Encouraging Transparency

When times are tough, it is not uncommon for franchise relationships to break down somewhat, especially when it comes to finances. Chris Burton of CBCS explains how a franchise audit often presents a clean slate for franchisor and franchise owner alike.

Spare a thought for your poor franchise owners. In this economic climate, times are tough for all of us. We all have to tighten our belts and your franchise owners in particular have to scrutinise every penny spent.

When trading is poor and the bank balance is shrinking fast, people do the strangest things. They start to think about where they can save it, which bills they can delay paying or who they can avoid paying etc. Suddenly those healthy and consistent sales returns from your franchise owners can diminish dramatically. Does this sound familiar? The problems that cash strapped or profit starved businesses face are very common. There is hardly a franchise network in the country where these issues are not prevalent. It is highly likely that your business is suffering diminished returns as a result. So how do you resolve this?

The obvious route is to chase the franchise owner hard and question why their returns have reduced so markedly. However, if they are trying to hide this information from you in the first place, this is unlikely to be successful. There is another solution.

Appointing a third party auditor to visit your randomly selected franchise owners will have a two-fold effect. On the one hand, the announcement that an auditor has been appointed will result in a three per cent (US Auditor) increase in sales declared. On the other, following an audit, we recover on average sufficient undeclared revenue to cover 95 per cent of our fees. But won’t an audit damage my relationship with the network?

Our auditing visits are designed to make the franchise owner feel comfortable about our attendance. We want them to feel that there is a mutual benefit of us being there and that we can genuinely assist them with their problems as well as uncover issues which need to be reported. Often this creates an opportunity for the franchise owner to come clean and to make a fresh start with you. It can act as a new start for both you and your franchise owners. So what do we do? We offer a variety of different auditing solutions. Whether you would prefer us to go into a business and investigate what is taking place from the inside or take away files and review them remotely, we have a package to suit your business. Whatever the outcome, we compile a comprehensive report for you within 48 hours of an audit.

This report highlights issues that the franchise owner needs to address and undisclosed sales. You can then approach the franchise owner and request payment of your missing fees and we can even take on the role of ‘Enforcer’ should this be required, where we will chase the franchise owner to make payment, based on the findings in our report. You can be confident that with the services of CBCS, the majority of your undeclared fees will be retrieved.

CBCS offer the complete package of auditing and financial support and training solutions for your franchisees. We can be there at the outset, providing training as part of your new franchisee training course, we can provide additional financial training for your existing franchises and of course we can be sourced as a provider of support for the franchisee’s financial and administrative issues. Please do not hesitate to get in touch to find out more about what we can do for your network.