Beyond the marketing fund: specific purpose funds under the Franchising Code

• The Code's own examples are a marketing fund for advertising and a cooperative fund for information technology. Treasury also mentions conference funds, and the ACCC lists technology, refurbishment, training, environmental or sustainability, and group project funds.
• Marketing and cooperative funds were regulated under the 2014 Code too. Other funds came under the statement, audit and account rules from 1 November 2025 (s97).
• Each fund needs its own annual statement within 4 months of the financial year end, given to contributors within 30 days of being prepared (s31).
• Statements must now show the percentage of income spent on the fund's purpose and on administration and audit, which Treasury describes as the one change from the old fund rules.
• Breaching the statement, account, contribution or spending rules can attract up to 600 penalty units each, which is $218,400 for conduct from 1 July 2026.

Section 6 of the Code sets three tests.

1. Control: the franchisor or master franchisor controls or administers the fund, or an associate does so on its behalf. Associates include directors, related companies and partners whose relationship with the franchisor is relevant to the system.
2. Compulsory payments: your franchise agreement requires you to pay money into it. A fund you contribute to only voluntarily may not meet this test.
3. Set purpose: under the agreement, the money must be used for a specified common purpose relating to the operation of the franchised business, such as advertising or information technology.
4. If a fund fails any one test, the Code's fund rules in s31 and s61 don't apply to it, although your agreement still does.

• The Code's examples (s6): a marketing fund for advertising, and a cooperative fund for information technology.
• Treasury's table of key changes (March 2025): marketing, cooperative and other funds for specific purposes, such as conference and IT funds.
• The ACCC's guide to the 1 November changes (13 October 2025): funds relating to technology, refurbishment, training, marketing, environmental or sustainability matters, and group projects.
• Borderline cases: a levy that the agreement treats as the franchisor's own income for a service, rather than money paid into a fund for a set purpose, may fall outside the definition. Read how each levy is described, and ask.

The rules arrived in stages. Which ones apply to you depends on the type of fund and on which Code governs your agreement.

1. Under the 2014 Code, the statement and audit rules covered marketing funds and other cooperative funds (clause 15), and the separate account, contribution and spending rules covered marketing funds (clause 31).
2. From 1 April 2025, the current Code replaced both with the single idea of a specific purpose fund. For marketing and cooperative funds, complying with the old rules counted as complying with the new ones until 31 October 2025 (s100).
3. From 1 November 2025, the statement, audit, account, contribution and spending rules in s31 and s61 also apply to every other specific purpose fund, such as a technology or refurbishment fund (s97(4) and (5)).
4. Disclosure documents created from 1 November 2025 must describe every fund under item 15 of Schedule 1. Earlier documents didn't need item 15 details for the newly covered funds (s97(6)).
5. The ACCC told franchisors to update agreement templates and disclosure documents by 1 November 2025, even if their financial year didn't end on 30 June.
6. If your agreement hasn't been renewed, extended or transferred since 1 April 2025, it stays under the 2014 Code (s98). Whether a technology or refit fund counts as a 'cooperative fund' under that Code is a question for your lawyer.

These duties apply fund by fund. The fund administrator is the franchisor or master franchisor, or an associate it has authorised to run the fund.

1. Prepare an annual financial statement within 4 months after the end of the financial year (s31(2)(a)).
2. Include enough detail of receipts and expenses to give meaningful information about where the money came from and what it was spent on, particularly on the fund's purpose (s31(3)(a)).
3. Show the percentage of total income spent on the fund's permitted expenses, and on the reasonable costs of administering and auditing it (s31(3)(b)).
4. Give each contributing franchisee a copy within 30 days of preparing it (s31(2)(b)).
5. Have the statement audited by a registered company auditor within 4 months after year end, and give franchisees the auditor's report within 30 days of receiving it, unless 75% of the contributing franchisees in Australia voted to waive the audit for that year (s31(2)(c) and (4)).
6. Keep a separate account with a financial institution for payments to the fund (s61(3)).
7. Pay in for every company-owned unit on the same basis as franchisees (s61(2)).
8. Spend fund money only on disclosed expenses, legitimate expenses for the fund's purpose, expenses a majority of contributing franchisees agreed to, and the reasonable costs of administering and auditing the fund, whatever the agreement says (s61(4)).

