Organise online sales before opening your first franchise outlet

Your existing business has an online shop, and your first franchisee is about to open. Who receives the revenue from an online order prepared by the franchisee? And who handles a return? Arrangements that seemed straightforward within one business need clear agreement across a franchise network. Before launching, decide how online orders, payments and customer enquiries will be handled by the separate businesses.

1. Decide who the seller is

Start with the contract with the customer, not the division of revenue. Who is selling the product: your central business or the franchisee? Owning the online shop does not automatically make you the seller for every order. Your processes and customer communications must reflect the arrangement you choose.

For each ordering route, establish which business is responsible. Consider home delivery from a central warehouse, collection from an outlet and orders placed through a local outlet’s page. For each route, record:

• which business enters into the sales contract;
• who receives payment and issues an invoice, where applicable;
• who reserves stock, packs the order and delivers it;
• who handles enquiries, complaints and refunds.

Make the seller’s identity clear to customers before they place an order. A shared brand must not obscure which business the customer is dealing with. Ensure the order confirmation and terms of sale reflect this too.

Online consumer sales are subject not only to franchise arrangements but also to statutory information requirements and rules on the right to cancel, among other obligations. Many products come with a 14-day cooling-off period, but there are exceptions. Have an adviser check which rules apply to your range. Agreements between the businesses must not undermine consumers’ statutory rights.

2. Allocate both revenue and fulfilment costs

An order may come in centrally while the franchisee does most of the work. Simply agreeing who records the revenue is therefore not enough. Map out the costs and tasks as well.

Take an order sold centrally and collected locally. The outlet receives the goods, sets aside space, checks the collection and answers questions. Agree whether it will be paid for this work, how that payment will be calculated and when it will be settled. Do not present this payment as extra revenue for nothing: it comes with work attached.

Then distinguish between the different financial flows:

• Sales revenue: which business is entitled to it?
• Fulfilment fee: what does the business handling delivery or order processing receive?
• Discounts: who bears the cost of a centrally organised promotion?
• Returns and errors: who pays for transport, refunds and putting things right?
• Franchise fee: are these sales or fulfilment fees included in the agreed basis for calculating it?

Ask an accountant or tax adviser to check that invoicing and VAT treatment reflect the actual arrangements. Avoid having both businesses record the same order as their own sale without an appropriate legal and accounting basis.

3. Document the arrangements before signing

The Dutch Franchise Act has applied in the Netherlands since 1 January 2021. The franchise rules are set out in Book 7 of the Dutch Civil Code. Among other things, they require franchisors to provide relevant information before entering into the agreement, including details of fees, investments and other financial contributions.

If online sales affect the franchisee’s earnings model or workload, those effects must therefore be clearly addressed during the preparation stage. Describe mandatory systems, fulfilment costs and how fees are calculated. Make clear which elements are fixed and which outcomes remain uncertain. A new online shop with no proven results is not a guaranteed source of income.

The legally required pre-contractual information is subject to a standstill period of at least four weeks before the franchise agreement is concluded. Do not use that period to introduce unclear online obligations for the prospective franchisee.

Set out the main financial arrangements and responsibilities in the franchise agreement or an appendix. Cover day-to-day tasks in practical operating instructions. A provision in the operations manual allowing you to reallocate all online revenue at your discretion is no substitute for carefully agreed terms. The Franchise Act’s information and consent rules may also be relevant to later changes.

4. Test the whole order process, including returns

Before opening, run test orders with the staff who will handle them. Test not only a successful purchase but also unavailable stock, a failed payment, an uncollected parcel and a return to a different outlet.

Each time, check that the customer knows whom to contact and that both businesses can see the same order status. Agree who takes responsibility when an order gets stuck. Limit access to customer data to what is needed for the task in question, and have the data protection roles and arrangements checked for compliance with the EU General Data Protection Regulation (GDPR).

Then reconcile payment records, stock movements and settlements between the businesses. Can the franchisee understand why an amount has been received or deducted without a verbal explanation from you? If not, simplify the process before real customers use it.

Practical takeaway: create a single overview for each online ordering route, identifying the seller, the business handling fulfilment, the flow of funds and the party responsible for complaints. Test it in practice and add the final arrangements to your franchise agreement.