Buying a Franchise in Ireland: Checking Marketing Levies

A shared marketing fund can help a franchise community build recognition beyond the reach of individual businesses. However, paying a levy does not necessarily guarantee advertising in your area, a minimum number of enquiries or a say in spending. Before buying a franchise in Ireland, establish exactly what you must contribute, what the fund can pay for and what information you will receive.

1. Establish the full marketing commitment

Start with the franchise agreement, any fee schedule and the relevant operations manual provisions. Ask the franchisor to identify every compulsory marketing payment, rather than discussing only the headline levy.

Your commitment might include a regular contribution to a central fund, a launch campaign, minimum local advertising expenditure and separate charges for digital services. Clarify whether these are additional obligations or whether one payment counts towards another.

For any turnover-based charge, ask:

• Is the calculation based on sales including or excluding VAT?
• How are refunds, discounts, delivery charges and cancelled orders treated?
• Are sales through third-party platforms included before their commission is deducted?
• Is there a minimum payment even when trading is quiet?
• When must you report sales and pay the levy?

Ask your accountant to illustrate the calculation using a sample trading month. This is a check of the charging mechanism, not a forecast of likely returns.

Identify who can increase the levy, whether there is a contractual ceiling and how much notice is required. Check whether changes to the operations manual could introduce additional marketing costs without changing the stated levy.

2. Check what the fund actually buys

Request the current marketing plan, the latest available spending summary and the proposed approach for Ireland. A campaign designed for another country may build general brand awareness without helping customers find your particular business.

Ask which costs are permitted. These could include advertising placements, creative work, website maintenance, agency fees, marketing staff and administration. Broad wording such as “brand development” deserves explanation: does it include recruiting new franchisees, promoting company-owned outlets or supporting expansion into new markets?

There is an important distinction between pooled marketing and a service bought specifically for your outlet. A shared fund may legitimately benefit the network unevenly from month to month. Do not assume your contribution will be spent locally or returned to you in measurable sales.

Where the fund operates across borders, establish:

• Whether Irish contributions are tracked separately.
• How spending between countries is decided.
• Whether company-owned outlets contribute on an equivalent basis.
• How currency conversion and central administration costs are handled.

Ask existing franchisees whether spending reports match what they see in practice. Focus on communication and accountability rather than asking whether every campaign was successful.

3. Understand the Irish legal position

In the Republic of Ireland, there is no specific franchise legislation, no statutory franchise disclosure document requirement and no requirement to register franchise agreements. A buyer should therefore request marketing fund information expressly rather than assume a prescribed disclosure process will provide it.

Franchise relationships are principally governed by general contract law, with intellectual property and Irish and EU competition law also relevant. Section 4 of the Competition Act 2002, as amended, and Article 101 of the Treaty on the Functioning of the European Union address anti-competitive agreements. Marketing arrangements cannot be used to bypass competition rules, including restrictions on fixed or minimum resale pricing.

Consumer protection and advertising rules also matter when campaigns reach customers, including the Consumer Protection Act 2007, as amended. However, buying a franchise is a business transaction: do not assume protections available to consumers give you rights over the marketing fund.

Voluntary ethical codes, such as the Irish Franchise Association Code of Ethical Conduct, are not franchise statutes. Membership or a stated commitment to a code is not a substitute for enforceable contractual reporting obligations.

Have an independent solicitor establish what the agreement actually promises. Do not assume that contributions are held on trust, ring-fenced or subject to an independent audit unless the arrangements support that conclusion.

4. Agree accountability before signing

Request clear provisions covering reporting frequency, spending categories, responsibility for approving expenditure and treatment of unspent balances. Ask what happens if the fund overspends, the franchisor changes ownership or your agreement ends.

Find out how you can raise concerns and whether a franchisee marketing committee has advisory powers or actual approval rights. Those are different levels of influence.

Record important assurances in the contract or an agreed contractual schedule. If reporting is unavailable, ask why and assess the risk with your advisers rather than treating a verbal promise as sufficient.

Practical takeaway: Before committing, obtain a complete marketing cost schedule, evidence of how the fund operates and written reporting rights. Judge the levy by both its affordability and its accountability.