Regular Access to Franchisee Financial Statements – Best Practice #34
- How regularly do you have access to franchisee financial statements, and on a comparable basis?
Franchisors need regular access to franchisee financials so they can understand how franchisees are doing and how the unit-level business model performs in different situations. Access to timely franchisee financials is also critical so that a franchisor can tailor support for individual franchisees. Other important reasons include a franchisors ability to monitor performance and set strategy. Access to franchisee financials is also valuable for field manager goal setting and effectiveness measures.
People involved in franchising will know that it is not uncommon, as part of legacy agreements and/or some management regimes, that some franchise companies won’t have any access to franchisee financials. This is a very challenging situation that should really be rectified (and there are a number of possible approaches we help companies with) as soon as possible for the benefit of franchisees individually, all franchisees as a group, and the franchisor.
Obtaining franchisee financials once a year, while still valuable, is nowhere near as useful as monthly or real-time access to franchisee financial statements. Real-time access to financial statements affords the best opportunity for insights that can be acted upon for the greatest benefit – whether at the local level – or even more regional or national level, assuming franchisees also operate to a Standardised Chart of Accounts.
We would generally suggest a full format franchising system should as a minimum have access to monthly franchisee financial performance – and this requirement is quite achievable for all parties with the advent of Cloud Accounting services.
This best practice is related to many other performance-oriented best practices within this series.
About the Franchising Best Practice 500 Series
This is part of a series of franchising best practices. Franchize Consultants is sharing and publishing these best practices weekly for the betterment of franchising.
We know that better knowledge and execution of franchising best practices leads to bigger and more valuable franchisor and franchisee businesses.