedford, Ben
Dodgshun and the team at minter Ellison who
have worked extremely hard to coordinate these
submissions on behalf of the Legal Committee.
many of the suggested changes and improvements
to the Code are based on extensive and considered
contributions from senior members of the Legal
Committee. i also want to thank all of those members
of the Legal Committee who contributed their
invaluable comments and suggestions on ways to
improve the language and application of the Code.
i believe that one of the functions of the Legal
Committee is to help foster collaboration and
involvement by senior members of the FCA legal
fraternity. the Legal Committee provides the
opportunity for members to demonstrate collegiate
support to colleagues and exchange ideas and
expertise, irrespective of the size of the firm they
represent or which state they are located. i would like
to thank all of those members of the Legal Committee
who have assisted this year and i am also extremely
appreciative of their time and efforts.
once again, this year the NFC12 Legal symposium
in Canberra will be a “must attend” event. i express
my sincere thanks to the tireless work of this
years’ organising committee in putting together a
comprehensive legal program. in particular, Alicia hill
(as Chair) and her team comprising philip Colman,
tamra seaton, Josh simons and tony garrison have
worked extremely hard to put together a fantastic
legal program with excellent speakers which i highly
commend to you.
Finally, i would like to thank stephen giles for his
never ending support and also each and all of
the members of the Legal Committee who have
participated and provided advice, feedback and
assistance to the various projects of the FCA, and look
forward to the projects for the next year.
Derek Sutherland
Chair
Legal Committee
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the Ethics Committee received 26 complaints during the past 12 months. All were investigated by our Chief operating officer, Kym De Britt, as part of the initial stage of our complaints handling and ethics process.
in the course of the year, in excess of 105 enquiries
were handled by the FCA head office staff, in
particular the membership manager. these enquiries
did not result in formal complaints being lodged as
they were well handled simply by providing advice
which enabled the enquirer to resolve the problem.
there were no matters which were sufficiently serious
to be escalated to the Ethics Committee.
the Ethics Committee will continue to take on a broader
role within the FCA with the production of ethical
guidelines on important franchising issues.
Stephen Giles
Chair
Ethics Committee
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FRANCHISE COUNCIL OF AUSTRALIA | ANNUAL REPORT 2011 - 2012
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VIC COMMITTEE
Corina Vucic FC Business solutions Dean Salomone hairhouse Warehouse
Julia Taylor pacnet Peter Fiasco Quest serviced Apartments
Gary Carter FC Business solutions Phil Blain Business Development Company
Sara Pantaleo La porchetta Tanya Robertson sigma pharmaceuticals
Steve Wren Appliance tagging services Cameron Graham ANZ mobile Lending
Bruce McFarlane hall & Wilcox Rebecca Bedford minter Ellison
Spiro Vournazos redcat
NSW COMMITTEE
Andy Levestek mortgage Choice Tony Melhem Coco Cubano
Kate Fellows World manager Elisabeth Ritchie HWL Ebsworth
Tracy Steinwand subway systems Australia Tania Katsanis Flowers by Fruit
Abraham Hatoum Looksmart Alterations Trish Rogers Trish Rogers Consulting
Jane Lombard the Franchise shop Paola Tanner Fuse Franchise partners
Sean O’Donnell thomsons Lawyers Rod Laycock Civic Video & Card Connection
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FRANCHISE COUNCIL OF AUSTRALIA | ANNUAL REPORT 2011 - 2012
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WA COMMITTEE
Bronwyn Butcher Frontline Tamra Seaton Norton rose
Carolyn Meighan talbot oliver Shay Scott Fisher & paykel Appliances
Dean Franks Australian Franchising systems Joe Lazzara Borrello Legal
John Dorazio Walker Wayland Leon Pike City Farmers Dogwash
Linda Steele think Big management Consultancy Mark Fernandez BDA Business Development
Mike Stringer Car Care / housework heroes Steve Hansen think Big management Consultancy
Stephen Seddon Westpac Veronica Jumeaux Downings Legal
QLD COMMITTEE
Alan Payne mr rental Warren Ballantyne gutter-vac
Dean Atkins poolWerx Darryn McAuliffe NAB
Gary Fryer inxpress Derek Sutherland iCoN Law
Jan Timms Worldwide printing James Theologidis sothertons Chartered Accountants
Jim Roddy parmalat Jason Gehrke Franchise Advisory Centre
Ralph Edwards Lease 1 Philip Ciniglio market minds
Rob Melin L&m partners Simone Pentis Fitness matters
Sarah Cobb Cariblue
