In this guide 6 sections
Settle five things first. How sales reach you from each outlet’s POS, how royalty rules differ by outlet, how audits are scored, how franchisees order stock, and what a portal shows them. The answers tell you whether a ready package fits or a custom build is needed.
How do sales reach you from each outlet?
Royalty starts with a sales figure you trust. Ask which POS systems your outlets run today, because a chain with one till vendor has a simple feed and a chain that grew by conversion often has four.
Find out what the feed carries. Daily totals are not enough if royalty excludes taxes, voids, staff meals or delivery platform orders, so you need line level data or at least clear categories.
Ask who can edit a closed day. A franchisee who can change last week’s sales controls your royalty base.
- POS vendors and versions across outlets
- Export format: API, file drop or manual
- Treatment of voids, discounts and refunds
- Delivery platform sales shown separately
Do the royalty rules differ by outlet?
Write down every rule as it is signed. Some agreements use a flat rate of net sales, while others use slabs, a minimum monthly fee, a marketing contribution or a different rate for the first year.
Rules attach to the agreement, not the brand. Outlet A signed in 2021 and outlet B in 2025, and their terms may not match. Ask how amendments are stored.
Test the rules on three real outlets with last quarter’s sales. If a person must apply a special clause by hand, note it, because a ready package that cannot hold that clause is a warning sign.
How are outlet audits scored and followed up?
An audit checklist for a restaurant, salon or pharmacy covers hygiene, brand standards, cash handling and stock. Ask who designs it and how often it changes.
Look at what happens after the visit. A failed fire extinguisher check needs an owner, a due date and proof of closure, and photos taken on a phone should attach to the line they support.
Decide whether audit scores affect anything. Some franchisors tie scores to renewal or to supply terms, which needs a clean history by outlet.
- Checklist versions by outlet type
- Photo evidence stored against each line
- Corrective actions with owner and due date
- Score history feeding renewal reviews
How do franchisees order stock and what do they see?
If you supply sauces, uniforms or packaging, franchisees place orders. Ask whether they order through you, a distributor or both, since minimum quantities, pack sizes, credit limits and delivery days all matter.
Then decide on the portal. A franchisee wants a statement of royalty, an order history, open audit actions and a place to download the manual. Keep it short.
Limit access carefully. A franchisee must never see another outlet’s sales, and a manager at one outlet should not see the owner’s statements.
Ready package or custom build?
Run your answers against each package you shortlist and count the points where you would bend your agreement to fit the tool. Two or three is normal. Eight is a custom build in disguise.
Ask each vendor to load three outlets with real sales and show a royalty statement. A demo with sample data proves little.
Take the list of unmet answers to your next vendor call, and ask for a written reply on each.
Franchise system requirements sheet
A two column worksheet with five blocks: sales feed, royalty rules, audits, stock orders and portal. Each block lists the questions in this article, a space for your answer and a tick box for ready package covers it, needs a workaround or needs custom work. A summary row counts the workarounds.
Open a blank worksheet to printQuestions owners ask
Can royalty be calculated from monthly sales totals?
Only when the agreement uses net sales with no exclusions. Most agreements need daily or line level data to remove voids, taxes or platform orders correctly.
Do we need a portal for franchisees?
Not on day one. A monthly emailed statement may do for a small network, but a portal helps once outlets query statements, orders and audit actions regularly.
Should audit checklists live in the same system as royalty?
They can sit apart, but linking them by outlet helps. Renewal and supply decisions then draw on sales, payments and audit history together.
How many outlets justify a custom build?
Outlet count alone does not decide it. Look at how many agreement terms and POS systems a ready package cannot cover without manual work.