Buying a Franchise in Ireland: Checking Marketing Levies

A recognised brand can attract customers, but paying into a shared advertising budget does not guarantee that your outlet will receive a particular level of promotion. Before buying a franchise in the Republic of Ireland, examine how its marketing levy works, who controls spending and what evidence contributors receive. These checks help you understand what the franchise community funds collectively and what you must still arrange locally.

Identify every marketing commitment

Franchise arrangements may include an advertising levy alongside the initial fee and continuing management fees. Start by separating the shared levy from your own advertising obligations: they may pay for different things, and one may not count towards the other.

Request a written schedule covering:

• Contributions to national, regional or international advertising budgets.
• Minimum local advertising expenditure.
• Launch campaigns and opening promotions.
• Website listings, digital advertising services and campaign materials charged separately.
• Any compulsory contributions to seasonal promotions.

Ask whether payments start when you sign, when your outlet opens or on another date. Establish whether there is a minimum payment during quiet periods and whether unused local advertising allowances can carry forward.

Have your accountant check the VAT treatment and timing of these payments. The aim is not simply to identify a headline levy, but to understand your complete marketing commitment without counting the same service twice.

Establish what the shared budget can fund

Ask for the contractual definition of permitted marketing expenditure. A fund described informally as being “for advertising” might also cover creative work, agencies, software, staff time or administration. These items are not necessarily inappropriate, but you should know what contributors are financing.

Useful questions include:

• Can the budget fund recruitment of new franchisees, rather than customer acquisition?
• Can it pay the franchisor or connected businesses for services, and how are those charges assessed?
• Are company-owned outlets required to contribute on the same basis?
• Can contributions collected in Ireland support campaigns in other countries?
• Can money be held for future campaigns, and who decides the reserve level?

Clarify whether the levy is accounted for separately and whether money is held in a separate bank account. Separate accounting, a separate account and legally protected funds are different things; do not assume that one provides the protections of another.

Ask your solicitor to establish whether the agreement creates a ring-fenced fund or simply requires you to pay a fee that the franchisor may spend within defined limits. That distinction matters when assessing control over unspent contributions.

Test accountability and local usefulness

Request the latest available marketing plan, budget and expenditure summary. For a new network without a spending history, seek a proposed budget and a clear explanation of who will approve expenditure.

Look for a reporting process that lets contributors compare planned activity with actual spending. Ask whether statements distinguish media purchases, production costs, administration and payments to connected businesses. Establish how frequently franchisees receive them and whether any independent review takes place.

A franchisee marketing committee can provide useful input, but establish whether it advises, votes or actually approves spending. Participation does not automatically give you a veto or an enforceable right to influence campaigns.

Then consider practical relevance to your outlet. A national campaign may build recognition without generating measurable enquiries in every locality. Ask how the franchisor chooses advertising channels, allocates regional campaigns and assesses results. Avoid treating campaign exposure as a promise of sales.

Speak to existing franchisees about whether campaigns arrive on time, materials suit their customers and local activity complements the shared programme. Ask for examples rather than general satisfaction scores. If you must advertise locally, establish the approval process, available templates and expected turnaround times before committing to suppliers.

Put protections into the Irish contract

The Republic of Ireland has no dedicated franchise legislation, mandatory statutory franchise disclosure document or franchise-agreement registration requirement. You should therefore request marketing information expressly rather than expect a prescribed disclosure pack to provide it.

General contract law governs the parties’ obligations, while principles concerning misrepresentation may be relevant to pre-contract statements. Applicable Irish and EU competition law, intellectual property law and advertising and data protection requirements also matter. A brand-approved campaign does not remove your own legal responsibilities.

The Irish Franchise Association’s ethical standards apply to its members; they are not legislation or a substitute for contractual rights.

Have an independent solicitor identify what the agreement actually promises about permitted spending, reporting, consultation and unused balances. Ask what happens to accumulated money when you leave: do not assume a refund is available. Record any agreed protections in the contract rather than relying on a presentation or informal assurance.

Practical takeaway: Treat the marketing levy as a spending commitment requiring scrutiny. Before signing, establish what it funds, how spending is explained and which local advertising costs remain yours.