Franchising: who handles online orders and returns?

Joining a franchise network often means becoming part of an online sales system too: purchases through the brand’s website, in-store collection, dispatch from stores and returns at the counter. Before signing, however, you need to understand which obligations will fall to you as the franchisee. The key question is not simply ‘Can I sell online?’ but who makes the sale, who processes the order and who bears the costs.

1. Identify the seller for each purchasing route

A single website may operate under several different commercial models. A customer might buy from the franchisor and collect from a franchisee, or buy directly from the business that runs the store. They might also simply reserve a product and complete the purchase later at the till.

Ask for a separate breakdown of at least these purchasing routes:

• ordering and paying on the website, with home delivery;
• ordering and paying on the website, with in-store collection;
• reserving online and completing the purchase in store;
• placing an online order that is prepared and dispatched from the franchisee’s stock.

For each route, identify the business named as the seller in the terms of sale and the order confirmation. Then check who receives payment, who issues the required tax documentation and who is answerable to the customer. Simply collecting a payment does not, on its own, establish who the seller is.

Trading under the same brand does not remove the businesses’ independence. Italy’s Law No. 129 of 6 May 2004 on franchising governs relationships between legally and economically independent parties. A vague answer such as ‘the network handles everything’ does not clarify your position as a prospective franchisee.

2. Put a financial value on the work required

In-store collection can bring people into the shop, but it also involves work: receiving parcels, storing them, checking the recipient’s identity and recording collection. If an order is fulfilled from your stock, you must also prepare and pack it and liaise with the courier.

Ask for a written schedule specifying, for each activity:

• any fee payable to the franchisee;
• when entitlement to that fee arises and when it is paid;
• who pays for packaging, transport and payment processing fees;
• what happens if an order is cancelled, left uncollected or returned;
• how amounts due between franchisor and franchisee are reconciled.

Distinguish the order value from your remuneration. If the franchisor is the seller, the total paid by the customer is not automatically revenue for your store: check the accounting treatment with your accountant, based on the actual arrangement.

Ask for worked examples of both a completed order and a returned order, rather than relying solely on favourable scenarios. Your store may already have used staff time and materials even if the sale is cancelled. Also clarify whether providing the service is compulsory and whether you can restrict it when limited space or workload prevents you from meeting the required standards.

3. Distinguish withdrawal rights, faulty goods and discretionary exchanges

Not all returns are the same. For distance sales to consumers, Italy’s Consumer Code, Legislative Decree No. 206/2005, generally provides a right to withdraw from the purchase within fourteen days, subject to statutory rules on when that period begins, the conditions that apply and exceptions for certain purchases. In-store collection does not automatically turn a contract already concluded online into an in-store purchase.

A simple reservation followed by a purchase completed in store is different. For purchases concluded in person, there is generally no equivalent change-of-mind right, unless the retailer offers a more generous policy. Rights relating to goods that do not conform to the contract remain separate, and the seller is responsible under the applicable rules.

Before signing, ask for a procedure that distinguishes between:

• withdrawal from a distance purchase;
• a claim relating to a faulty product;
• a discretionary exchange offered by the brand.

For each case, it should be clear who authorises the transaction, who issues the refund, where the goods are sent and who bears the costs. In particular, check whether you must accept products sold by other businesses in the franchise network and whether you must advance refunds when you did not receive payment for the original order.

4. Set out responsibilities in the contract

Italy’s Law No. 129/2004 requires franchise agreements to be in writing; otherwise, they are void. It also requires a complete copy of the agreement and the prescribed accompanying documents to be supplied at least thirty days before signing. Use this period to have the operational rules for online sales reviewed, rather than focusing only on the sales presentation for the service.

Ask for the agreement and its schedules to specify responsibilities, fees, refund timescales and complaints handling. They should also cover lost parcels, damaged products, disputed deliveries and orders still outstanding when the franchise relationship ends. Internal agreements allocate obligations and costs between businesses, but cannot remove consumers’ mandatory statutory rights.

Practical tip: before joining, trace an online purchase on paper from order to refund. If any step lacks a clearly identified responsible party or an explicit allocation of costs, ask for these to be set out in writing before you sign.