I’m A Franchisor - What Should I Know About Marketing Funds?

If you’re growing a franchise network in Australia, a well-run marketing fund can be a powerful lever for brand growth. It lets all franchisees pool resources for national and regional campaigns that boost awareness and drive sales across the system.

But marketing funds also come with strict legal obligations and high expectations from franchisees. How you set up, spend and report on the fund can make the difference between strong network support and ongoing disputes.

In this guide, we’ll break down what an Australian franchisor needs to know about marketing funds - from the Franchising Code of Conduct requirements to practical setup tips, spending rules, reporting, and the key contract terms to get right.

What Is A Franchise Marketing Fund?

A franchise marketing fund is a central pool of money that franchisees (and sometimes the franchisor) contribute to for brand-wide marketing and advertising activities. Contributions are usually a percentage of gross sales or a fixed weekly amount, as set out in the franchise agreement and disclosure document.

The idea is simple: by coordinating spend at the network level, you can run bigger, more consistent marketing than any single site could afford, and everyone benefits from the uplift in brand recognition.

Because franchisees pay into the fund, you need clear rules about how the money can be used, when and how you’ll report on it, and what happens to any surplus. That’s where the Franchising Code and your own documents come in.

What Does The Franchising Code Require?

In Australia, the Franchising Code of Conduct (a mandatory industry code enforced by the ACCC) sets out baseline requirements for marketing and advertising funds in franchising systems. Key obligations include:

Separate Account And Proper Controls

• Hold fund contributions in a separate bank account under the franchisor’s control.
• Use the fund solely for legitimate marketing and advertising activities for the franchise system - not for unrelated expenses.

Annual Statement And Timing

• Prepare an annual financial statement for the fund that details all receipts and expenditure for the relevant financial year.
• Provide the statement to franchisees within the timeframes required by the Code (generally within four months after the end of the fund’s financial year).

Audit (Unless Franchisees Vote Otherwise)

• Have the statement audited by a registered company auditor unless a majority of franchisees who contribute to the fund vote to waive the audit for that year.
• If an audit is required, provide the audit report to franchisees with the annual statement.

Disclosure And Transparency

• Disclose in the disclosure document key details about the fund, including the contribution amount, what it can be used for, any administration fees, and whether the franchisor also contributes.
• Be transparent about how decisions are made regarding expenditure (e.g. national vs local campaigns) and how surpluses or deficits will be handled.

Use Of Interest And Admin Fees

• If the fund earns interest or you charge administrative or management fees, these must be permitted and clearly disclosed.

Your franchise agreement and disclosure document need to align with the Code. It’s common to include a dedicated marketing fund clause within the Franchise Agreement and to keep the disclosure document updated as fees or fund rules change over time through a Disclosure Document Update.

What Can (And Can’t) The Fund Pay For?

Franchisees expect every dollar to go towards growing the brand and increasing sales. The Code also guards against misuse. As a practical guide:

Common Permitted Expenditure

• Brand-wide media buying (TV, radio, out-of-home, digital ads).
• Creative development and production for campaigns (video, photo, design, copywriting).
• Search, social and marketplace advertising, SEO/SEM and digital optimisation.
• Brand website, app and martech platforms that directly support marketing activity.
• Public relations, influencer campaigns and content creation tied to brand promotion.
• Marketing agencies’ fees where directly related to planning, executing and measuring campaigns.

Expenditure That Usually Raises Issues

• General head office costs and salaries not directly related to the fund’s marketing activity.
• Legal fees unrelated to marketing spend (for example, general disputes or corporate matters).
• Store development costs or capex that benefit specific sites rather than the network.
• Rebranding or system changes that are arguably capital in nature (unless your documents and disclosures clearly allow it and it’s genuinely for brand marketing).

When in doubt, ask: does this expense clearly and directly promote the franchise brand? Is it consistent with what we disclosed? And will our annual statement make sense to a reasonable franchisee looking for value and fairness?

How Do We Set Up And Run A Compliant Fund?

A practical, step-by-step approach will keep you compliant and build trust with your network.

1) Draft Clear Fund Rules And Contract Terms

Start by locking in how contributions are calculated, when they’re due, what the fund can pay for, audit and reporting requirements, and how surpluses/deficits are handled. These rules should be reflected in your Franchise Agreement and disclosure document so franchisees know exactly what to expect.

2) Open A Dedicated Bank Account

Set up a separate bank account for the fund. Implement internal controls (authorisations, reconciliations, monthly reporting) so you can produce clean records quickly when it’s time to prepare the annual statement and any audit.

3) Build An Annual Marketing Plan And Budget

Prepare a plan that breaks down proposed spend (e.g. 60% national media, 25% digital, 10% creative, 5% PR), with timing and objectives. Share the high-level plan with franchisees early so they can see how their contributions translate into activity.

4) Track Spend And Report Frequently

Keep line-by-line records of fund receipts and payments. Consider quarterly snapshots to franchisees summarising campaigns, spend against budget and key results. This regular communication reduces friction and makes the annual statement a non-event.

5) Prepare The Annual Statement And Audit

Within the Code timeframe after the financial year ends, circulate the annual statement (and audit report if required). Be ready to answer reasonable questions and supply supporting detail.

6) Refresh Disclosures And Templates

If contribution amounts, permitted uses or administration fees change, ensure your disclosure document is refreshed through a Disclosure Document Update before offering new franchises or renewing existing ones.

