What to read in a third-party delivery contract before signing

Why owners sign without seeing the real terms

Two owner threads capture the gap. A franchisee asked other franchise owners what their third-party delivery contracts look like, trying to benchmark terms. Someone planning a future restaurant asked to talk about the real financial math of third-party delivery. We only have search excerpts of both, without the replies' figures, and terms differ by platform, market, size and date, so numbers posted by other operators would not be reliable benchmarks anyway.

Signup flows often present a tier choice and a commission percentage, with the full terms behind a link. The percentage matters, but so do the base it is charged on, the costs outside it, and the conditions that come with each tier. If you are a franchisee, also check whether your franchise agreement or a system-wide deal sets terms for you; your own signature may not be the only one that counts.

Commission: the rate, the base and the tier conditions

Read the commission definition word for word. Is it a percentage of the food subtotal, of the subtotal including any markup you set, or of something else? Are taxes, tips and guest-paid fees excluded? Is there a separate payment processing charge? Are pickup orders, orders delivered by your own staff, and orders from the platform's own storefront tools charged differently?

Tiered plans usually trade a higher commission for more visibility, a wider delivery radius, or promotional perks. Write down exactly what each tier provides in the contract, not the marketing page, and whether the platform can change those benefits. If the higher tier promises more exposure, there is usually no guarantee of more orders, so treat the extra orders as an assumption you will test.

• Commission base: subtotal before tax? including your markup?
• Separate payment processing or service charges
• Different rates for delivery, pickup and self-delivery
• Exactly what each tier adds, in the contract text
• Minimum terms or volume requirements attached to a tier

Refunds, errors and charge-backs

Refund terms decide who pays when a guest reports a missing item, a wrong order, a late delivery or a cold meal. Look for which complaints are charged back to the restaurant automatically, which require the platform to investigate, how long you have to dispute an adjustment, what evidence is accepted, and whether you are charged for the whole order or only the affected items. Ask whether driver-caused problems are treated differently from kitchen errors.

Do not assume a refund rate from a forum. Some posts claim very high shares of fraudulent refunds, but such figures are unverified and should not be used for planning. Use your own payout history after a few weeks, and build documentation habits into packing from the first day: sealed bags, item checklists, and photos with the order number. Our article on contesting delivery refund claims covers the evidence side.

Marketing, promotions and ad spend

Promotional costs often sit outside the commission. Typical arrangements include discounts you fund, such as a percentage off or free delivery, and sponsored listings charged per click or per order. Check who funds each promotion, whether you can be auto-enrolled in campaigns, whether there is a spending cap, how you opt out, and how promotion costs appear on statements. A tier that includes some marketing may still charge separately for more.

Treat each promotion as a separate decision with its own math: the discount is paid on every order that uses it, including orders from guests who would have ordered anyway. The fair test is whether it brings incremental orders worth more than its total cost.

Exclusivity, pricing rules, term and exit

Some agreements offer a lower rate or extra benefits for exclusivity, meaning you list only on that platform. That can make sense if one app dominates your area, but it removes your fallback if service quality drops. Check how exclusivity is defined, whether it covers your own website ordering, and the penalty for breaking it. Look also for any clause about prices: whether you control app menu prices, and whether you must keep app prices in some relation to in-store prices.

Find the term length, whether it renews automatically, the notice needed to cancel, any early termination fee, and how the platform may change fees or terms during the term. A clause allowing changes with notice by email to an address nobody reads is a practical risk. Make sure the notice address is one you monitor. Also check payout timing, any reserve the platform may hold, tablet or integration fees, who owns the guest data you can see, and the dispute-resolution process, which may require arbitration. For anything material, have a lawyer review the agreement before signing.

Regulatory background worth knowing, without overreading it

Federal regulators have scrutinized parts of this industry, mostly on the consumer side. The Federal Trade Commission's food and beverages industry page links an August 12, 2026 release, FTC Sends More than $23.8 Million to Drivers and Diners Harmed by Grubhub's Deceptive Advertising Claims and Other Unlawful Conduct. It describes a December 2024 settlement in which the FTC and the Illinois Attorney General alleged practices including listing restaurants on the platform without their permission, and says the company must list restaurants only with their consent. Those were allegations resolved by settlement; the release does not say the company admitted them. The lesson for owners is narrow: search each platform for your restaurant periodically, and make sure your agreement addresses listing consent and use of your name and photos.

The FTC also announced in April 2026 that it was seeking public comment on unfair or deceptive fee practices in online food and grocery delivery. That is an advance notice of possible rulemaking about fees charged to consumers, including whether platform prices differ from restaurant prices. It is not a final rule and does not address commissions charged to restaurants. Separately, some cities have adopted their own rules on delivery-platform fees or practices. Check your city and state before signing, and do not assume a rule from another city applies to you.

Hypothetical worked example: a unit-economics sheet for two tiers

All numbers are hypothetical, and commission is assumed to be charged on the food subtotal. An average app order has a $35.00 subtotal. Food and packaging cost $11.20. Based on the restaurant's own records, refunds and adjustments average 2% of subtotal, or $0.70.

On a 15% tier, commission is $5.25, so contribution per order is $35.00 minus $5.25 minus $11.20 minus $0.70, which is $17.85. On a 25% tier, commission is $8.75 and contribution is $14.35. At 600 orders a month on the lower tier, monthly contribution is $10,710 (600 times $17.85). To match that on the higher tier, the restaurant needs $10,710 divided by $14.35, about 746.3, so 747 orders, roughly 24.5% more orders. If the higher tier also comes with $200 a month of ads the restaurant chooses to buy, it needs ($10,710 plus $200) divided by $14.35, about 760.3, so 761 orders. The owner now has a specific number to test: if a trial of the higher tier does not deliver about 27% more orders (761 divided by 600 is about 1.27), the lower tier earns more.

Signing checklist and records to keep

Save a PDF of the agreement and every policy it incorporates by reference, as of the day you sign, because online terms change. Record the tier, rate, start date, renewal date and notice deadline in your calendar. After the first full month, compare your payout statement with your model line by line, and recalculate if anything differs.

• Commission base and every fee outside the commission identified
• Refund charge-back rules and dispute window noted
• Promotion auto-enrollment turned off unless chosen; ad caps set
• Exclusivity, pricing and listing-consent clauses read and understood
• Term, renewal, cancellation notice and fee-change rights on the calendar
• Unit-economics sheet per tier, with the break-even order count
• Copy of the agreement and incorporated policies saved
• Local delivery-platform rules checked for your city and state