Marketing levy
What it means
The marketing levy funds collective promotion of the brand, such as national and regional campaigns, brand assets and shared digital marketing. It is usually charged as a percentage of gross sales or as a fixed periodic amount, and is paid on top of the royalty.
Under the Franchising Code of Conduct, money paid into these pooled funds is subject to specific rules. The 2025 Code brought marketing funds under its broader 'specific purpose fund' provisions, which from 1 November 2025 require the franchisor to keep the money in a separate account, spend it only on the fund's stated purpose, and give franchisees meaningful annual financial statements.
Those statements must be detailed enough to show how the fund's income was spent, including the proportion of income that went to the fund administrator's own expenses, so franchisees can see where their contributions went.
In practice
A marketing levy is not the same as your own local-area marketing. Many agreements require you to also spend a minimum amount promoting your specific outlet in addition to the levy, so budget for both.
Ask to see recent marketing fund financial statements as part of due diligence. They reveal whether contributions are being spent on genuine brand-building or largely absorbed by administration, and whether the franchisor also contributes to the fund for any outlets it operates.
A real example
A quick-service outlet on a 3% marketing levy and $700,000 in gross sales contributes about $21,000 a year into the national marketing fund. The franchisor must hold that money in a separate specific purpose fund account and, under the 2025 Code, provide an annual statement showing how the pooled contributions were spent, including the share that went to administering the fund.
Marketing levy, FAQs
How is a marketing levy different from a royalty?
The royalty pays for the right to use the system and brand; the marketing levy is a separate, purpose-restricted contribution to a pooled advertising fund that the franchisor must account for to franchisees.
Can the franchisor spend the fund on anything it likes?
No. Under the Code's specific purpose fund rules the money must be held separately and spent only on the fund's stated marketing purpose, with annual financial statements provided to franchisees.
Do I still have to do my own marketing?
Often yes. Many agreements require a separate minimum local-area marketing spend on top of the levy to promote your individual outlet.
What changed under the 2025 Code?
From 1 November 2025 marketing funds fall under broader specific purpose fund rules, tightening separate-account, disclosure and reporting obligations, including disclosing the administrator's share of expenses.
See the full franchise glossary, the Fee Index or our buyer guides.