Latest / Franchise Conversations with Fexingo: Buying, Running, and Scaling Franchise Businesses / How Franchisees Are Using Third-Party Delivery Audits to Reclaim Revenue
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- Lucas: So I'm looking at a P&L from a 12-unit burger franchise in Ohio, and there is a line item that says 'delivery commission expense.' It's about $8,000 a month across the group. Not huge, but when you dig into it, they found that they were being overcharged by an average of $1,200 per month — phantom fees, wrong commission tiers, duplicate charges. And they only caught it because they hired an outside firm to audit every single transaction from DoorDash, Uber Eats, and Grubhub. Luna: Wait — an audit firm that specializes in delivery platforms? I didn't know that was a thing. How does that even work? Lucas: It's a small but growing niche. These auditors pull the raw transaction data from the franchisee's point of sale system and cross-reference it with the settlement reports from each delivery platform. The platforms take a commission that's supposed to be based on the net order value after promotions and discounts, but what actually happens is that errors creep in. The platform might charge commission on the full pre-discount amount, or apply the wrong commission tier — say, 25 percent instead of 20 percent because the order was categorized wrong. Or they double-charge for a marketing fee. Luna: So it's not like fraud, more like systematic sloppiness? Lucas: Exactly. And the platforms process millions of transactions — they're not catching these individually. So the franchisee ends up overpaying by 3 to 5 percent of delivery revenue on average. That Ohio group recovered $47,000 over six months. That's real money for a franchisee operating on thin margins. Luna: And the audit firm takes a cut of the recovery? Lucas: Typically they charge a contingency fee — around 25 to 35 percent of what they recover. So if they find $10,000 in overcharges, the franchisee keeps $6,500 or so. No recovery, no fee. That's the model. A few firms also offer a flat monthly retainer for ongoing monitoring, but the contingency model is more common because it aligns incentives. Luna: If today's conversation has given you a concrete idea to check your own delivery fees, that's exactly the kind of thing that makes this show worth doing. The way these episodes stay ad-free is through listener support — if you found this useful, buy me a coffee dot com slash fexingo. Just a way to keep these deep dives coming. Lucas: Yeah, we appreciate it. So back to the audit — the other interesting thing is that some franchisors are starting to mandate these audits in their operating agreements. Luna: Really? So the brand itself is requiring franchisees to check the delivery platforms? Lucas: Yeah, a few of the bigger fast-casual chains have added a clause that says franchisees must conduct a third-party delivery audit at least once per fiscal year, or the franchisor reserves the right to audit on their behalf and pass the cost through. The rationale is that overcharges are not just a franchisee problem — they distort the brand's revenue data. If the franchisor is collecting royalties based on gross sales, and the delivery platform is under-reporting or mis-classifying orders, the franchisor gets shortchanged too. Luna: That's a pretty strong signal. It also puts pressure on the platforms to clean up their act. Have any of them responded? Lucas: DoorDash and Uber Eats have both introduced transparency dashboards for merchants in the past year. You can now see a breakdown of commission by order, including any adjustments. But the catch is that you have to go look at it — it's not proactively sent. And the dashboards only show current data, not historical. So the audits are still necessary to catch past errors. Luna: And the audits also uncover things like 'commission charged on tax' or 'commission charged on tip'? I've heard that's a thing. Lucas: It is. In some older contracts, the commission base included the sales tax and the customer tip. That's been largely reformed, but there are still legacy agreements out there. The audit firms have found cases where a franchisee was paying commission on the full order total including a $5 delivery fee that the franchisee never even receives — it goes straight to the driver. That's legally questionable, but it was buried in the fine print. Luna: So the audit is basically a forensic accounting exercise applied to delivery data. How long does a typical audit take? Lucas: For a multi-unit operator with maybe 10 locations, the initial deep dive takes about two to four weeks. The auditors need access to POS logs and platform account credentials. They run algorithms to match orders, spot anomalies. After that, they compile a report with specific overcharges itemized by platform and by store. Then they submit claims to the platforms on behalf of the franchisee. The platforms usually credit the overcharges within 30 to 60 days, sometimes with interest. Luna: And the platforms don't push back? I would think they'd dispute the claims. Lucas: They do occasionally, but the audit firms have gotten