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FRANCHISE COUNCIL OF AUSTRALIA | ANNUAL REPORT 2011 - 2012
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SA COMMITTEE
Andrew Bampton soloman Bampton Andrew Harvey optimum Assurance group
Ben Brazier pitcher partners Bronwyn Lee minter Ellison
Fiona Gilbert DLA phillips Fox Jock Dean outdoor Living Designs by mr Carports
Kate Rayson Communikate et al Mark Langford gametraders
Matthew Prescott thomsons Lawyers Peta St Clair Dr pC
Ramsey Andary DmAW Lawyers Rosalie Vis v.i.p home services
Ian Irvine Fox tucker Dave Thornton Dial a Digger
Andrew Russo Kennedy & Co
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FRANCHISE COUNCIL OF AUSTRALIA | ANNUAL REPORT 2011 - 2012
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Without the tremendous support of our National partners, the FCA would not be able to deliver the same outstanding results to its members. on behalf of all the state Chapter Committees the FCA extends its unequivocal gratitude to our National partners:
• Bloomtools
• Diversified Exhibitions
• Franchise Business.com.au
• NAB
• pacnet
• Whirlwind print
• Franklyn scholar
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FRANCHISE COUNCIL OF AUSTRALIA | ANNUAL REPORT 2011 - 2012
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Notice is hereby given that the 29th Annual general meeting of Franchise Council of Australia Ltd will be held at 5.30pm on 7th october 2012 at the National Convention Centre, 31 Constitution Avenue, Canberra, ACt, 2601
Agenda
1. Apologies.
2. to receive and adopt minutes of the 2011 Annual general meeting.
3. to receive and adopt the Chairman’s report.
4. to receive, consider and adopt the financial report of the
company and of the economic entity for the year ended 30 June
2012 and the reports by Directors and auditors thereon.
5. to confirm appointment of Directors.
6. to appoint Auditors.
By order of the Board
Kym De Britt
secretary
30 August 2012 N
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your Directors present their report on the company and its controlled entities for the financial year ended 30 June 2012.
Directors
the names and particulars of Directors in office at any
time during or since the end of the year are:
Stephen Giles B.Ec. LL.B Director
Fellow of the Franchise Academy. Chairman of the
FCA since December 2010. member of Executive
Committee, Former Chair of Ethics and Legal
Committees. Board member since 1997. partner with
Norton rose Lawyers.
George Yammouni B.Bus.stud CpA past Chairman
member of the Executive Committee. past president
of victorian state Chapter (2003 to 2006). Board
member since 2003. Elected as independent Director
in 2006. CEo of Bathroom Werx.
Tony Melhem mmA, BA Comm Deputy Chairman
Director and Chairman of National Franchisee Forum.
Board member since october 2007, FCA Franchisee of
the year 2005-06. gloria Jeans Franchisee.
Sean O’Donnell BA LLB (hons)
partner of thomsons Lawyers. Franchise and dispute
resolution lawyer. Accredited mediator. Current FCA
NsW/ACt Chapter president and member of FCA Legal
Committee. Board member since February 2012.
Gary Carter gradDipBus, gradDiphr
president of victorian Chapter. past member of
victorian Chapter FCA since 2008. general manager
– Franchise operations FC Business solutions. Board
member since July 2011.
Ralph Edwards Director and president of
QLD state Chapter.
Board member since october 2008. Director of Lease1.
Mike Stringer Director and president of
WA state Chapter.
Board member since october 2008, Director of Car
Care Australia and heroes group.
Jason Gehrke mBA
Chair suppliers Forum. Director of Franchise Advisory
Centre. Franchise lecturer and examiner at griffith
university. publisher, Franchise News & Events. Board
member since october 2008.
Mark Langford president of the south
Australian Chapter.
Director of the Franchise Council of Australia since
october, 2009. Founder and managing Director of
gametraders retail franchise of 37 stores nationally.
Michael Paul CEo/Founder of pack & send
international.
Deputy Chairman Board member since october 2009.
Jim Cornish Bvsc(hons), Bsc(vet)(hons)
sydney university, mBA Agsm.
CEo of Ecowash mobile international.
Board member since october 2009.
Andy Levsteck
Director and president of NsW state Chapter.
Board member July 2011 - December 2011.
Steve Wright B. Bus FCA Executive Director
Board member since February 2008.
Directors have been in office since the start of
the financial year to the date of this report unless
otherwise stated.
No Director has an interest in any contract or
proposed contract with the company declared since
the last Directors’ report.
Company Secretary
the following person held the position of Company
secretary at the end of the financial year:
Kym De Britt mBA, B. Bus, FCA Chief operating officer.
