Understanding Your Marketing Fund Disclosure Obligations as a Franchisor

Updated: November 2025

Category: Franchising Compliance & Disclosure

Running a successful franchise network in Australia means more than just maintaining brand consistency and supporting your franchisees. It also means keeping up with your legal disclosure obligations under the Franchising Code of Conduct.

Franchisors must disclose how marketing funds are managed under the Franchising Code of Conduct, transparency builds trust across your network.

If your franchise system includes a marketing fund, or any other fund your franchisees pay into for a shared purpose, you have specific responsibilities under the Code. Here's what franchisors need to disclose, when, and why transparency matters for both compliance and trust across your network.

What Is a Disclosure Document?

A disclosure document is a standardised form required by the Franchising Code of Conduct. Every franchisor in Australia must maintain this document and provide it to:

• Prospective franchisees before they sign a franchise agreement; and

• Existing franchisees, if they request it.

  
  

This document outlines essential details about your business, including your background as the franchisor, information about the franchise network, and the initial and ongoing costs of operating the franchise.

Franchisors must review and update their disclosure document at least once each year, and again whenever a material change arises. For most franchisors whose financial year ends 30 June, that annual update falls due by 31 October.

This annual update isn't optional. It's a core part of your compliance obligations. And if you operate a fund that franchisees contribute to, the Code requires even more detail.

What Changed: From "Marketing Funds" to "Specific Purpose Funds" 

Here's where things have moved on. A new Franchising Code of Conduct came into effect on 1 April 2025, with the fund-related obligations becoming mandatory from 1 November 2025.

Under the old Code, these disclosure and reporting rules applied only to marketing funds. Under the new Code, the same obligations now extend to any specific purpose fund: any account a franchisee is required to contribute to for a common purpose, whether that's marketing, a cooperative buying fund, or something else entirely.

In practice, this means:

• Marketing funds are still the most common example, but they're no longer the only fund type regulators are watching.

• Your disclosure document now needs to detail every specific purpose fund in your system, not just marketing.

• The old Key Facts Sheet requirement has been dropped entirely. Franchisors no longer need to prepare or upload one.

If your compliance documents still refer only to "marketing funds", they're describing the old, narrower version of the law.

What Is a Marketing Fund?

A marketing fund is a dedicated account controlled by the franchisor, into which franchisees contribute regularly. Its purpose is to support brand-wide marketing and promotional activities, from advertising campaigns to digital marketing and public relations that benefit the whole network.

To stay compliant, franchisors must:

• Maintain a separate bank account for the fund;

• Deposit all franchisee contributions into that account; and

• Use the funds only for permitted purposes, such as:

  • Marketing and advertising costs;

  • Activities disclosed in the disclosure document;

  • Expenditure agreed upon by franchisees; and

  • Reasonable administration costs associated with managing the fund.

Your Key Disclosure Obligations

For every specific purpose fund you administer, you must provide clear, detailed disclosure about:

• How the fund is controlled and administered;

• How franchisees' contributions are calculated; and

• How the funds have been used throughout the financial year.

You're also required to:

• Prepare an annual financial statement for the fund;

• Have it audited, unless 75% of franchisees vote not to; and

• Distribute a copy to all franchisees within 30 days of preparation.

These requirements exist to give franchisees confidence that their contributions are being used fairly and effectively.

Why Compliance Matters

Failing to comply with fund disclosure provisions can lead to substantial financial penalties and reputational damage. Under the new Code, the stakes are considerably higher than they used to be. Serious disclosure breaches now carry penalties starting at $10 million, and other substantive breaches attract civil penalties of up to 600 penalty units.

Recent cases, such as Ultra Tune and Domino's, show how seriously regulators like the ACCC take non-compliance in this space.

Transparency here isn't a best practice. It's the law, and the cost of getting it wrong has never been higher.

Tips for Franchisors

To stay compliant and build trust with your network:

• Update your disclosure document at least annually, and whenever a material change occurs.

• Identify every specific purpose fund in your system, not just marketing, and make sure each is properly disclosed.

• Prepare and distribute your fund financial statements within 30 days of completion.

• Keep records of all fund-related transactions and approvals.

• Communicate clearly with franchisees about how funds are used.

Specific purpose funds remain one of the most heavily scrutinised areas in franchising compliance. Maintaining clear disclosure and financial transparency protects your business and your franchisees alike.

If you're unsure about your disclosure obligations or need guidance on how to prepare compliant documents, Franchising Made Easy® can connect you with trusted legal professionals who specialise in franchise compliance and disclosure.

Frequently Asked Questions

What disclosure obligations apply to specific purpose funds?

Franchisors must meet specific legal disclosure requirements around how contributions to any specific purpose fund, including marketing funds, are collected and spent.

Why do these obligations matter beyond compliance?

Transparent disclosure builds franchisee trust and reduces the risk of disputes over fund usage.

What should franchisors review regularly?

Their disclosure documents and fund reporting practices, to ensure they remain current with the Franchising Code of Conduct as it now stands.

Speak With a Franchise System Architect

If you are exploring franchising and want to determine whether your business is ready for franchising, it helps to speak with someone who understands the structural side of franchise development.

At Franchising Made Easy^®, we specialise in helping founders design franchise systems that are commercially viable, operationally disciplined and built for long-term growth.

If you would like to explore your options, consider booking a consultation to discuss your business and expansion ambitions.

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