Franchises and chains guide
Who pays for packaging in a franchise?
In the vast majority of networks, the franchisee pays for their own packaging. Head office approves the supplier, enforces the brand guidelines and never touches an invoice. It is not the only possible setup, and the choice has direct consequences on both sides' cash flow.
The three possible setups
| Setup | Who advances the money | Who invoices the location | What it means |
|---|---|---|---|
| Direct purchase by the franchisee | The franchisee | The supplier | The simplest and most common setup. Head office keeps control of the brand guidelines without carrying any cash. |
| Centralised buying with re-invoicing | The franchisor | The franchisor | Better negotiated prices, but head office advances production for the whole network and manages re-invoicing location by location. |
| Direct billing with commission | The supplier | The supplier | The franchisee pays for their packaging, and head office earns a commission on those purchases without advancing anything. |
Why re-invoicing costs more than it earns
On paper, buying for the whole network and re-invoicing captures the margin. In practice, head office becomes the banker and the accountant of its franchisees. It advances production, carries the stock, chases late payments, and every quantity gap becomes a discussion. Many networks drop this setup after two or three years, less because of margin than because of the time it consumes.
The setup that turns a cost into revenue
The third setup separates cash flow from revenue. Franchisees order and are invoiced directly by the supplier. Head office advances nothing, re-invoices nothing, and receives a monthly commission on its network's purchases. The packaging line, which earned nothing, becomes a recurring revenue line, indexed on the network's growth.
Launch costs, the real negotiation topic
A new customised reference involves launch costs, usually linked to the printing plates. They are billed once, on the first production run. Three practices coexist: the franchisor covers them for the whole network, they are split between the open locations, or they are built into the unit price of the first run. This is the point negotiated most often, and the one most often left unwritten.
Frequently asked questions
Is a franchisee obliged to buy their packaging from the network's supplier?
It depends on what the franchise agreement provides. An exclusive supply clause exists in many networks, and it is usually justified by the protection of the brand's identity. This is a contractual negotiation point, to be handled with legal counsel. The framework described in this guide is French franchise law.
Can a franchisor take a margin on packaging?
It is possible and common, provided it is transparent and written into the agreement. Under the French framework described here, the network's supply terms must appear in the pre-contractual information given to the candidate. Here again, the point should be validated with legal counsel.
Who pays the plate costs of a new reference?
They are billed once, on the first production run. Depending on the network, they are covered by the franchisor, split between the locations or built into the price of the first run.
What happens to personalised stock when a franchisee leaves the network?
This is a point to provide for in the agreement. When the stock is carried by the supplier rather than the location, the question largely disappears, because the outgoing franchisee is not left holding pallets of branded stock.
Pack On Demand by Publifood
We consolidate your network's volumes, we produce, we store and we deliver each location on demand. One box delivered, one box invoiced, even when it carries your brand.
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