Appointed Company secretary september 2008.
FRANCHISE COUNCIL OF AUSTRALIA | ANNUAL REPORT 2011 - 2012
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Principal Activities
the principal activities of the economic entity during
the financial year were:
— establish standards of international best practice
in business format franchising for Australian
franchise systems;
— to provide information and education about
franchising to existing and potential franchisees
and franchisors;
— to lobby state and federal governments on issues
relevant to the sector;
— to develop a vital, strong and financially viable
franchising sector;
— to advance the interests of members in Australia
and in special interest markets such as the
international franchise community, Franchise
Advisory Councils, small Business Forums and
property leasing organisations (particularly
shopping centres);
— to continually foster among consumers,
governments and the business community, a broad-
based understanding of the economic importance of
having a strong franchising sector in Australia; and
— to design efficient, identified, value-added services
to members and assist them to be more effective in
franchising.
As the peak body for franchising, the FCA continues
to add value to the businesses of its members by
providing a range of services relevant to franchising
and which represent good value. the FCA recognises
that its members have different needs, and
that different types of members should co-exist
harmoniously. the success of franchising depends on
successful franchisors, and this in turn, depends on
profitable and happy franchisees.
the Franchise Council of Australia works constantly to
ensure that all activities and services are for the good
of the entire sector including franchisors, franchisees
and service providers. there were no significant
changes in the nature of the economic entity’s
principal activities during the financial year.
Performance Measurement
the company measures its performance by reviewing
attendance of members at national and state
conferences, member use of education facilities and
subscription renewal.
Operating Results
the consolidated profit of the economic entity after
providing for income tax amounted to a net loss of
$298,369.
Review of Operations
Member Development and Representation
the FCA continues to attract new members due to its
status as the sector peak representative body, and the
only body to represent the interests of the sector as
a whole, franchisors, franchisees and advisers/service
providers. the FCA is the coordinator of all mainstream
education and professional development services in the
sector, as well as the only provider of member services
including specialised insurance broking.
Franchise Academy Ltd
the FCA Franchise Academy continued to develop its
programs during the year. the Academy has expanded
its service providers with the intent to develop a
broader curriculum for the sector. the Academy
has established an exclusive education partnership
with nationally registered training organisation,
Franklyn scholar, to support the development of a
skilled franchise sector workforce. the Academy also
established an education technology partnership with
World manager to educate franchises on the value of
technology in the workplace.
continued over page
FRANCHISE COUNCIL OF AUSTRALIA | ANNUAL REPORT 2011 - 2012
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Directors’ Emoluments
Directors do not receive any fees for their time
and service on the Board. however, the FCA meets
all their travelling and accommodations costs for
attending Board meetings throughout the year.
Meetings of Directors
During the financial year, the following meetings of
Directors (including Committees of Directors) were held.
Attendances by each Director during the year were:
DIRECTOR BOARD MEETINGS TELECONFERENCE FINANCE COMMITTEE
Number eligible to
attend
Number Attended
Number eligible to
attend
Number Attended
Number eligible to
attend
Number Attended
Stephen Giles 6 6 3 3
George Yammouni 6 5 3 3
Tony Melhem 6 6 3 3
Ralph Edwards 6 5 3 3 6 6
Mike Stringer 6 6 3 3
Jason Gehrke 6 6 3 3
Mark Langford 6 4 3 3
Michael Paul 6 6 3 3
Jim Cornish 6 4 3 2
Sean O’Donnell 3 3 2 2
Gary Carter 6 5 3 2
Steve Wright 6 6 3 3 4 4
Andy Levstek 2 2 1 1
FRANCHISE COUNCIL OF AUSTRALIA | ANNUAL REPORT 2011 - 2012
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Members Liability if the Company is Wound Up
the entity is incorporated under the Corporations Act 2001 and
is an entity limited by guarantee. if the entity is wound up, the
constitution states that the liability of each member is limited.
Auditor’s Independence Declaration
the Auditor’s independence Declaration for the year ended
30 June 2012 has been received and can be found on page 45
of this report.
signed in accordance with a resolution of the Board
of Directors.