What Should Our Documents Say?

Your franchise documents are your single source of truth. They should match the Code and set practical expectations. Key terms to address include:

• Contribution Amount And Basis: State the percentage or fixed fee, how it’s calculated (e.g. on gross sales), GST treatment and payment timing.
• Permitted Expenditure: Define categories you’ll spend on (media, digital, creative, PR, website, agency fees) and any exclusions. Keep this aligned with the Code’s intent.
• Administration Costs: If you intend to recover admin or management fees from the fund, specify the basis and cap if any.
• Decision-Making: Clarify how the franchisor decides on campaigns, whether there’s consultation, and how local marketing initiatives fit with national activity.
• Audit And Reporting: Set out the audit position (subject to franchisee waiver) and the timing and form of the annual statement.
• Surpluses/Deficits: Explain whether surpluses roll over to the next year, and how temporary deficits will be handled.
• Interest: Confirm whether interest earned stays in the fund and how it’s applied.
• End Of Franchise: Note that contributions are generally non-refundable and relate to system-wide marketing rather than a specific outlet.

These provisions typically sit within a carefully drafted Franchise Agreement, supported by a clear disclosure document. If you also run brand promotions or prize draws, set them up with compliant Competition Terms & Conditions to reduce risk around prize delivery, eligibility and advertising claims.

Advertising Law, Privacy And Digital Marketing - What Else Matters?

Marketing funds don’t exist in a vacuum. Your brand advertising and data practices must also comply with wider Australian laws.

Australian Consumer Law (ACL)

Your advertising must not mislead or deceive. This covers claims about price, performance, “was/now” discounts, testimonials and comparative ads. Train your team and agencies to vet claims and keep evidence on file. If you want a quick refresher, read more on misleading or deceptive conduct and how the ACL applies to marketing.

Email, SMS And Digital Promotions

If you’re running email campaigns, SMS marketing or retargeting, make sure your practices align with Australian email marketing laws around consent, unsubscribe mechanisms and accurate sender identification.

Privacy And Data

If you collect personal information for marketing (for example, newsletter sign-ups, loyalty programs or online enquiries), you’ll need a compliant Privacy Policy that explains what you collect, how you use it and how customers can access or correct their data. Align your marketing tech stack and processes with what your policy promises.

Website And Platform Terms

Where campaigns drive traffic to a website or app, make sure your digital touchpoints have up-to-date Website Terms and a Privacy Policy, and that any promotional landing page rules are clear to consumers. For prize draws or contests, run them under proper Competition Terms & Conditions to set expectations and avoid disputes.

Common Issues And How To Avoid Disputes

Even with the best intentions, marketing funds can become flashpoints. Here are frequent issues and how to manage them.

“We Don’t See The Value”

Franchisees may question whether the fund is delivering sales. Share the annual plan, give quarterly updates, and report simple KPIs (reach, clicks, footfall proxies, campaign ROAS where sensible). Transparency builds support, even when market conditions are tough.

Use Of Funds For Gray-Area Expenses

Expenses like rebranding, store signage, or corporate events often trigger debate. If it’s not a clear brand-wide marketing activity, consider paying from the franchisor’s account (not the fund), or get franchisee feedback first. Where the expense is allowable, ensure it’s clearly disclosed in your documents.

Late Or Missing Contributions

Spell out contribution due dates and consequences for late payment in the Franchise Agreement. Consistent enforcement keeps the fund stable and fair to franchisees who pay on time.

Audit Waiver Process

If you’re seeking to waive the audit in a given year, follow the Code process carefully and maintain records of the vote. Some networks prefer to audit annually regardless - it’s an additional cost, but can strengthen trust.

Changing Contribution Rates

Any change to contribution amounts or permitted uses must be handled carefully: update your disclosure document before you offer or renew, and give clear notice to your network. Sudden changes without explanation are a quick way to lose support.

Local Marketing Vs National Campaigns

Franchisees often want to see activity in their backyard. Consider a structure where a small percentage is reserved for local co-op activity, or use geo-targeting in digital campaigns. If your documents allow, you can also set guidelines for approved local initiatives while the fund focuses on national work.

Compliance Slippage

Missing the annual statement deadline or failing to keep the fund in a separate account can attract regulatory attention and cause franchisee unrest. Create an internal compliance calendar and assign responsibility for each task well ahead of due dates.

Key Takeaways

• Marketing funds are powerful for brand growth, but they come with strict duties under the Franchising Code - especially around separate accounts, permitted use, disclosure, annual statements and (unless waived) audits.
• Be explicit in your documents about how contributions are calculated, what the fund can pay for, and how you manage surpluses, admin costs, decision-making and reporting.
• Spend fund money only on legitimate brand-wide marketing and advertising; avoid head office or site-specific costs unless clearly allowed and disclosed.
• Back up your compliance with strong processes: dedicated bank account, a transparent plan and budget, regular updates to franchisees, and timely annual statements.
• Remember wider laws: the ACL prohibits misleading claims, email and SMS require consent and opt-outs, and a clear Privacy Policy is essential when you collect marketing data.
• Clarity and communication prevent disputes - if franchisees understand how the fund works and can see the activity, they’re far more likely to support it.

If you’d like a consultation on setting up or reviewing your franchise marketing fund - including your Franchise Agreement, disclosure and fund rules - you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.