Advertising Fund (Marketing Fund)

The advertising fund, also called the marketing fund or brand fund, is a mandatory contribution franchisees make to a collective pool used for national and regional marketing campaigns. Disclosed in Item 6 of the FDD, this fee is typically calculated as a percentage of gross revenue (usually 1-5%) and is separate from the royalty fee. Franchisors manage the fund and decide how to allocate it across national advertising, digital marketing, local store marketing materials, and promotional campaigns. Some franchisors also require franchisees to spend a minimum amount on local advertising in addition to the fund contribution. The advertising fund is one of the most scrutinized aspects of franchise agreements, as franchisees often have limited visibility into how their contributions are spent.