Stephen Giles
Director
Dated this 1st day of october 2012
FRANCHISE COUNCIL OF AUSTRALIA | ANNUAL REPORT 2011 - 2012
NOTE Consolidated Group
2012 $ 2011 $
revenues 2 2,508,826 2,800,468
Employee Benefits Expense (1,406,860) (1,159,756)
Depreciation and Amortisation Expense (52,813) (53,782)
Other Expenses 3 (1,347,522) (1,507,009)
Profit / (Loss) Before Tax (298,369) 79,921
income tax Expense 4 - (15,957)
Profit / (Loss) for the Year (298,369) 63,964
other Comprehensive income - -
Total Comprehensive Income Attributable to Members (298,369) 63,964
the accompanying notes form part of these financial statements.
statement of Comprehensive income for the year ended 30 June 2012
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FRANCHISE COUNCIL OF AUSTRALIA | ANNUAL REPORT 2011 - 2012
NOTE Consolidated Group
2012 $ 2011 $
CURRENT ASSETS
Cash and Cash Equivalents 5 1,237,269 1,244,716
trade and other receivables 6 154,970 248,117
inventories 7 9,893 3,450
other Current Assets 8 129,169 108,354
TOTAL CURRENT ASSETS 1,531,301 1,604,637
NON-CURRENT ASSETS
property, plant and Equipment 10 35,839 55,147
intangible Assets 11 42,223 72,023
other Non-Current Assets 8 10,000 10,000
TOTAL NON-CURRENT ASSETS 88,062 137,170
TOTAL ASSETS 1,619,363 1,741,807
CURRENT LIABILITIES
trade and other payables 12 1,027,333 817,317
short-term provisions 13 119,143 153,235
TOTAL CURRENT LIABILITIES 1,146,476 970,552
TOTAL LIABILITIES 1,146,476 970,552
NET ASSETS 472,887 771,255
EQUITY
retained Earnings 472,887 771,255
TOTAL EQUITY 472,887 771,255
the accompanying notes form part of these financial statements.
statement of Financial position as at 30 June 2012
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NOTE Consolidated Group
2012 $ 2011 $
CASH FLOWS FROM OPERATING ACTIVITIES
receipts from members and Non-members 2,772,127 2,577,260
payments to suppliers and Employees (2,833,445) (2,619,222)
interest received 57,575 48,119
Net Cash Provided by (used in) Operating Activities 16 (3,743) 6,157
CASH FLOWS FROM INVESTING ACTIVITIES
purchase of property, plant and Equipment 10a (3,704) -
purchase of intangible Assets - (32,960)
Net Cash Provided by (used in) Investing Activities (3,704) (32,960)
NET(DECREASE)/INCREASE IN CASH
AND CASH EQUIVALENTS HELD
(7,447) (26,803)
Cash and Cash Equivalents at the Beginning of the Financial year
1,244,716 1,271,519
Cash and Cash Equivalents at End of the Financial Year 5 1,237,269 1,244,716
the accompanying notes form part of these financial statements.
statement of Cash Flow for the year ended 30 June 2012
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Retained Earnings
$
General Reserves
$Total
$
Consolidated Group
Balance at 1 July 2010 707,292 - 707,292
profit Attributable to members of parent Entity 63,964 - 63,964
Balance at 30 June 2011 771,256 - 771,256
Loss Attributable to members of parent Entity (298,369) - (298,369)
Balance at 30 June 2012 472,887 - 472,887
the accompanying notes form part of these financial statements.
statement of Changes in Equity for the year ended 30 June 2012
FRANCHISE COUNCIL OF AUSTRALIA | ANNUAL REPORT 2011 - 2012
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NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
these financial statements include the consolidated financial statements and notes of Franchise Council of Australia Ltd and controlled entities (‘Consolidated group’ or ‘group’). Franchise Council of Australia Ltd is an unlisted not-for-profit public company limited by guarantee, incorporated and domiciled in Australia.
Basis of Preparation
the Directors have prepared the financial statements on the basis that the company is a non-reporting entity. these financial statements are therefore special purpose financial statements that have been prepared in order to meet the requirements of the Corporations Act 2001.
the financial statements have been prepared in accordance with the mandatory Australian Accounting standards applicable to non-reporting entities under the Corporations Act 2001 and the significant accounting policies disclosed below, which the Directors have determined are appropriate to meet the needs of members. such accounting policies are consistent with the previous period unless stated otherwise.
the financial statements have been prepared on an accruals basis and are based on historical costs, modified, where applicable, by the measurement at fair value of selected non-current assets, financial assets and financial liabilities.
a. Principles of Consolidation
A controlled entity is any entity over which Franchise Council of Australia Ltd has the power to govern the financial and operating policies so as to obtain benefits from its activities.
A list of controlled entities is contained in Note 9 to the financial statements.
As at reporting date, the assets and liabilities of all controlled entities have been incorporated into the consolidated financial statements as well as their results for the year then ended.
