When deciding where to invest in franchising internationally, dozens of factors come into play, which are detailed comprehensively in the regular EGS GlobalVue™1 reports produced by international franchising experts Edwards Global Services (EGS). The report ranks nine factors, areas such as projected GDP growth, legal concerns, the ease of finding investors, and more, to rate the ease of expanding by country on a scale of 1-4.
“Very often, (when it comes to payment) what I’ve found in the past is that franchisees say, ‘Well, in our country, it’s sometimes difficult to make cross-border payments. We’ve got these things going on, we don’t know what’s going to happen,” said William Edwards of EGS, who has more than four decades of experience in the global franchising industry. “If you introduce structure, process, and standards, there’s no ambiguity.”
Let’s look at some of the reasons why automating more of the cross-border invoice-to-cash process is a success factor in any international franchise effort – whether you are expanding or optimizing an existing investment.
FX 101 for Franchisors
You are a US-based franchisor and you have secured a franchisee for five Ryan’s Rockin’ Diners in Thailand. The contract and payment terms are written in USD, and you expect payment in USD. As such, when it is time to collect those fees every month, you will email the USD denominated invoice. When the franchisee opens that invoice, they must determine how much it will cost them to pay in Thai Baht. And they will likely remit the payment by wire transfer, which will arrive in your bank account without any information on what the payment is for or who it is from. That of course introduces some issues.
First, let’s take the invoicing process. Because the invoice was sent by email as an attachment, you have no way to see whether the franchisee received or opened the invoice. If you want to send a reminder to pay it or chase a payment that is overdue or even unpaid, it will all require manual work on the part of your staff as well. The franchisee likewise has no easy way to see what they owe and when it is due – especially if they are managing multiple franchises for which they may owe different amounts for various fees.
Secondly, let’s look at the payment process. The FX market is complex. FX rates change frequently. Some of the countries you’ll want to do business in don’t want USD leaving their borders. And without very good visibility into fees, it’s likely that franchisee payments will be short of what it actually owed in USD.
Perplexed? You’re not alone. About half of global trade2 is invoiced in USD, according to the Bank of International Settlements. And 95%4 of businesses say they could increase their global expansion efforts if they had an easier way to deal with exchange rates. Dealing with currency fluctuations is one of the the biggest challenges to managing existing global franchise businesses and to expanding into new markets.
“A lot of these variables can create complexities around what is the simple act of sending out an invoice and getting paid for it,” said Trip Roney, Senior Account Executive, Flywire
Challenges behind collecting cross-border franchisee payments
Global franchisors know that the cross-border invoice-to-cash process is not simple. Payments are often late or short, (or both), or even go unpaid. This can also create friction between corporate A/R teams and franchisees with collection efforts, make it challenging to predict and manage cash flow and impact profit margins.
“Probably the largest (payment) challenge that we’ve faced as a franchisor is in collecting that timely and full remittance fee,” said Jim Perkins, who is the Executive Vice President of International Development at Dickey’s Barbecue Pit.
Here’s why.
Banking differences/local economy. Central banks in many countries do not like hard currency leaving their country, and they particularly dislike the USD leaving their borders. A few are very clear on this: South Africa, Brazil, and China, according to Edwards of EGS. For that reason, the culture and emotions behind banking can vary significantly depending on where the franchisee is located.
“It’s a transaction within a transaction,” Dickey’s Perkins said. “For franchisees, it means setting appointments. It’s driving to the appointment. It’s finding a place to park. It’s walking in, waiting in line, sitting down, and then explaining to a bank manager what you’re trying to do. And that bank manager doesn’t want U.S. currency leaving their bank. That emotion is massive, and it’s difficult to manage remotely.”
FX rate fluctuation. Franchisees are typically paying you a percentage of gross sales in USD. And if their local currency goes the wrong way, your share of that money (in USD) will be lower. If the fee structure isn’t clear (see below), the rates aren’t the most competitive, and you lack visibility into the timing and amount of payments, the impacts of currency fluctuations could be massive.
Lack of clarity on fees. The payment method (e.g., wire transfer, credit card, or digital payment) used by a franchisee affects fees. Some of the stickier areas with franchisees include:
- The difference between the midmarket rate3 and the actual cost of obtaining the currency. The rate a consumer sees online is the interbank rate – what banks and large financial institutions trade currencies at. The actual cost of obtaining a currency will almost always be higher than that rate because of the fees charged by the partners involved in the trade.
- Credit card fees. There are exceptions depending on the card type, but when a foreign payer uses a credit card, they pay an FX fee of 2% or more and a Foreign Exchange Markup (an additional charge levied by the card scheme on top of the mid-market exchange rate that a payer may see online). Payers don’t always know about these charges until they see their credit card statement.
