Who pays for AI in a franchise system — the franchisor or the franchisee?

Usually the franchisee, through the technology fee. The franchisor typically builds and licenses the platform, then recovers the cost across the network — which is why the technology fee clause matters more than the tool itself.

This is a contract question before it is a technology question, and it is where most franchisee disputes about AI begin.

The common structure

—Franchisor builds or licenses the platform centrally.

—Cost is recovered through a technology fee, charged per unit, usually monthly.

—The fee is set in the franchise agreement, often with a clause permitting increases.

Where the friction is

A franchisee who signed years ago agreed to a technology fee for a point-of-sale system. The same clause is now funding AI tooling they did not evaluate and may not want.

The clause almost always permits this. The dispute is rarely about legality — it is about a franchisee paying for a capability decided without them.

What to check in the agreement

Whether the technology fee is capped, whether increases require notice, and whether adoption of new systems is mandatory. These three terms determine your exposure far more than any tool's price.

For franchisors

Systems that consulted franchisees before adding AI to the technology fee report materially less resistance. Announcing the charge after the decision is the pattern that generates council disputes.

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