For franchising
Franchise and brand platforms: royalties, levies, and franchisee transfers
Franchising monetises through percentages of other people’s sales — royalty fees, marketing levies, technology surcharges — collected through Connect rails whose defaults were never discussed at franchise disclosure time. Customer refunds trigger royalty-refund obligations; systemwide promotions spike refund volumes across hundreds of locations simultaneously; and franchisee exits deauthorise accounts carrying open reconciliations. The model matters enormously: direct-charge franchises behave completely differently from destination-charge ones.
Know which model each franchise uses
Direct charges put franchisees as merchant-of-record — liability sits with them, platform vectors shift toward fee-collection failures. Destination charges put the brand on the hook for every refund mechanically. Mixed estates are common and underdocumented; audit which model each location actually runs before assuming anything else on this page.
Royalty-as-application-fee inherits everything
Royalties collected as application fees inherit the entire fee-leak literature: defaults keeping royalties on refunded sales, proportional-return obligations, net-margin double-count hazards when both levers fire. Marketing levies riding as separate transfers add the second layer — refundable independently of royalty behaviour, frequently forgotten independently too.
- Network sales
- $9.12M
- Royalty flow
- ~$547k
- Promo-month refund spike
- ×3 baseline
- Typical stranding band
- $1.1k–4.4k/mo
Systemwide promotions: synchronized refund spikes
National promotions refund across the estate simultaneously — hundreds of locations issuing customer refunds the same week, each carrying royalty-return obligations and levy adjustments. Centralised promotion funding means the brand eats the cost while franchisee transfers sit stranded locally: politically sensitive, mechanically ordinary, and worth rehearsing before the Q4 campaign rather than during it.
Franchisee exits deauthorise mid-reconciliation
Terminations and non-renewals disconnect Stripe access with receivables sometimes open. Offboarding checklists should include reconciliation sweeps before deauthorization — recovering what remains reachable while the relationship still cooperates, preserving findings as evidence when it does not.
What FeeGuard does about it
Estate-wide views aggregate across locations while findings attribute individually; direct-vs-destination model detection prevents cross-model confusion; and promo-window monitoring catches the synchronized spikes as they happen rather than at franchise advisory council meetings.
Common questions
Franchisees process on their own Stripe accounts?
Direct-charge model — vectors differ substantially, starting with who bears refund liability. Audit the estate’s actual configuration first.
Promo refunds funded centrally — do flags still matter?
Absolutely: whoever funds the customer refund must pull back royalty and levy transfers locally, or centralised generosity becomes localised windfalls.