Item 15 of Schedule 1 requires these details for every fund you'd have to pay into. Check them before you sign, and again before you renew.

• The fund's specified common purpose.
• Who contributes, for example franchisees, the franchisor or outside suppliers.
• How much you must contribute, and whether other franchisees pay a different rate.
• Who controls or administers the fund.
• The kinds of expenses the fund may be used for. The ACCC asks franchisors to avoid vague categories.
• A statement of the duties to prepare statements and audits and to give you copies within 30 days.
• A copy of the most recent annual financial statement for the fund.
• Whether the franchisor or an associate supplies goods or services that the fund pays for, with details.
• Whether any part of the fund must be spent for the benefit of your business in particular.

The ACCC's guide to the 1 November changes uses this scenario: a franchisor with a 30 June year end that requires franchisees to pay into two funds.

• Marketing fund timing: the franchisor prepared the statement in late September, received the auditor's report on 1 October and gave both to franchisees on 15 October, within 30 days. That part complied.
• Marketing fund detail: the statement showed 'social media' as a single line making up 20% of the year's spending, with no breakdown. The ACCC said the statement was unlikely to comply, because it didn't give meaningful information about how the money was spent.
• IT fund: before 1 November 2025 the franchisor opened a separate account, moved the remaining IT fund money into it on 1 November, and began paying in for its corporate units on the same basis as franchisees. The ACCC said this was likely to comply.
• Illustrative maths: if a fund spent $500,000 in a year, a $100,000 'social media' line would be the 20% share that the ACCC said needed a breakdown.

• Your contributions go into the franchisor's general operating account rather than a separate fund account.
• No statement reaches you within about 5 months of year end (4 months to prepare it, plus 30 days to send it), and nobody can say when it will.
• The statement lumps large amounts into one-word lines such as 'digital', 'social media' or 'admin'.
• Company-owned outlets don't appear as contributors, or appear to pay less than franchisees.
• The fund pays the franchisor or a related company for goods or services, but the disclosure document doesn't say so.
• There is no auditor's report, and you don't recall any vote to waive the audit.
• The franchisor can't tell you what share of the fund went on administration and audit, even though the statement must now show it.

These steps draw on the ACCC's 13 October 2025 guide and the Code itself.

• Open a separate account for each fund's contributions, and move any existing balance into it.
• Contribute for every corporate unit on the same basis as franchisees.
• Keep records that let you prepare the year-end statement, including invoices, cost estimates and contracts that show costs are reasonable and proportionate.
• Prepare the statement within 4 months of year end, with meaningful detail, and give it to franchisees within 30 days of preparing it.
• Have it audited within 4 months unless 75% of contributing franchisees vote not to, and send the auditor's report within 30 days of receiving it.
• Describe each fund's purpose, contributors, rates, administrator, expense types and related-party supplies in the disclosure document, and attach the latest statement.
• Keep anything franchisees give you in writing under the Code, such as audit waiver votes, for at least 6 years (s37).
• Expect enforcement: in August 2026 Venue Smart paid $59,400 across three infringement notices, including for not preparing a 2024–25 marketing fund statement and not keeping a separate account for fund payments. Paying a notice is not an admission.

• Which funds will I pay into, and what is each one's specified purpose?
• How is each contribution calculated, and does anyone pay a different rate?
• Who administers each fund, and is it held in its own account?
• Do company-owned outlets contribute on the same basis as franchisees?
• May I see the last two annual statements and auditor's reports for each fund?
• What percentage of income went on administration and audit last year?
• Does any fund buy goods or services from the franchisor or a related company?
• Has the audit ever been waived, and how was the vote run?