All inter-company balances and transactions between entities in the consolidated group, including any unrealised profits or losses, have been eliminated on consolidation. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with those adopted by the parent entity.
Where controlled entities have entered or left the consolidated group during the year, their operating results have been included from the date control was obtained or until the date control ceased.
b. Income Tax
in assessing its income tax liability, Franchise Council of Australia Ltd applies the principles of mutuality to its revenue and expenses. revenue in the form of receipts from members represents mutual income and is not subject to income tax. Expenditure associated with mutual activities is not deductible for income tax purposes. All other receipts and payments are classified for income tax purposes in accordance with income tax legislation.
income tax expense is calculated on the operating result at current taxation rates. A permanent difference due to mutual activities with members, result in the current income tax expense of Franchise Council of Australia Ltd being $NiL (2011: $16,379).
Franchise Council of Australia Ltd and its wholly-owned Australian subsidiaries have not formed an income tax consolidated group under the tax Consolidation system.
c. Inventories
inventories are measured at the lower of cost and net realisable.
Notes to the Financial statements for the year ended 30 June 2012
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NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES continued
d. Property, Plant and Equipment
Each class of property, plant and equipment is carried at cost or fair value less, where applicable, any accumulated depreciation and impairment losses.
Plant and Equipment
plant and equipment are measured on the cost basis less depreciation and impairment losses.
the carrying amount of plant and equipment is reviewed annually by Directors to ensure it is not in excess of the recoverable amount from these assets. the recoverable amount is assessed on the basis of the expected net cash flows which will be received from the assets’ employment and subsequent disposal. the expected net cash flows have been discounted to their present values in determining recoverable amounts. the cost of fixed assets constructed within the consolidated group includes the cost of materials, direct labour, borrowing costs and an appropriate proportion of fixed and variable overheads.
subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the group and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the income statement during the financial period in which they are incurred.
Depreciation
the depreciable amount of all fixed assets including building and capitalised lease assets, but excluding freehold land, is depreciated on a straight line basis over the asset’s useful life to the consolidated group commencing from the time the asset is held ready for use. Leasehold improvements are depreciated over the shorter of either the unexpired period of the lease or the estimated useful lives of the improvements.
the depreciation rates used for each class of depreciable assets are:
Class of Fixed Asset Depreciation Rate
plant and equipment - computer hardware 25.0%
plant and equipment - computer software 40.0%
Furniture and fittings 7.5%
the assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date.
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount.
gains and losses on disposals are determined by comparing proceeds with the carrying amount. these gains and losses are included in the income statement. When revalued assets are sold, amounts included in the revaluation reserve relating to that asset are transferred to retained earnings.
Notes to the Financial statements for the year ended 30 June 2012
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NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES continued
e. Leases
Leases of fixed assets where substantially all the risks and benefits incidental to the ownership of the asset, but not the legal ownership that are transferred to entities in the consolidated group, are classified as finance leases.
Finance leases are capitalised by recording an asset and a liability at the lower of the amounts equal to the fair value of the leased property or the present value of the minimum lease payments, including any guaranteed residual values. Lease payments are allocated between the reduction of the lease liability and the lease interest expense for the period.
Leased assets are depreciated on a straight line basis over the shorter of their estimated useful lives or the lease term.
Lease payments for operating leases, where substantially all the risks and benefits remain with the lessor, are charged as expenses in the periods in which they are incurred.
Lease incentives under operating leases are recognised as a liability and amortised on a straight-line basis over the life of the lease term.
f. Financial Instruments
Initial Recognition and Measurement
Financial instruments, incorporating financial assets and financial liabilities, are recognised when the entity becomes a party to the contractual provisions of the instrument. trade date accounting is adopted for financial assets that are delivered within timeframes established by marketplace convention.
Financial instruments are initially measured at fair value plus transaction costs where the instrument is not classified as at fair value through profit or loss. transaction costs related to instruments classified as at fair value through profit or loss are expensed to profit or loss immediately. Financial instruments are classified and measured as set out below.
Derecognition
Financial assets are derecognised where the contractual rights to receipt of cash flows expires or the asset is transferred to another party whereby the entity is no longer has any significant continuing involvement in the risks and benefits associated with the asset. Financial liabilities are derecognised where the related obligations are either discharged, cancelled or expire. the difference between the carrying value of the financial liability extinguished or transferred to another party and the fair value of consideration paid, including the transfer of non-cash assets or liabilities assumed is recognised in profit or loss.
Classification and Subsequent Measurement
(i) Financial liabilities
Non-derivative financial liabilities (excluding financial guarantees) are subsequently measured at amortised cost using the effective interest rate method.
