Why September is the right time to review your marketing fund records

For franchise networks with a 30th June financial year-end, September is a useful time to review marketing fund contributions and expenses. Good record-keeping is more than good practice. Under the current Franchising Code of Conduct, marketing funds fall under the rules for specific purpose funds. These rules set out obligations for franchisors and fund administrators.

From “marketing fund” to “specific purpose fund”

A new Franchising Code of Conduct came into effect on 1st April 2025, with some rules applying from 1st November 2025.

Under the new Code, rules that previously applied to marketing or cooperative funds now extend to any specific purpose fund. This includes funds for technology, refurbishment, training, marketing, environmental or sustainability initiatives, and group projects.

A specific purpose fund is money set aside for a specific common purpose related to running a franchised business. Unless the franchise agreement says otherwise, franchisees generally do not decide how the fund is spent. The franchisor makes those decisions.

Contributing to a marketing fund also does not mean that a franchisee’s individual business must be promoted or advertised using money from the fund.

What franchisors and fund administrators must do

The Franchising Code sets clear requirements for managing specific purpose funds.

Franchisors and fund administrators must:

• Keep fees paid into the fund in a dedicated or separate account.
• Use the money only for the fund’s specified purpose.
• Prepare an annual financial statement showing how the money was collected and spent.
• Contribute to the fund for corporate units on the same basis as franchisees.

From 1st November 2025, franchisors also need to meet additional requirements. These include setting up a separate account for franchisee contributions and transferring any existing fund balance into that account.

Franchisors must also contribute to the fund for corporate units on the same basis as franchisees. They should maintain appropriate records to support preparation of the financial statement at the end of the financial year.

A September review gives franchisors an opportunity to check these records early. It also leaves time to address any gaps before the next reporting deadline.

The annual statement: timing and detail matter

Under the new Code, franchisors must prepare the financial statement within four months of the end of the financial year. Unless 75% of contributing franchisees vote for the statement not to be audited, the statement must also undergo an audit within that four-month period.

The statement must then be provided to contributing franchisees within 30 days of being prepared. If an audit takes place, the auditor’s report must be provided within 30 days of the fund administrator receiving it.

The statement also needs to provide “meaningful information” about the fund’s income and expenses. It should be easy for an ordinary reader to understand, rather than written only for accounting professionals.

Franchisees should be able to see how, when and on what the fund’s money was spent. A broad description may not provide enough information for a significant expense. Larger expenses may therefore need more detail than smaller ones.

This makes accurate record-keeping throughout the year important. Keeping contribution and expense records up to date can make it easier to prepare the annual statement, provide the required information to franchisees and address gaps before the reporting deadline.

What counts as a “reasonable” cost?

The rules applying from 1st November 2025 also clarify which administration and audit costs a specific purpose fund can reasonably cover.

A reasonable cost should be necessary, proportionate and consistent with the fund’s specific purpose.

Examples may include:

• External accountant fees for the annual fund audit
• Pro-rata wages for dedicated staff who manage fund disbursements
• Pro-rata software subscriptions used to manage the fund or related analytics
• Bank and fund transaction fees

Some costs are less likely to be considered reasonable. These include financial audits or professional advice unrelated to the fund’s purpose, inflated internal overheads, executive salaries, whole-of-business system licences and legal costs unrelated to fund administration.

The more directly a cost relates to the fund’s purpose, the easier it is to demonstrate why the fund should cover it. Franchisors should keep supporting records such as invoices, cost estimates and contracts to show that costs are reasonable and proportionate.

Make the most of an September review

A September review gives your network time to address gaps before the annual financial statement deadline.

Start by checking that contributions are going into the correct separate account. Review expenses to make sure they are properly categorised and supported by documentation. Also confirm that any corporate-operated units are contributing on the same basis as franchisees.

Taking these steps now can make annual financial statement preparation more straightforward. It can also help ensure the statement gives franchisees meaningful information and supports compliance with the Franchising Code of Conduct.

References

Australian Competition and Consumer Commission (ACCC) (2026) Specific purpose funds for franchise businesses. Available at: Specific purpose funds for franchise businesses | ACCC