When I joined d&t a few years ago, I started learning about financial intimacy. Now, it’s not what you might thinking!
Accountants need to know all about the ins and outs of a business and the individual who runs it. Franchisees need to share all sorts of details with their accountant that they would not necessarily discuss with even their closest friends and family. In some ways, their accountant may end up knowing them better than anyone.
As part of a franchise agreement, franchisees are obliged to share their financial information with their franchisor. This is really important as it ensures the franchisor is across the main key performance indicators and trends and can take a high-level view of the success of the network and each individual franchisee. It helps them make decisions at the correct time, steer the network in the right direction, and step into help and support individual franchisees when necessary.
However, because of our Great British reserve and intimate nature of finances, franchisees are often reluctant to share this critical information. That might be a bit of an understatement! Getting blood from a stone might be a more accurate description in some cases!
This means for many franchisors, gaining an insight into how much franchisees are actually spending and earning is often a laborious and time-consuming process. Not only is it difficult to persuade busy franchisees to deliver the right information at the right time, any data that is reported usually needs to be manually added into a tracking tool. It can be a frustrating process for both the franchises and franchisor.
The value of a franchise network accountancy tool is that franchisees use this to input their accounts and the franchisor has access to oversee the data. The accountancy dashboard tool we developed around five years ago and now provide for franchised networks, connects directly into the cloud accountancy packages Xero or QuickBooks. Once set up, it’s franchisee friendly and can save franchisees time as this essentially becomes their accounting package so information is included directly. There is no need for franchisors to chase up the data.
From a franchisee’s point of view, the dashboard tool allows anonymous benchmarking of similar sized territories in the network, so franchisees can easily compare how well they are doing with their peers and track this on a monthly basis. It will also show up if they are spending more on a phone contract, marketing or other suppliers and provide the valuable chance to re-negotiate to reduce spend.
For our franchisors using the dashboard tool, with our help, we have easily been able to identify where other costs can be saved on a network level. For example, if phone or other supplier contracts are all being taken out individually, it becomes clear where there is scope for negotiation of a network rate to reduce overall costs for franchises.
The past year has certainly highlighted the need for franchisors to have a clearer handle on financial wellbeing of their franchisees’ businesses. Gaining this level of financial intimacy is not without its challenges. However, by implementing a network accountancy tool information and data can be delivered and analysed easily, freeing-up time for franchisees to focus on their day job while franchisors can look after the health of their network.
