New franchising code rules
A new Franchising Code of Conduct was introduced on 1 April 2025. Some rules in the new code apply from 1 November 2025.
Under the new code, there are new rules and disclosure obligations for specific purpose funds. This page includes guidance about these rules.
- technology
- refurbishment
- training
- marketing funds
- environmental or sustainability
- group project.
The new rules apply to accounts, records, financial statements, the disclosure document, and reasonable costs to run the fund.
The new code rules come into effect for all types of specific purpose funds from 1 November 2025.
View guidance on other changes to the franchising code and when they apply.
On this page
About specific purpose funds
Under the new franchising code, the specific purpose fund includes what was formerly known as the marketing fund.
Franchisors often require franchisees to pay money into a specific purpose fund operated by the franchisor.
A specific purpose fund is money set aside for a specific common purpose related to running the franchised business.
Unless it says so in the franchise agreement, franchisees usually don’t get a say on how money paid to a specific purpose fund is spent. The franchisor decides this.
Although a franchisee may pay fees to a marketing fund, this does not mean that the franchisee’s individual business must be promoted or advertised using money from the fund.
Rules for specific purpose funds
The franchising code sets out rules for how specific purpose funds must be disclosed, kept and used.
Franchisors with a specific purpose fund must:
- include specific information in the disclosure document
- give prospective franchisees a copy of the most recently prepared annual financial statement for the fund.
When operating a specific purpose fund, the franchisor or their fund administrators, must:
- keep the fees paid into the fund in a dedicated or separate account
- only use the money allocated to the fund for the specified purpose
- prepare an annual financial statement to tell franchisees about how the money was collected and spent.
If the franchisor or master franchisor operates a franchised business, they must also contribute to the fund like their franchisees.
Information disclosed to franchisees must not be misleading or deceptive.
New code rules for specific purpose funds
From 1 November 2025, for each specific purpose fund to which franchisees must contribute, a franchisor should:
- establish a separate account for franchisees to pay their contributions into the fund
- transfer any existing specific purpose balance held to that separate account
- contribute to the fund from 1 November 2025 for all corporate units you operate on the same basis as franchises. Franchisors must contribute to specific purpose funds on the same basis as other franchisees for any corporate units
- maintain appropriate records to facilitate preparation of the financial statement for the end of your financial year.
Penalties may apply to franchisors who don't follow these laws.
Details to include in the disclosure document
If a franchisee must pay money to a specific purpose fund, the franchisor's disclosure document must include details about:
- the specified common purpose of the fund
- who controls or administers the fund
- who else contributes to the fund
- the type of expenses that the fund can be used for
- how much the franchisee must contribute to the fund and if some franchisees contribute more or less
- the kinds of expenses that the fund may be used for
- if the franchisor or master franchisor must spend part of the fund to benefit the franchisee’s business.
The disclosure document must also include further information about:
- preparing the annual financial statement on the fund’s contributions, spending and activity
- auditing the financial statement
- if the franchisor, master franchisor or an associate supplies the goods or services that the fund pays for.
Information for prospective franchisees
The franchisor must also provide prospective franchisees with a copy of the most recently prepared annual financial statement for the fund.
New code rules for disclosure documents
New obligations apply under the new franchising code when:
- the disclosure document is created or updated on or after 1 November 2025
- the franchise agreement requires the franchisee to contribute to a specific purpose fund.
The disclosure document must:
- clearly state the fund’s purpose
- say who pays into it
- state how much the franchisee contributes and whether other franchisees contribute at a different rate
- name who manages or administers the fund
- list the types of expenses it covers, reflecting the franchise agreement. Avoid using vague categories, provide clear and meaningful information about what money is spent on
- state if the fund pays for goods or services provided by the franchisor, or an associate. If so, give details.
- attach a copy of the fund statement to the disclosure document.
For further details see the ACCC’s Guidance on the franchising model disclosure document ( PDF 690.05 KB ) .
How specific purpose funds can be used
A specific purpose fund can only be used to pay for:
- costs that the franchisor has told franchisees about in the disclosure document
- legitimate expenses related to the specific purpose fund
- expenses that most franchisees contributing to the fund have agreed to pay
- the reasonable costs of administering or auditing the fund.
If a franchisee has concerns about how funds are spent, they should speak to their franchisor first.
The franchisor must give a fund statement to franchisees each year. This statement must include details of how funds are being used.
New code rules for reasonable costs to run a specific purpose fund
New rules apply from 1 November 2025 to the reasonable costs to run a specific purpose fund.
Reasonable costs are costs that are necessary, proportionate and consistent with the specific purpose of the fund. The fund administrator may use funds to pay the reasonable costs of administering and auditing the fund.
Expenses that are likely to be considered reasonable include:
- external accountant fees for annual fund audit
- dedicated administrative staff wages (pro-rata) for managing fund disbursement
- software subscription to manage the funds or analytics (pro-rata)
- bank fees or fund transaction costs.
Expenses likely to be considered unreasonable include:
- using the fund to pay for financial audits or professional advice not related to the fund’s specified purpose
- charging inflated internal overheads or paying executive salaries
- licencing costs for whole of business systems not related to the fund’s specified purpose
- legal costs not related to the administration of the fund.
The more transparent, proportionate and directly attributable to the purpose of the fund the charge is, the more likely it is to be considered reasonable.