Impairment
At each reporting date, the group assesses whether there is objective evidence that a financial instrument has been impaired. in the case of available-for-sale financial instruments, a prolonged decline in the value of the instrument is considered to determine whether an impairment has arisen. impairment losses are recognised in the income statement.
Notes to the Financial statements for the year ended 30 June 2012
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NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES continued
g. Impairment of Assets
At each reporting date, the group reviews the carrying values of its tangible and intangible assets to determine whether there is any indication that those assets have been impaired. if such an indication exists, the recoverable amount of the asset, being the higher of the asset’s fair value less costs to sell and value in use, is compared to the asset’s carrying value. Any excess of the asset’s carrying value over its recoverable amount is expensed to the income statement.
impairment testing is performed annually for goodwill and intangible assets with indefinite lives.
Where it is not possible to estimate the recoverable amount of an individual asset, the group estimates the recoverable amount of the cash-generating unit to which the asset belongs.
h. Intangibles
intangibles are recorded at cost less accumulated amortisation and impairment where they have a finite life. the estimated useful life and amortisation method is reviewed at the end of each annual reporting period. Where the intangibles are considered to have an indefinite life the impairment is measured annually by reference to the discounted future inflows of the asset.
i. Foreign Currency Transactions and Balances
Foreign currency transactions are translated into functional currency using exchange rates prevailing at the date of the transaction. Foreign currency monetary items are translated at the year-end exchange rate. Non-monetary items measured at historical cost continue to be carried at the exchange rate at the date of the transaction. Non-monetary items measured at fair value are reported at the exchange rate at the date when fair values were determined.
Exchange differences arising on the translation of monetary items are recognised in the income statement, except where deferred in equity as a qualifying cash flow or net investment hedge.
Exchange differences arising on the translation of non-monetary items are recognised directly in equity to the extent that the gain or loss is directly recognised in equity, otherwise the exchange difference is recognised in the income statement.
j. Employee Benefits
provision is made for the company’s liability for employee benefits arising from services rendered by employees to balance date. Employee benefits that are expected to be settled within one year have been measured at the amounts expected to be paid when the liability is settled. Employee benefits payable later than one year have been measured at the present value of the estimated future cash outflows to be made for those benefits. those cashflows are discounted using market yields on national government bonds with terms to maturity that match the expected timing of cashflows.
k. Provisions
provisions are recognised when the group has a legal or constructive obligation, as a result of past events, for which it is probable that an outflow of economic benefits will result and that outflow can be reliably measured.
l. Cash and Cash Equivalents
Cash and cash equivalents include cash on hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within short term borrowings in current liabilities on the balance sheet.
Notes to the Financial statements for the year ended 30 June 2012
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NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES continued
m. Revenue
revenue is measured at the fair value of the consideration received or receivable after taking into account any trade discounts and volume rebates allowed. Any consideration deferred is treated as the provision of finance and is discounted at a rate of interest that is generally accepted in the market for similar arrangements. the difference between the amount initially recognised and the amount ultimately received is interest revenue.
revenue from the sale of goods is recognised at the point of delivery as this corresponds to the transfer of significant risks and rewards of ownership of the goods and the cessation of all involvement in those goods.
interest revenue is recognised using the effective interest rate method, which, for floating rate financial assets is the rate inherent in the instrument. Dividend revenue is recognised when the right to receive a dividend has been established.
Dividends received from associates and joint venture entities are accounted for in accordance with the equity method of accounting.
revenue from the rendering of a service is recognised upon the delivery of the service to the customers.
All revenue is stated net of the amount of goods and services tax (gst).
n. Goods and Services Tax (GST)
revenues, expenses and assets are recognised net of the amount of gst, except where the amount of gst incurred is not recoverable from the tax office. in these circumstances, the gst is recognised as part of the cost of acquisition of the asset or as part of an item of the expense.
receivables and payables in the balance sheet are shown inclusive of gst.
Cash flows are presented in the cash flow statement on a net of gst basis.
o. Comparative Figures
Where required by Accounting standards, comparative figures have been adjusted to conform to changes in presentation for the current financial year.
p. Critical Accounting Estimates and Judgments
the Directors evaluate estimates and judgements incorporated into the financial statements based on historical knowledge and best available current information. Estimates assume a reasonable expectation of future events and are based on current trends and economic data, obtained both externally and within the group.
