Finding the Best Payment Processor For Your Franchise Business

Franchisors and franchisees have unique needs for payment processing. Learn about setting up credit card payments for franchise businesses.

Franchise businesses are a unique concept, and often especially attractive to the many stakeholders involved in each location.

That doesn’t only include the franchisee and franchisor, but vendors and partners like payment processors and other merchant services providers. Why is that the case? A reputable brand name and recognition, an existing desire for the products or services offered, and other factors all contribute.

Franchises come with plenty of benefits, but there are also unique payment processing concerns for both franchisors and franchisees.

Let’s briefly define what a franchise business is. Then, we’ll look at how to select an effective payment processor from the perspective of franchisers and franchisees.

Already sure that you need to find a dependable, independent payments consultant to help you find flexible, secure payment processing solutions? Swipesum can develop the right strategy for your business, lowering fees while ensuring seamless integrations. View all of the payments services we offer to franchise businesses.

What is a Franchise Business? Why is Payment Processing Especially Important for Them?

Franchise businesses leverage an existing company name and brand to attract customers to a recognizable merchant. It involves a franchisor, often the owner or developer of the original concept, providing certain assets and services to a franchisee.

The two groups enter into a franchising agreement. This allows the use of intellectual property, logos, special tools and business knowledge, and more by the franchisee. In return, the franchisee (the business owner for the individual location, or group of them) pays a franchise fee. It also agrees to abide by conduct, image, and other standards set by the franchisor.

The franchising business model allows a business to expand without taking on all of the risks associated with opening new locations. It also offers opportunities for smaller businesses to leverage well-known assets and intellectual properties. However, some franchisees still need to take out franchise business loans to cover the cost of purchase.

Franchisees can also make money in other ways related to this agreement. McDonald’s, as Investopedia explains, leases real estate it owns to many franchisees and earns significant revenue through that process.

With this context in hand, let’s look at selecting a payment processor from the perspective of a franchisor. Then, we’ll focus on the franchisee side of credit card processing. Want to skip ahead? Book a free consultation, and our experts can guide you through the ins and outs of credit card processing for franchisees.

A customer pays for coffee with a credit card.

Key Considerations for Processing Credit Cards and Other Payments: The Franchisor Perspective

Leveraging the Power of Size and Scale

The most successful franchises have hundreds or thousands of total locations. That means a sizable and generally consistent stream of credit card transactions. Statista projects the total economic output of all franchises in the US to be $787.7 billion in 2022

This combination of volume, activity, and stability is attractive to payment processors. That puts franchisors in a stronger position when it comes to negotiations. And, when a franchisor negotiates on behalf of all franchisees, it’s the most effective way of leveraging that scale.

Current Technology and Future Opportunities

A franchisor essentially has three options when it comes to payment processing and software, depending on its current position. We go into more depth on this topic in this article on our blog. In short, the three are:

  1. Ownership of POS, business management, or payment software: If your franchise owns its own tech stack, you can fully manage payment processing. Your company could integrate directly with an individual provider or gateway, such as NMI or Authorize.net. That provides opportunities for revenue sharing with one provider — or many if using a gateway. Alternatively, and more commonly, your company could streamline payment processing for franchisees with payment facilitation. In this approach, your software becomes the home base for all payment reporting and creates an easy-to-use system for everyone.
  2. Licensed software: Your company will need to ask the software provider which payment processing providers it works with. There are still options for saving money on processing fees — ask about the software provider’s integrations and supporting gateways.
  3. No payment software in place: Your company will need to set up virtual or physical terminals. Your organization has plenty of options but needs to put a plan in place.

The Importance of Successful Hardware and Software Integrations

Ultimately, a payment processing tech stack must be secure, reliable, and easy to use for everyone involved. If the entire system is not set up properly or is otherwise unstable, it can lead to serious operational issues. It can also create negative customer experiences.

Be sure to make successful payment tech integrations a clear top priority.

The Value of an Expert Payments Consultant

Making major payment processing decisions that affect the corporate headquarters and franchisees can be especially complex. 

You can hire a Chief Payments Officer or payment processing expert in-house. However, the best overall option, and often the most practical for franchise businesses, is to work with a team of experienced consultants who take on this type of work every single day.

Working with a consultant means bringing in an experienced specialist to lower costs and fees, but it can leave your company with a solution that isn’t integrated, as well as inadequate support.

What makes Swipesum different than other consultants? Our team:

  • Vets potential vendors for software and hardware
  • Negotiates to a final agreement
  • Implements the solutions and developed customer technology
  • Runs customer service

Having that kind of expertise supporting this effort keeps stakeholders looped in but free to focus on the core duties most important to the business.

Key Considerations for Processing Credit Cards and Other Payments: The Franchisee Perspective

Does Your Franchisor Vet Payment Processing Providers or Have an Existing Partnership?

You can benefit from an existing relationship between your franchisor and a payment processing company. In cases where preferred relationships exist or corporate suggests certain vendors, you can request pricing from all of them and choose the one that offers the best value overall. Be sure to avoid agents, small ISOs and smaller industry players where rates and support are inadequate for the scale of your large operation.

Where to Start With Credit Card Franchise Business Processing

Does your franchisor not recommend or prefer any payment processing providers? Your franchise can work with a payments consultant to streamline the process of selecting the best vendor.

This process is complex and the final decision can have a substantial impact on your business for years to come. However, few franchise owners are themselves experts in the world of payment processing and merchant services. Partnering with a payments advisor can support you as you navigate this process and allow you to keep focusing on the core, day-to-day needs of your franchise.

Independent Consultants for Payment Processing Success

At Swipesum, we recognize that implementing a new payment processing system often takes somewhere between 3-9 months. That’s time business leaders at the corporate and individual franchise level can’t spare. We have the expertise to expedite this process while we connect you with the best providers for your business, reducing it to just a matter of weeks.

Want to learn more about the benefits of working with Swipesum? Book A Free Consultation.

No items found.

Swipesum Team

Read more
SCHEDULE a CONSULTATION

Meet one of our payments experts to see if working together makes sense.

We will schedule a quick consultation call to go over how you're currently handling merchant services at your bank, show you our menu of options, and plan for a successful launch.

Swipesum.Insights

SWIPESUM.CONSULTING

We help businesses make intelligent payment decisions.

Learn more about Swipesum
audit

Start with a free audit of your payments processing statements

Schedule an audit
consultation

Connect with a payments expert and get a free initial consultation

Book consultation