Franchisors should retain records demonstrating the costs are reasonable and proportionate such as invoices, cost estimates and contracts.
Who pays into the fund
If the franchisor or master franchisor operates a franchised business, they must also contribute to the fund like their franchisees.
Specific purpose fund statements
If franchisees pay into a specific purpose fund, the fund administrator must prepare an annual financial statement. This statement must be given to franchisees.
The fund administrator could be the franchisor, master franchisor or a person they authorise to administer the fund. The disclosure document requires the fund administrator to be listed.
New code rules for specific purpose fund statements
From 1 November 2025, a franchisor should:
- create a financial statement of that fund within 4 months of the end of the financial year
- have the financial statement audited within 4 months of the end of the financial year, unless 75% of the franchisees contributing to the fund vote for the statement not to be audited
- make sure the financial statement provides meaningful information to franchisees about the receipts and expenses of the fund
- give the financial statement to franchisees within 30 days of it being prepared
- give the audit report to franchisees within 30 days of it being received.
Statements must be audited
Financial statements must be independently audited. Franchisors must give a copy of the audit report to franchisees.
The only time a statement doesn't have to be independently audited is if 75% of the franchisees in Australia who contribute to the fund vote that an audit isn't necessary. This vote should happen each year within 3 months after the end of the financial year, before the fund financial statement is due.
The franchisor can pay for the cost of the audit using the specific purpose fund.
The statement must be given to franchisees each year
The financial statement and, if required, an auditor’s report, must be prepared within 4 months of the end of the financial year.
The fund administrators have 30 days after the statement is prepared to give a copy to the franchisees that contribute to the fund.
If an auditor’s report has been prepared, this must be provided to franchisees within 30 days of the fund administrator receiving the report.
Case study
In 2023, Delicia Franchising Pty Ltd paid a penalty of $11,100 for failing to provide franchisees with a copy of its annual marketing fund financial statement for the financial year ending on 30 June 2022.
The ACCC's investigation also identified that Delicia Franchising’s annual marketing fund financial statements for 2020, 2021 and 2022 did not provide sufficient detail of the fund’s receipts and expenses and were not provided to franchisees within 30 days.
Delicia Franchising provided an undertaking to the ACCC admitting that it breached the franchising code of conduct by not providing enough detail.
The statement must provide meaningful information
The financial statement must:
- make sense to an ordinary reader, and not just an accounting professional
- include enough detail to give franchisees meaningful information about the fund’s income and expenses
- include the percentage of the total income spent on meeting the fund administrator’s expenses of administering and auditing the fund.
Meaningful information allows franchisees to see on the statement, how, when, and on what the money from the fund was spent. This helps franchisees to understand whether the fund is being used appropriately.
For example, ‘50% spend’ under a line item of ‘Advertising - Television’ in a statement is unlikely to give enough detail. More information is needed, such as which television channels the advertising appeared on and when.
Different items or types of expenditure may need different levels of detail. Generally, larger expenses will be more important to franchisees and need more detail.
Read our 2019 Ultra Tune court case media release. It includes guidance on meaningful information in financial statements.
Case study
A franchisor’s financial year ended on 30 June. They prepared their specific purpose fund statement in late September and received the auditor’s report on 1 October. The franchisor provided the statement and the auditor’s report to their franchisees on 15 October. This complied with the franchising code requirements.
However, some of the items in the statement didn’t have a lot of detail. For example, the statement listed ‘Social media’ as a line item but didn't give more detailed information. For this specific purpose fund allocated to marketing, social media accounted for 20% of the spend that year.
The financial statement is unlikely to comply with the code as it doesn’t give meaningful information about how the fund was being spent. Franchisors should include as much information as possible in their financial statements. This is so franchisees can understand where money is being spent.
Case study of 2 specific purpose funds
A franchisor’s financial year ended on 30 June 2025. Their franchise agreements requires franchisees to contribute to 2 specific purpose funds – a marketing fund and an IT fund.
While most of the franchise agreements were entered prior to 1 April 2025, some were entered after 1 November 2025.
Marketing fund
The franchisor prepares their marketing fund specific purpose fund statement in late September 2026 and receives the auditor’s report on 1 October 2026. It contains clear details of some, but not all, of the receipts and expenses. The franchisor provides the statement and the auditor’s report to their franchisees on 15 October 2026 (that is, within 30 days). This complies with the new franchising code requirements.
Some of the items in the marketing fund specific purpose fund statement lack detail. For example, the statement lists ‘social media’ as a line item without any further breakdown or details. For this specific purpose fund allocated to marketing, social media accounts for 20% of the total spend that year. Given its significance, more detail should be provided in the statement to allow franchisees to understand how funds were spent, including detail of receipts and expenses.
The financial statement is unlikely to comply with the new franchising code as it doesn’t give meaningful information about how the fund was being spent. Franchisors should include as much information as possible in their financial statements. This is so franchisees can understand where money is being spent.
IT fund
Before 1 November 2025 the franchisor opens a separate account for IT fund monies. On 1 November 2025 the franchisor transfers all remaining IT fund contributions to the separate account. The franchisor starts to contribute to the IT fund for its corporate units on the same basis as other franchisees.
This franchisor is likely to be compliant with their specific purpose fund obligations for this IT fund under the new franchising code.