Notes to the Financial statements for the year ended 30 June 2012
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NOTE Consolidated Group
2012 $ 2011 $
NOTE 2: REVENUE
Continuing Operations
- AFE/Education income 803 -
- Book sales 10,968 14,251
- Commissions 15,000 15,000
- Conferences and Awards 624,436 751,357
- Diploma of Franchising 4,451 9,299
- Franchise review: Advertising and sponsorship 14,300 38,120
- Functions 91,888 143,950
- insurance Commission 37,697 75,179
- interest received 2a 57,575 48,119
- members’ subscriptions 869,950 992,236
- other income 42,357 28,686
- sponsorship 348,118 300,354
- Website Advertising 391,283 383,917
Total Revenue 2,508,826 2,800,468
a. Interest Revenue from:
- other parties 57,575 48,119
Total Interest Revenue 57,575 48,119
Notes to the Financial statements for the year ended 30 June 2012
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Consolidated Group
2012 $ 2011 $
NOTE 3: OTHER EXPENSES
Administration Expenses 213,795 265,030
Advertising and promotion 27,744 8,506
Committee Expenses 4,194 14,516
Conference and Awards Expenses 543,673 522,740
Cost of Book sales 6,442 8,479
Course Consultancy and Associated Costs 35,401 28,141
Facility Expenses 138,868 138,990
Finance and Legal Expenses 103,074 108,250
Franchise review Costs 102,938 74,594
Function Expenses 82,011 169,264
information technology Expenses 50,066 77,308
international initiatives 1,520 1,318
Loss on scrapping of Equipment - -
representation Expenses 37,796 89,873
1,347,522 1,507,009
NOTE 4: INCOME TAX
a: The Components of Tax Expense Comprise:
- Current tax - 16,379
- under / (over) provision in respect of previous year - (422)
Total tax expense - 15,957
As per Note 1b. Franchise Council of Australia Ltd applied the principles of mutuality to its revenue and expenses, in assessing its income tax liability. revenue in the form of receipts from members represents mutual income and is not subject to income tax. Expenditure associated with mutual activities is not deductible for income tax purposes.
Notes to the Financial statements for the year ended 30 June 2012
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Consolidated Group
2012 $ 2011 $
NOTE 5: CASH AND CASH EQUIVALENTS
Cash at Bank and on hand 595,794 509,520
short-term Bank Deposits 641,475 735,196
1,237,269 1,244,716
NOTE 6: TRADE AND OTHER RECEIVABLES
CURRENT
- trade receivables 151,127 248,117
- other receivables 3,843 -
154,970 248,117
Provision for Impairment of Receivables
Current trade receivables are generally on 30 day terms, with follow up every 7 days thereafter. it has not been found to be necessary to charge interest on trade receivables. By closely managing trade receivables, those which are in excess of their terms rarely become irrecoverable. Where any trade debtor does become irrecoverable, the amount is written off and is included in other Expense items. Accordingly, no provision for impairment of receivables has been required in either of the years shown in these statements.
Notes to the Financial statements for the year ended 30 June 2012
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Consolidated Group
2012 $ 2011 $
NOTE 7: INVENTORIES
Stock On Hand 9,893 3,450
NOTE 8: OTHER ASSETS
CURRENT
Credit Card Clearing 5,481 13,528
prepayments 44,044 8,106
Deposits paid 79,644 86,720
129,169 108,354
NON CURRENT
other 10,000 10,000
10,000 10,000
TOTAL OTHER ASSETS 139,169 118,354
Country of Incorporation Percentage Owned
2012 2011
NOTE 9: CONTROLLED ENTITIES
Controlled Entities Consolidated
parent Entity
Franchise Council of Australia Ltd Australia - -
subsidiaries
Franchise Academy Ltd Australia 100% 100%
FCA insurance services pty Ltd Australia 100% 100%
Franchise Academy Ltd was incorporated on 8 December 2005.
FCA insurance services pty Ltd was incorporated on 2 August 2006.
Notes to the Financial statements for the year ended 30 June 2012
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Consolidated Group
2012 $ 2011 $
NOTE 10: PROPERTY PLANT AND EQUIPMENT
Plant and Equipment
At Cost 95,236 91,531
Accumulated Depreciation (84,125) (65,641)
Accumulated impairment Losses - -
Total Plant and Equipment 11,111 25,890
Furniture and Fittings
At Cost 60,378 60,378
Accumulated Depreciation (35,650) (31,121)
Accumulated impairment Losses - -
Total Furniture and Fittings 24,728 29,257
Total Property, Plant and Equipment 35,839 55,147
a. Movement in Property, Plant and Equipment
Balance at Beginning of year 55,147 82,563
Additions 3,704 -
Disposals - -
Depreciation Expense (23,012) (27,416)
Total balance at End of Year 35,839 55,147
Notes to the Financial statements for the year ended 30 June 2012
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Consolidated Group
2012 $ 2011 $
NOTE 11: INTANGIBLE ASSETS
A. Intangible Assets Being Amortised
At Cost:
- Website and online processes 128,745 128,745
- pCi retail Lease submission 43,568 43,568
- Franchising Australia report 12,500 12,500
- Course Establishment Costs 107,799 107,799
Total Cost 292,612 292,612
Accumulated Amortisation (251,139) (221,339)
Accumulated impairment Losses - -
Total 41,473 71,273
b. Intangible Assets Which the Directors Have Assessed as
Having an Indefinite Life.
