What can franchise marketing fund money pay for? Admin costs, salaries and company stores

• The limits apply despite any terms of the franchise agreement, so a broad clause can't widen them (s61(4)).
• Company-owned outlets must pay into the fund on the same basis as franchisees (s61(2)).
• Fund money must be kept in a separate account with a financial institution (s61(3)).
• Each annual statement must show the percentage of income spent on the fund's purpose and on administration and audit (s31(3)(b)).
• Each of these rules carries up to 600 penalty units, which is $218,400 for conduct from 1 July 2026.

Section 61(4) sets the list. Spending outside it breaches the Code, whatever the agreement says.

1. Expenses of a kind disclosed to franchisees in the disclosure document. Item 15 must list the kinds of expenses each fund may be used for.
2. Legitimate expenses for the fund's specified purpose, such as advertising and campaigns for a marketing fund.
3. Expenses agreed to by a majority of the franchisees who are required to pay into the fund.
4. The reasonable costs of administering and auditing the fund.

An expense needs to fit only one of the first three. The fourth covers the cost of running the fund itself, which is where questions about salaries and admin charges come in.

The ACCC's guide to the 1 November changes (13 October 2025) describes reasonable costs as those that are necessary, proportionate and consistent with the fund's purpose. Its examples of costs likely to be reasonable:

• External accountant fees for the annual fund audit.
• Wages of dedicated administrative staff who manage fund disbursements, on a pro-rata basis.
• Software subscriptions to manage the fund or its analytics, on a pro-rata basis.
• Bank fees and fund transaction costs.

Its examples of costs likely to be unreasonable:

• Financial audits or professional advice not related to the fund's specified purpose.
• Inflated internal overheads.
• Executive salaries.
• Licence costs for whole-of-business systems not related to the fund's specified purpose.
• Legal costs not related to administering the fund.

The ACCC adds that the more transparent, proportionate and directly attributable a charge is, the more likely it is to be reasonable, and that franchisors should keep invoices, cost estimates and contracts to show it.

It depends whose salary, and for what. Here is how the Code and the ACCC's examples apply to common cases.

• Administrative staff who process fund payments: likely reasonable on a pro-rata basis, as a cost of administering the fund.
• Senior executives, such as a chief executive or finance director: the ACCC lists executive salaries as likely unreasonable.
• Staff who deliver the fund's purpose, such as someone producing network campaigns: neither ACCC list mentions them. Whether their cost is a legitimate expense for the fund's purpose depends on the agreement, the disclosure document and whether the charge is proportionate and directly attributable.
• A flat 'management fee' or overhead recovery with no breakdown: hard to show it is reasonable, and inflated internal overheads are on the ACCC's unreasonable list.
• Whatever the role, salary costs charged to the fund should appear in the statement in enough detail for franchisees to understand them (s31(3)).

Company outlets benefit from brand marketing too, so the Code makes them pay their share.

• If the franchisor or master franchisor runs units itself, it must pay into the fund for each of them on the same basis as franchisees (s61(2)).
• In plain terms, company units should pay under the same formula as franchisees, for example the same percentage of their sales.
• The rule isn't new for marketing funds: the 2014 Code had it too (clause 31(3)). It has applied to other specific purpose funds since 1 November 2025.
• Item 15 of the disclosure document must say who contributes, for example franchisees, the franchisor or outside suppliers, and whether anyone pays a different rate.
• The ACCC's model disclosure guidance lists franchisee and corporate store contributions, and supplier rebates, among the sources of income a meaningful statement should show, so you can check that company stores paid.

Every statement must give meaningful detail of receipts and expenses (s31(3)). Work through it in this order.

1. Check it arrived on time: prepared within 4 months after year end and given to you within 30 days of being prepared.
2. Read the income side: franchisee contributions, corporate store contributions, supplier rebates and any other sources.
3. Read the spending side. The ACCC's model disclosure guidance points to the nature of the marketing bought, its price and its reach (local, state or national) as meaningful detail.
4. Find the two percentages: the share of income spent on the fund's purpose, and the share spent on administration and audit.
5. Look for payments to the franchisor or its associates, and compare them with item 15 of the disclosure document.
6. Flag any large line without a breakdown. In the ACCC's worked example, a 'social media' line worth 20% of the year's spending, with no detail, made the statement unlikely to comply.
7. Check for an auditor's report, or evidence that 75% of contributors voted to waive the audit.
8. Illustrative check: if a fund's income was $800,000 and administration and audit cost $64,000, the statement should show 8% spent on administration and audit ($64,000 divided by $800,000).

These outcomes are described as the ACCC described them. Paying an infringement notice is not an admission.

• August 2026, Venue Smart: paid $59,400 across three infringement notices, including for not preparing an annual statement for its marketing fund for 2024–25 and not keeping a separate account for franchisee payments into the fund.
• March 2024, Ultra Tune: fined $1.5 million for contempt of court for breaching earlier court orders, including two late marketing fund statements, one nearly 8 months late. The Full Federal Court dismissed its appeal in January 2025.
• December 2023, Delicia Franchising: paid an $11,100 infringement notice and admitted breaches in a court-enforceable undertaking. Its marketing fund statements for 2020 to 2022 lacked sufficient detail and weren't given to franchisees within 30 days.
• December 2022 (older context), Retail Food Group: in a court-enforceable undertaking it agreed to about $10 million in payments and debt waivers, including $5 million to Michel's Patisserie franchisees who paid marketing levies from July 2012 to June 2017. The ACCC alleged some fund payments weren't legitimate marketing expenses and hadn't been adequately disclosed or agreed to by a majority. RFG acknowledged the allegations without admission.
• 2019, Ultra Tune: the ACCC's model disclosure guidance says the Full Federal Court found its marketing fund statements lacked sufficient detail, and $2.014 million in penalties followed for this and other breaches of the Australian Consumer Law.

• Large one-word lines such as 'digital', 'social media', 'agency' or 'admin' with no breakdown.
• An administration share that jumps from year to year without explanation.
• Payments to the franchisor or a related company that item 15 of the disclosure document doesn't mention.
• Legal fees, whole-of-business software or executive costs charged to the fund.
• Company stores missing from the income side of the statement.
• Statements that arrive late or not at all, and no auditor's report without a waiver vote.
• Fund contributions paid into the franchisor's general bank account.

• What exactly can the fund pay for under my agreement and item 15 of the disclosure document?
• Which salaries, if any, are charged to the fund, and on what basis?
• What percentage went on administration and audit in each of the last two years?
• Do company-owned outlets pay in under the same formula as franchisees?
• Does the fund pay the franchisor or any associate for goods or services?
• Have any expenses been approved by a majority vote of contributors, and where is the record?
• Is the fund audited every year, or has the audit been waived?