Immersive Ink

Sconces is a hunting dog, trained for stealth and tracking.

Franklin is happy in back with Dori, Ori, and Nori. He will move to the front and scout ahead should the party find themselves in need of a "burglar."

While Franklin would be happy to have the magic cloak (and, indeed, I was the player who found it) there is absolutely no in-character reason why a stranger and newcomer should be entitled to it.

Halflings
[...] They are nearly invisible when they blend into the background and can move almost silently.

Elves
[...] They are nearly invisible in their gray-green cloaks and can move almost silently.

Emphasis added. If Wiglaff takes the elven cloak, he & Franklin would make a formidable scouting team both "nearly invisible", equipped with magic and a dog.

Wiglaff would also return his next 100 gp share of treasure to the group in exchange for the cloak.

Wiglaff will purchase a six foot timber & will carry it himself.

How's this for marching order? Assuming Sconces & his small master can fit into a single slot.

[Rhod F2] [Grampus Dw2]
[Aldbane C2] [Wodan hench]
[Wiglaff E1] [Maloof C1]
[Marco foot] [Edgar lantern]
[Vesh Mu1] [Aiden torch]
[Mona foot] [Nori hench]
[Phillippe porter] [Franklin H1]+[Sconces dog]
[Ori hench] [Dori hench]

acodispo wrote:

Halflings
[...] They are nearly invisible when they blend into the background and can move almost silently.

Elves
[...] They are nearly invisible in their gray-green cloaks and can move almost silently.

Emphasis added. If Wiglaff takes the elven cloak, he & Franklin would make a formidable scouting team both "nearly invisible", equipped with magic and a dog.

Wiglaff would also return his next 100 gp share of treasure to the group in exchange for the cloak.

I agree - I am treating the halfling ability to be like a built-in elvish cloak

All the more reason not to give Franklin the cloak!

In that case I agree, let's give it to Wiglaff.

I'll cast my vote for Wiglaff to get the cloak.

Sconces is relaxed and friendly toward Wiglaff (sensing his innate affinity toward woodland creatures).

Franklin approaches the elf and replies, "I may be small, but I am stout of heart. I will join your cause to the best of my ability. Say, nice cloak! It looks good on you."

Wiglaff nods solemnly at the halfling, and also at Sconces.

"As far as I am concerned, you're both welcome to our company! I'm sure your skills & bravery will be very useful!"

He examines the cloak.

"I see this was made by my kindred. These are rare, and I would be honoured to wear it. And I'll be happy to compensate the company for granting it to me."