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.
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.
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