Buying a Franchise in Australia: Check Marketing Funds

Marketing contributions can look like a small addition to a franchise fee, but they create an ongoing financial commitment. Before joining Australia’s franchising community, establish what you must pay, what the money may support and how you can check its use. A national advertising campaign is not the same thing as a promise to deliver customers to your outlet.

Understand the fund and its legal framework

Australia regulates franchising through the mandatory federal Franchising Code of Conduct, enforced by the Australian Competition and Consumer Commission (ACCC). The current Code commenced on 1 April 2025. The Competition and Consumer Act 2010 and Australian Consumer Law also apply to franchise businesses.

Under the Code, marketing funds and other funds collected for designated purposes are known as specific purpose funds. Rules govern how their money can be used, and franchisees must receive an annual financial statement explaining receipts and expenditure. These protections provide accountability; they do not guarantee that every campaign will benefit every outlet equally.

Ask your solicitor to identify which payments fall within these rules and which are ordinary fees paid to the franchisor. A charge labelled ‘brand support’ or ‘digital services’ needs explanation: its name alone does not establish how it must be administered.

Read the fund provisions in the disclosure document alongside the proposed franchise agreement. Have any inconsistency clarified before committing, rather than assuming the more favourable description will prevail.

Map every marketing payment

Request a complete schedule separating pooled fund contributions from spending you must undertake yourself. Your obligations might include national campaigns, regional promotions, local advertising, website services or opening publicity. Do not assume one payment covers them all.

For each charge, establish:

• Whether it is fixed, turnover-based or calculated another way.
• Whether quoted amounts include GST.
• When payment becomes due and whether minimum contributions apply.
• Whether contributions continue during temporary closure or reduced trading.
• Who can change the charge, under what conditions and with what notice.
• Whether spending on your own advertising counts towards a compulsory local marketing budget.

Also distinguish approval to advertise from payment for advertising. You may have to fund local activity while still obtaining approval for its design, wording and placement.

Ask your accountant to show these commitments as separate lines in your operating budget. This makes duplication visible. For example, a compulsory fund contribution, a local advertising minimum and a separate digital services fee may all support marketing without paying for the same service.

Examine how contributions are spent

Ask for the latest available fund financial statements, any accompanying auditor’s reports and the current marketing plan. If the fund is new, request its proposed budget and governance arrangements instead. Treat a plan as an intention, not a contractual promise, unless the agreement makes it one.

Look beyond the headline advertising total. Ask for explanations of administration charges, agency fees, website expenditure, production costs and payments to businesses connected with the franchisor. Such expenditure is not automatically improper, but you need to understand what it buys and whether it fits the fund’s disclosed purpose.

Useful questions include:

• Who decides the budget and approves expenditure?
• Which services are delivered by the franchisor or related businesses?
• How are unused contributions handled?
• How are shared campaign costs allocated between different brands or activities?
• Does the fund pay for attracting customers, recruiting franchisees, or both, and what permits that spending?

Seek written answers. A statement showing money spent demonstrates expenditure, not necessarily value. Request explanations of the objectives and results of major campaigns without treating past results as a forecast for your outlet.

Assess local benefit and ongoing accountability

A national campaign may build brand awareness without generating an even distribution of enquiries. Ask how the marketing plan accommodates your location, customer base and services, particularly if the network operates across very different markets.

For digital campaigns, establish where enquiries go, how customer locations are identified and whether advertising directs customers towards outlets or a central sales channel. Keep the focus on what your contribution funds and how performance is measured.

Find out how franchisees receive reports, raise spending questions and contribute suggestions. A marketing committee can provide useful input, but do not assume it has decision-making powers: ask for its terms of reference.

Before signing, give your solicitor a list of unresolved fund questions and ask your accountant to test affordability without assuming an immediate sales uplift. If an important assurance concerns a guaranteed service or allocation, seek appropriate contractual wording.

Practical takeaway: Know the payment, permitted purpose and reporting arrangements for every marketing charge. Buy into a clearly explained commitment, not an expectation that pooled advertising will automatically deliver local sales.