Managing Online Sales in Franchise Agreements

A business with strong sales through delivery apps or online marketplaces is not necessarily ready to share those channels with franchisees. If accounts, orders and fee deductions are still managed informally, opening franchisee-operated outlets can create new disputes. Before franchising the business, establish online sales rules that explain who is authorised to sell, who receives payments and who bears the costs. This clarity helps build healthy relationships across the franchise network.

1. Define which channels franchisees are entitled to use

Start by mapping all sales channels: the brand’s own website, delivery apps, online marketplaces, social media accounts and ordering services through instant messaging. Do not assume that permission to use the brand automatically grants the right to open a shop on every platform.

For each channel, decide whether it will be managed by head office, individual outlets or through shared responsibilities. For example, head office might manage the ordering website while franchisees manage delivery app accounts for their own outlets. This is a business design choice, not a standard requirement for all franchises.

Draw up a written list covering:

• Channels franchisees may use and those requiring prior approval.
• Products or services that may be offered through each channel.
• Account names, seller identities and the outlets fulfilling orders.
• Who is authorised to activate, suspend or close a channel.
• The application procedure for franchisees wishing to use a new platform.

In Indonesia, Government Regulation No. 35 of 2024 on Franchising requires franchise agreements to include, among other things, the business activities, business system, and the parties’ rights and obligations. Online sales provisions can clarify these elements. However, the regulation does not prescribe a single model for allocating online channels that all brands must use.

2. Separate account control from the right to receive payments

An account using the brand’s name is not always registered in the franchisor’s name. Platforms may require the business operator’s identity details, a payment recipient’s bank account and documents for a specific outlet. Check the platform’s terms before promising that all accounts will be owned by, or transferable by, head office.

Create an account management sheet for each channel. Record the registered seller, recovery email address, verification phone number, administrator access holders and bank account designated for payouts. Avoid using an employee’s personal phone number as the sole means of recovering an account.

Distinguish between three permissions: managing the shop’s appearance, changing payment settings and viewing transaction data. These do not all need to be assigned to the same person. Franchisees need sufficient access to run their outlets, while head office needs appropriate control to safeguard the use of the brand.

Also specify what happens when outlet management changes. As an operational measure, prepare procedures for revoking employee access, updating recovery contacts and checking bank account details. Do not promise automatic account transfers if the platform requires fresh verification or registration.

3. Test order and cost allocation using real transactions

Online orders may be received by head office but fulfilled by a franchisee’s outlet. Without clear rules, the two parties may have different understandings of whose sales are being recorded and who bears the deductions.

Define the basis for assigning orders, such as stock availability, opening hours, fulfilment capacity or customer choice. Explain what happens if an outlet rejects an order, is closed or does not have the requested product. Order allocation should be traceable, rather than decided through informal conversations whenever a problem arises.

Next, prepare sample calculations for several scenarios:

• A standard transaction without a promotion.
• A transaction with a discount funded by head office.
• A transaction with a discount funded by the outlet.
• A transaction with a platform subsidy.
• A cancelled or refunded transaction.

For each calculation, show the sales value, the source of discount funding, the platform commission, any other applicable deductions and the net amount received by the outlet. If online transactions form part of the royalty calculation base, ensure their treatment is consistent with the agreement’s payment provisions.

Test the mechanism before offering it to franchisees. Use transactions from the business’s existing channels, then reconcile order records with the platform’s payout reports. The aim is not to set new rates, but to ensure that the allocation of entitlements and costs works in practice.

4. Record the agreed terms in the right documents

Include channel usage rights, authority over accounts, responsibility for costs and the principles of order allocation in the agreement or an annex forming part of it. Technical instructions, such as how to upload products or process orders, can sit within operating procedures.

Do not bury important commercial obligations in app instructions. If head office can run promotions that impose costs on outlets, clearly state the limits of that authority and the approval process. Also define each party’s access to transaction data, without assuming that customers’ personal data can be freely used for marketing.

Government Regulation No. 35 of 2024 requires the Franchise Offering Prospectus to be provided at least 14 calendar days before the agreement is signed. Use the process of explaining the franchise offer to ensure prospective franchisees understand the online sales model, particularly its costs and dependence on platforms. Franchisors must also hold a Franchise Registration Certificate (STPW) before entering into a franchise agreement.

Practical step: before recruiting franchisees, complete a channel matrix, an account permissions list and a sample payout calculation. If these three documents are not aligned, the online sales arrangements are not yet ready to be promised to franchisees.