Franchise Advertising Fund Lawsuits: What’s Been Reported, and What Brands Keep Missing

Over the past two years, franchisees at several well-known brands have taken their franchisors to court over how advertising funds were spent. The reported details differ, but the frustration underneath is the same: franchisees pay into a fund every week and can’t see what it’s buying. For anyone running franchise marketing for growing brands, these cases are worth understanding.

Below is what has been reported so far, with links to every source, followed by our view on what franchise brands as a whole keep missing about the ad fund, and how growing brands can avoid the same breakdown in trust.

What has been reported

Hurricane Grill & Wings (February 2025)

Restaurant Dive reported that franchisees operating 19 of the chain’s 38 locations sued the franchisor and its parent company, FAT Brands. According to the report, the franchisees contributed 3% of weekly gross sales to the marketing fund and allege the funds were misappropriated and that marketing services weren’t provided. FAT Brands called it “a meritless lawsuit with false allegations.”

Round Table Pizza (November 2025)

1851 Franchise reported that the Round Table Owners Association sued FAT Brands. The franchisees allege that about $800,000 of marketing fund money paid for a FAT Brands conference, that audit requests were refused since 2023, and that the system went months without advertising. FAT Brands filed for Chapter 11 bankruptcy in January 2026, according to Restaurant Dive, and Restaurant Business reported that franchisees are pursuing their claims in the bankruptcy process.

MAACO (June 2026)

In PJC Management Group v. MAACO Franchisor SPV, franchisees operating nearly 50 locations allege that ad fees went to uses unrelated to advertising, that television advertising was scaled back and that required annual accountings weren’t provided. North Carolina Lawyers Weekly reported that the North Carolina Business Court allowed the breach of contract claims to proceed and dismissed others. That ruling came at an early stage of the case and is not a finding that the allegations are true.

The pattern behind the headlines

Look past the specific companies and the same theme shows up in each report: franchisees couldn’t see what their contributions bought. Audits, accountings and reporting come up again and again. Whatever the outcome of these cases, the lesson for every franchise brand is that a fund nobody can see into is a fund nobody trusts.

National brand awareness does help local locations

It’s worth saying clearly: national marketing isn’t wasted money. For a service brand, national campaigns that reach every market and every media channel build recognition that helps each location win locally. A single location may not feel it day to day, but programs the franchise develops, investment in marketing and keeping the website current all help every location.

It’s also true that a lot of good marketing goes unnoticed. Brand work is often working consistently in the background. That’s exactly why it needs to be explained, not just done.

Where franchise brands drop the ball: creating demand

The biggest gap we see is in brands that aren’t essential services, especially entertainment. These brands need to create desire and a reason to visit. Many got real hype early on through campaigns and brand building, then took their foot off the pedal. National campaigns, billboards, Meta Ads and the market-wide campaigns that drove interest slowed down once the brand started selling franchises and grew to many locations.

The result is individual locations left with declining interest in the brand. We saw one entertainment brand lose about 60% of its organic search traffic after it stopped creating demand. That’s when recovery campaigns funded by the marketing fund need to happen, and it’s exactly the kind of work an ad fund exists to pay for.

Be specific about national vs local, and why

If franchisors were more specific about what goes into local work, what goes into national work and why national demand matters, franchisees would ask fewer questions. Some of the most valuable brand work is simple and easy to forget. Maintaining an active brand social media profile is a good example: many brands let it slip after they launch their first 10 to 20 locations, even though local locations can feed off that content and those campaigns.

Advice for brands with 5 to 30 locations

If you’re growing, set up the fund the right way now, before trust becomes a problem.

In practice, that might look like about $1,500 a month per location for local marketing, plus a national or multi-location brand contribution of $500 to $1,000 a month. Local ad spend is almost never included at the location level, but some ad spend should be built into national campaigns, which still reach and benefit every area. For how one website ranks every location, see our guide to local SEO for franchises.

How we run franchise marketing

Our approach keeps the brand strong online, with one website the whole system benefits from, and gives franchisors two ways to fund local marketing:

That local package is discounted because it runs across a whole system. A single-location business pays $2,500 to $4,000 a month for the same kind of program. Every franchisee gets their own dashboard, and head office sees every location. It’s how we run marketing for Pest Detective, a family-owned franchise, and it’s built for brands growing from 5 to 30 locations. Pest control brands can see the full program on our marketing for pest control franchises page.

Franchise advertising fund FAQ