Do companies have the option to pay dividends in franked or unfranked forms?
A: Potentially yes (if they have the franking credits). They can choose to frank the dividend or leave it unfranked.
Remember, franking credits are absolutely of no value to the company – they are only of value to the shareholders. Franking credits represent the company tax paid to the Australian Taxation Office – for each dollar of tax they pay, the get 1 dollar of franking credits. Accordingly, if a company has the available franking credits, 99.99% of the time it will frank the dividend.