good at documenting the errors. One firm I spoke with said they have a 95 percent success rate on claims. The platforms know their data isn't perfect, and they'd rather settle than have a public dispute with a franchisee group. Plus, the amounts are small enough that it's not worth a legal fight for them. Luna: So what's the typical recovery for a single-unit franchisee? Is it worth hiring an auditor for just one store? Lucas: It can be. If a single store does $200,000 a year in delivery revenue, and the overcharge rate is 4 percent, that's $8,000. The auditor takes maybe $2,500, leaving the franchisee with $5,500. That's real margin improvement. But the economics are better for multi-unit operators because you can spread the audit cost across more stores. Some firms offer a flat fee per store if you bring a group. Luna: Are there any downsides? Like, does the platform retaliate by demoting the store in search rankings or something? Lucas: That's a fear, but I haven't seen evidence of it. The platforms have merchant terms that prohibit retaliation, and they know that franchisees talk to each other. If a pattern of retaliation emerged, it would be a PR disaster. That said, some franchisees choose to stay anonymous when filing claims — the audit firm can act as a third-party representative so the platform doesn't know which specific store is behind the claim until after the credit is issued. Luna: That's smart. So the audit firm becomes a shield. How do franchisees find these auditors? Is there a trade group? Lucas: There's no formal association, but the International Franchise Association has a vendor directory that lists a few. Also, some of the bigger franchisee advisory councils have pooled resources to negotiate group rates with auditors. I know of one group of 40 franchisees from a sandwich chain that collectively recovered over $300,000 in their first year. Luna: That's impressive. And it's not just fast food — does this apply to any franchise with delivery? Like, what about a retail franchise that ships products? Lucas: It's mainly for on-demand delivery — food, convenience store items, alcohol. The audit firms I've talked to focus on DoorDash, Uber Eats, Grubhub, and a few smaller regional players. But the principle could extend to any platform that takes a commission on transactions — if there's a mismatch between the platform's records and the merchant's, there's potential leakage. Luna: So it's really about the granularity of data. Most franchisees are just looking at the net deposit from the platform and not drilling into each order. And the platforms make it hard to export raw data. Lucas: Exactly. The dashboards they provide are designed for a high-level overview, not a line-by-line audit. You can download CSV files, but they're often missing fields like item-level discounts or promo codes. The auditors have to reconstruct the order from the POS side. That's where the value lies — they have the tools to match tens of thousands of transactions quickly. Luna: What about the franchisor's role here? Should they be providing this as a service to franchisees? Lucas: Some are starting to. A couple of large fast-casual brands have partnered with audit firms to offer the service at a discounted rate to their franchise network. The franchisor gets a small referral fee, and the franchisees get a lower contingency rate because of the volume. It's a win-win. But most franchisors are still hands-off — they see delivery as the franchisee's responsibility. Luna: And I imagine the platforms are not thrilled about this. Have they tried to block audits through terms of service? Lucas: They have language that says merchants can't use automated tools to scrape data, but the audit firms typically work with the franchisee's own account — they log in manually or use API access that the franchisee grants. So it's not scraping, it's authorized access. The platforms have updated their terms to require merchants to notify them if a third party is accessing the account, but that's more about accountability than blocking. Luna: So the cat and mouse game continues. But for now, it seems like there's a real opportunity for franchisees to recover cash that's essentially sitting on the table. Lucas: Absolutely. And the best part is that it's a one-time fix that keeps paying. After the initial audit, you can set up ongoing monitoring — either through the auditor or by training your own staff to spot anomalies. One operator I know built a simple spreadsheet that flags any order where the commission percentage exceeds the contracted rate by more than half a percent. He reviews it once a week and files disputes himself. It takes him 15 minutes. Luna: That's the kind of operational discipline that separates the top quartile of franchisees. It's not just about sales — it's about protecting every dollar. Lucas: Right. And in an environment where delivery is growing — it's now about 15 percent of total revenue for many quick-service franchises — that 3 to 5 percent leakage is a meaningful drag on profitability. If you're a franchisee and you haven't looked at your delivery commission data in detail, it's probably worth a second look.