Security and fraud. As we have covered above, franchisee payments are often fraught with emotion, and all parties want a guarantee of a safe and secure payment process. It’s easy to understand why. Cross-border payments fraud is a significant concern for small and mid-sized business owners, according to a recent global survey by Mastercard, covered in PaymentsDive. AFP’s 2025 survey4 shows that the top three payment methods most vulnerable to fraud are: checks, ACH debits, and wire transfers, and that the most common fraud vehicles are Business Email Compromise (BEC) and an individual external to the organization using a forged check or stolen cardNearly half cited wire transfers as the top payment method used in BEC attempts, according to the survey.
Payment delays. Local laws and regulations, payment systems, and foreign exchange rates influence the timeliness of cross-border payments. There are also structural things to consider that can delay payments, such as bank holidays or incorrect SWIFT information.
Disconnected systems lead to manual invoicing and reconciliation. Franchisors are often managing 4 or 5 different systems that each hold valuable information about their business. More often than not, these systems are not talking to one another. Information about how much their franchisees owe in royalty fees may live in a home-grown royalty calculation tool that is not integrated with the ERP or accounting system. The invoice, on the other hand, will be generated from that system of record. Information has to manually be transferred from one to the other, when both asking for payment and reconciling it. And that is if everything goes smoothly – if there is a payment delay or a short payment, manual intervention across different time zones and languages is often the only route to remedy it.
3 steps to solving the last mile of cross-border transactions
1. Understand the impact of FX and minimize exposure.
Dickey’s Barbecue Pit collects master fees, which are a licensing fee (or a subset of that, such as a regional or local fee), and royalty fees each month. For Dickey’s, all contracts and remittances are due in USD, and all fees are covered by the franchisee, based on the Citibank rate in New York City, at the close of business daily. So there’s no discussion on exposure, minimizing, or maximizing transaction risk. Payment processes are integrated with their system of record.
Clarity is very important – both for the franchisee and the franchisor.
“It’s important for the CFO to understand exactly how much money is going to come back and when, as opposed to what the fees are that you’re charging for,” Edwards said.
2. Be ready to present franchisees with modern and connected systems, proven, automated processes, and fair and effective standards for payment.
The challenge of getting timely and accurate payment comes down to what’s in the mind of the host country – and it’s a question best answered with exactly what you expect and how the franchisee accomplishes it. Perkins has fielded questions from franchisees about whether Dickey’s will accept alternative payment methods, such as Buy Now, Pay Later and blockchain-based/cryptocurrency payments.
“The challenge of receiving payment is no longer a challenge, because I can come back to, 'listen we’ve got a structure, we’ve got process, and standards,” he said. “It’s transparent. And after I acknowledge we've executed an agreement, the franchisee partner knows they’ll be in touch with a representative from Flywire, as well as a representative from Dickey’s. And I pass it over to Flywire.”
Solid processes help both franchisors and franchisees avoid the ambiguity and friction that often stalls payments.
3. Focus on your core business, which isn’t payment processing.
If a franchisee in Bangkok has a question about the amount and timing of a payment, when can your billing department in Dallas get back to them? Does your business have the capacity to manage refunds and chargebacks if necessary? Can you provide support in local languages?
Franchisors like Dickey’s Barbecue Pit have found success in offloading these to a payment partner.
“I get Dickey’s out of the business of pulling in funds via the finance department. We’re not good at it, we’re a franchisor,” he said. “We leave it to Flywire."
With Flywire’s invoice-to-cash functionality for franchise fee payments, franchisors can:
- Automate the invoicing and dunning processes for both domestic and international payments. Franchisors and their franchisees both have access to real-time payment information in a dashboard view. It makes it easy to see exactly what is owed and payment status. Clients globally can access that information in eight different languages.
The software automates invoice creation by either pulling data via a direct integration to the system of record or through a simple file upload. It automatically sends notices (configured according to your unique business rules) to alert customers franchisees that a payment is almost due or past-due.
For franchisors, the homepage view surfaces payments at-risk of being overdue or past-due, making it easier to act on the exceptions. For franchisees, the payor portal makes it is easy to see what they owe and act on it – with options in their preferred payment method and currency as determined by the franchisor.
“It drives open communication between the franchisor and the franchisee,” said Chris Jordan, Director of Solutions at Flywire.
Flywire’s payment platform makes an international transaction appear as easy as a domestic one. Franchisors bill in their preferred currency. Franchisees pay online using their currency and payment method of choice – with all fees clear up front to eliminate short payments. Flywire exchanges the funds and pays out the franchisor in their preferred currency.
- Automate cash application and reconciliation. These payments are automatically applied to the correct invoice, and ease the bank reconciliation process. Both parties save time and money.
“The combination of software and payments functionality brings next level visibility, ease and clarity to franchisors and their franchisees to build stronger relationships and business value for everyone,” Roney said.
To learn more about how Flywire can work for your franchise, connect with a payments expert today.
1 William Edwards, “GlobalVue,” (Edwards Global Services).
2 Mathias Drehmann and Vladyslav Sushko, “The global foreign exchange market in a higher-volatility environment,” (BIS).
3 “Euro-dollar parity: What does it mean for travel businesses?,” (Flywire).
42025 AFP Payments Fraud and Control Survey, AFP and J.P.Morgan