As a franchisor, of course you want your franchisees to be successful. In fact, that’s the whole point franchising your business. You give the new owners the tools they need, and then they go execute your plan. But if your franchisees don’t have good, consistent bookkeeping, it can affect your business.
Here are 5 reasons why good franchisee bookkeeping matters:
1. Identify problems early
If you know your franchisees have great bookkeeping, you know that any problems with their revenue or cash flow will be identified early. If any of your owners are behind on their bookkeeping, even by a few months, there could be a problem that’s going unchecked. Encourage your franchisees to stay on top of their books and to reach out if they’re encountering problems. Catching a problem early can save you from a massive headache (or a potential closure) down the line.
2. You know you’re using the same language to communicate
It’s important that you and your franchisees are on the same page. That means communicating using the same terminology. If you know their bookkeeping is in order you can discuss their Profit and Loss Statement, or talk to them about depreciating assets, without having to worry that they don’t understand. It also means It’s just another way to create strong communication between you and your franchisees.
3. You can encourage your franchisees to share info
If you know everyone’s bookkeeping is up-to-date, you know they’re all collecting the same data, so you know what information each location is using to make their decisions. It also means franchise owners can help each other. We know that many franchisees want more opportunities to meet, and learn from, other owners. By ensuring they all stay on top of their bookkeeping, they now have more common processes around which they can share best-practices.
4. If they’re compliant, you’re compliant
You shouldn’t have to worry that each of your locations is compliant with your accounting standards. You also don’t want to be left with a mess when it comes time to aggregate everyone’s financials for your Item 19 reporting obligations. You won’t have to worry if you know all your locations has accurate and up-to-date books that meet every requirement. That way, come tax time, both you and your franchisees won’t have anything to worry about.
5. You’re giving them a higher chance for growth
Day-to-day bookkeeping isn’t just good for remaining compliant and identifying problems, it can also identify areas of growth and reduce unnecessary spend. Once the business is humming along, you can start to work on growth areas. Not only that, you can share insights from stand-out locations with your other franchisees to get everyone on the path to growth.
Bookkeeping seems like a simple thing, but it really can make all the difference in your franchise. It can not only help identify problems faster, it can also help to make your franchisees more profitable.