Marketing fund
What it means
The marketing levy is the contribution; the marketing fund is where those contributions sit and are spent. The point of pooling money is scale: a network can run brand campaigns, produce professional creative and buy media that no single franchisee could afford alone. Franchisor-owned outlets are generally expected to contribute on the same basis as franchisees.
The Franchising Code imposes transparency and accountability on marketing funds. The franchisor must keep fund money in a separate bank account, must prepare an annual financial statement showing the fund's receipts and expenses in enough detail, and must have that statement audited unless a set proportion of franchisees agree to waive the audit. Fund money must be spent on legitimate marketing and administration of the fund, not diverted to general franchisor profit.
Disputes about marketing funds usually centre on whether the spend is fair and network-focused, whether local franchisees see benefit, and whether the accounting is clear. Because the levy is often a percentage of gross sales, franchisees pay more as they grow, which makes transparency about where the money goes especially important.
In practice
During due diligence, read the marketing-fund provisions in the agreement and the fund's financial statements in the disclosure document. Check what the levy is, how it is calculated, what the money has actually been spent on, and whether local-area marketing is a separate, additional obligation.
As an operator, you can request the annual marketing-fund statement and, where the numbers are unclear, raise questions through the network's advisory council or the Code's dispute-resolution process. Keep your own local marketing receipts if the agreement requires a minimum local spend on top of the levy.
A real example
A retail franchise charges a 2% marketing levy on gross sales, paid into a national marketing fund. At year end the franchisor issues an audited statement showing the fund spent contributions on a television campaign, social media and creative production, with a small administration cost. Franchisees review the statement at their advisory council meeting and ask for more spend on regional digital advertising.
Marketing fund — FAQs
What is the difference between a marketing levy and a marketing fund?
The levy is the fee each franchisee pays; the fund is the pooled account those levies go into and are spent from. You pay the levy; the franchisor administers the fund.
Does the franchisor have to account for the marketing fund?
Yes. The Franchising Code requires the fund to be kept separate, and the franchisor must prepare an annual financial statement and have it audited unless enough franchisees agree to waive the audit.
Can the franchisor spend the fund on anything?
No. Fund money must be used for legitimate marketing and the reasonable costs of administering the fund, not diverted to the franchisor's general profit.
Do I still have to do my own local marketing?
Often yes. Many agreements require a minimum local-area marketing spend on top of the national levy. Check whether the two are separate obligations before you sign.
See the full franchise glossary, the Fee Index or our buyer guides.