Definition
Franchise settlement
Franchise settlement is the process of squaring up between sites in a shared loyalty programme, because the branch that issued the stamps is often not the branch that gave the reward away.
Why it cannot be ignored
Across a handful of redemptions it is noise. Across hundreds it is a steady transfer from whichever sites are convenient to redeem at toward whichever are convenient to earn at, usually from suburb to city centre or the reverse. Between franchisees — separate businesses with separate books — that is money moving without an agreement, and it surfaces as a dispute rather than a line item.
What makes a settlement report trustworthy
Both halves, per site: stamps earned here, rewards handed over here, netted off. A summary either party has to take on faith is not settlement, it is an assertion. Because each transaction records the location and the staff member, the figures can be checked rather than believed, which is the difference between an invoice that gets paid and one that starts an argument.
Agree it before signing franchisees
The mechanics are easy; the agreement is not, and it is far easier to write before anybody is out of pocket. Decide what a reward is worth for settlement purposes — food cost or menu price — how often you square up, and who owns the customer record. These are commercial questions the software cannot answer for you.
Questions
- Should rewards settle at cost or at menu price?
- That is a commercial decision. Cost is the more common and defensible basis, because it is what the redeeming site actually lost. Whichever you choose, write it down before launch.
- What if a franchisee leaves?
- Balances belong to the brand’s programme rather than the departing site, so customers keep working cards and use them elsewhere. That is the outcome that protects the brand, and it should be in the agreement.
Related terms
Multi-location loyalty
Multi-location loyalty is a single loyalty programme that works across every site a business runs, so a customer earns at one branch and can redeem at another with one shared balance.
Redemption
Redemption is the moment a customer receives the reward their loyalty card has earned. It is also the point at which the balance is spent — a card is not cleared by reaching its target, but by staff handing the reward over.
Loyalty program
A loyalty program is an arrangement that rewards customers for coming back. In hospitality it usually takes one of two forms: stamps counted per visit toward a free item, or points accrued against how much is spent.
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