This is a very complex situation with roots way beyond SEO.
The company is about 7 years old and been online for only 2 years.
Your franchisees have probably been online a lot longer. You have arrived late the the fight and should not expect them to step aside to give you top rankings.
Income comes from 90% from wholesales/retail stores ( owned by franchisees ) .
For this you should give thanks.
the wholesales work with a discount tactic to sell products in the store
For this you should give thanks. Most businesses on this planet try to give their customers a sweet deal. They are willing to take a lower profit to make your merchandise fly off of their shelves. If you don't like this institute a MAP policy or raise the wholesale price. If you do that you might not like the results.
And yes we have our website address on the boxes and products
Smart. This gives you an enormous opportunity.
Are your products any good? If the customer has a poor or lackluster experience with what they purchased they will not be visiting your website.
But we convert customers at a measly 3.5%
How much landing page testing have you done to improve your conversion rate. Are the products on your website easy to find and properly described. Does your checkout work smoothly. I bet that 3.5% would increase if you got some consulting from someone who knows how to convert visitors into buyers.
I had thought about putting a little tag on the products or a little booklet inside the packaged boxes
This is a good idea... but I would make it an enticement for visitors to come to your site. I would not offer a free product because you will probably be swamped with people wanting it. Have you heard about the huge "free stuff" culture that is out there? Huge. You might be really sorry if they get the word out on your free offer.
i wanted help by asking some of the communities creative mind.
The normal advice given here is to work on increasing your visibility through improved rankings and greater keyword reach. We might also advise you to get moving on social media. Your situation seems to have problems (or perceptions of problems) that are outside of SEO.
I am a retailer and my advice to you would be to do everything that you can to help the retailer. You said that they are driving 90% of your sales. Instead you are trying to figure out ways to eat his lunch. My suppliers generally bend over backwards to help me because they know I am doing the job that they either can't do or are not willing to do. If these people stop selling your product, you will be out of business.