Buying a Franchise in Australia: Check Marketing Fees

A recognisable brand can be a major reason to join Australia’s franchising community, but its advertising comes at a cost. Before buying, establish exactly what you must contribute, who controls the money and what reporting you will receive. A marketing levy is not a promise of customers, and a national campaign may not replace the need to promote your own business locally.

1. Separate the different marketing charges

Do not treat a quoted marketing percentage as your complete advertising budget. Request a written schedule covering every compulsory marketing payment and activity, then compare it with the franchise agreement and disclosure document.

Distinguish between:

• Shared fund contributions: payments pooled for purposes such as brand advertising or promotional campaigns.
• Local marketing expenditure: money you must spend directly to promote your own business.
• Separate service charges: website, booking platform, directory listing or digital campaign fees.
• Promotional costs: discounts, free products, campaign materials or additional staffing needed to deliver offers.

Ask whether each charge is fixed, calculated on sales or payable only when a campaign runs. For sales-based contributions, check the definition of turnover: does it include GST, refunds, delivery charges or sales made through third-party platforms?

Also establish whether a minimum contribution applies when sales are low. Two brands quoting the same percentage can create very different cash commitments once their calculation rules and extra obligations are considered.

2. Understand the Australian legal framework

Australia specifically regulates franchising through the mandatory Franchising Code of Conduct, made under the Competition and Consumer Act 2010. The Australian Competition and Consumer Commission (ACCC) regulates compliance with the Code. The Australian Consumer Law also applies, including its prohibition on misleading or deceptive conduct.

A new Code commenced on 1 April 2025, with some additional requirements applying from 1 November 2025. It includes rules for specific purpose funds, which can include shared marketing funds. These rules address matters such as how fund money is managed, permitted expenditure, financial statements and auditing, subject to applicable exceptions.

Ask an independent franchise solicitor to identify which rules apply to your proposed agreement and fund. Do not assume that every payment labelled “marketing” is necessarily treated in the same way: a shared fund contribution and a fee for a service may require different analysis.

The franchisor must provide prescribed pre-contract information, generally with at least 14 days for consideration before you enter the agreement or make a non-refundable payment. Use that period to investigate marketing obligations rather than simply checking the headline fee.

3. Examine where shared money goes

Request the latest available fund financial statement, any applicable auditor’s report and an explanation of major spending categories. If a fund is new and has no spending history, ask for its proposed budget and governance arrangements instead.

Look beyond the total labelled “advertising”. Establish how much goes towards media placement, creative production, agencies, administration and payments to the franchisor or associated businesses. Ask what services related-party payments cover and how those charges are determined.

Useful questions include:

• What purposes can the fund support under the agreement and disclosure document?
• Who approves expenditure, and do franchisees have any input?
• How are national, regional and local campaigns prioritised?
• What happens to unspent contributions?
• When and how will franchisees receive financial reporting?

Do not expect your contribution to be spent dollar for dollar in your suburb. Shared advertising may legitimately support the wider brand. The commercial question is whether the permitted spending and campaign strategy make sense for your proposed business.

Financial reporting shows where money went; it does not, by itself, prove that campaigns generated profitable sales.

4. Test your local advertising obligations

Ask for the local marketing requirements and approval process before committing. Find out whether you can choose local channels, appoint an agency or manage social media yourself, and who owns the resulting accounts and creative assets.

Clarify how compulsory promotions affect your margin. A campaign may increase sales while reducing the amount retained after discounts, product costs and transaction charges. Ask your accountant to model the cash impact using the actual promotional mechanics rather than assuming every extra sale is equally valuable.

Check whether approved local expenditure counts towards a minimum spending requirement. Establish what evidence you must retain and whether unused spending obligations carry forward.

Also ask how enquiries generated centrally are allocated and tracked. A campaign report showing website visits across Australia tells you little about the number of suitable enquiries reaching your location.

5. Put the answers into your buying decision

Build a marketing cost schedule for your accountant showing shared contributions, local spending, separate fees and promotional costs. Ask your solicitor to check fee increases, spending discretion, reporting rights and any promises made during recruitment.

If an assurance matters to your decision, seek appropriate written contractual confirmation. Keep campaign forecasts separate from guaranteed commitments, and retain the supporting correspondence.

Practical takeaway: buy with a clear understanding of what you must pay, what the money may fund and what information you can obtain. Brand visibility is valuable, but it is not a substitute for transparent costs and workable local marketing obligations.