At Cost:
- trade marks 750 750
Total 750 750
Total Intangible Assets 42,223 72,023
NOTE 12: TRADE AND OTHER PAYABLES
CURRENT
trade Creditors and Accruals 67,117 118,563
superannuation and pAyg payable 60,106 56,047
unearned subscription income 591,929 443,098
other unearned income 242,074 154,708
gst obligation 66,107 44,901
1,027,333 817,317
Notes to the Financial statements for the year ended 30 June 2012
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Consolidated Group
2012 $ 2011 $
NOTE 13: PROVISIONS
Ketchell’s Case - 15,057
income tax - 16,379
Employee Entitlements 119,143 121,799
Total Current Provisions 119,143 153,235
NOTE 14: CONTRIBUTED EQUITY
in accordance with the company’s memorandum and Articles of Association, the Franchise Council of Australia Ltd is limited by guarantee and does not have share capital.
NOTE 15: CONTINGENT ASSETS OR LIABILITIES
there are no known contingent assets or liabilities as at report date.
NOTE 16: CASH FLOW INFORMATION
Reconciliation of Cash Flow from Operations with Profit after Income Tax
profit / (Loss) after income tax (298,369) 63,964
Non-cash Flows in profit
Depreciation and Amortisation 52,812 53,782
Loss on scrapping of Equipment - -
Changes in Assets and Liabilities, Net of the Effects of purchase and Disposal of subsidiaries
Decrease / (increase) in trade and other receivables 84,679 (111,994)
Decrease / (increase) in other Assets (20,814) 25,713
Decrease / (increase) in inventories (6,444) 1,832
increase / (decrease) in payables 218,484 (46,173)
increase / (decrease) in provisions (34,091) 19,033
(3,743) 6,157
Notes to the Financial statements for the year ended 30 June 2012
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Consolidated Group
2012 $ 2011 $
NOTE 17: PARENT ENTITY DISCLOSURE
Current Assets 1,493,097 1,589,339
Non-Current Assets 202,506 229,648
Total Assets 1,695,603 1,818,987
Current Liabilities 1,147,174 972,430
Total Liabilities 1,147,174 972,430
Shareholders Equity
retained Earnings 548,429 846,557
Total Shareholders Equity 548,429 846,557
profit / (Loss) (298,129) 89,726
Total Comprehensive Income (298,129) 89,726
NOTE 18: AUDITORS’ REMUNERATION
During the financial year the following fees were paid or payable for services provided by William Buck Audit (vic), the aduitor of the company:
- audit of the financial report 12,500 9,500
NOTE 19: MEMBERS’ GUARANTEE
the entity is incorporated under the Corporations Act 2001 and is an entity limited by guarantee. if the entity is wound up, the constitution states that the liability of each member is limited.
NOTE 20: EVENTS AFTER THE BALANCE SHEET DATE
there are no known events after the balance sheet date which might have a significant impact on the Consolidated group.
NOTE 21: COMPANY DETAILS
the registered office and principle place of business of the company is:
suite 6, 307-313 Wattletree road malvern East, victoria 3145
Notes to the Financial statements for the year ended 30 June 2012
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the Directors have determined that the company is not a reporting entity and that this special purpose Financial report should be prepared in accordance with the accounting policies described in Note 1 to the financial statements.
the Directors of the company declare that:
1. the financial statements and notes, as set out on pages 27 to 43 are in accordance with the Corporations Act 2001 and:
a. comply with Accounting standards and the Corporations regulations 2001; and
b. give a true and fair view of the financial position as at 30 June 2012 and of the performance for the year ended on that date of the company and consolidated group;
2. in the Directors’ opinion there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable.
this declaration is made in accordance with a resolution of the Board of Directors.
on behalf of the Board
Stephen Giles
Director melbourne
Dated this 1st day of october 2012
Directors’ Declaration
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