At Qvinci, listening to franchisor tales of woe about franchisee accounting practices goes with the territory (if you’re a zee … keep reading, we’re not just blaming you). More often than not, it’s what drew them to us in the first place.
For example, we had one customer sign on with us recently right after two of his “best” units went out of business a few weeks apart. No warning. Totally blindsided.
Can you imagine? He was sitting in his office, minding his own business when the phone rang: “Hi. We’re just calling to let you know that we’ve let go of all the staff and closed the doors. We’re done. Thanks. Bye.”
Short of an entire system going out of business, it was every zor’s worst nightmare. And, this poor guy had to live through it twice back to back.
So how did it happen?
In this particular case, the corporate office was only collecting POS data from its 200+ locations as it lacked an effective means of regularly collecting detailed financials.
The problem with that approach is POS data on its own does not paint a full picture of how individual units are managing their finances. It’s better than nothing but not by much.
Now for the really disturbing part: The overwhelming majority of franchises operate this way in spite of the fact they know it’s far from being a best practice.
Industry experts have been writing about this for some time without knowing there was a solution out there. For example, in an article on franchising.com, Rupert Barkoff writes how he is often “astonished” at how so many franchisors offer so little guidance to their franchisees in the area of accounting direction and services.
“How will franchisees know if they are truly making money and operating effectively if they don’t keep good books and receive information to help them run their businesses more effectively?” he asks.
As Barkoff points out in his piece, the fault does not solely lie with the franchisors as franchisees are often reluctant to let anybody see their books.
An Accounting Catch 22
To remedy the situation, Barkoff firmly believes franchises must adopt a stronger emphasis on accounting matters regardless of any objections either side might have. In other words, get over it and start working together as a team.
If you’re interested in reading the rest of Barkoff’s article, click here. As an prominent attorney and co-editor-in-chief of Fundamentals of Franchising, he knows what he’s talking about.
Alternatively, if you already know this is an area where you need to up your game, go ahead and contact one of the franchising experts on our sales team. They’ll be happy to talk you about how easily you can eliminate this issue from your list of concerns.
To wrap things up, one last anecdote:
Not long after we helped another franchisor hook up all of his locations to Qvinci, we received an interesting phone call from him that highlighted the software’s ability to provide “teachable moments.”
“My No. 1 franchisee hasn’t been recording the Cost of Goods Sold. He doesn’t keep track of it anywhere. No wonder he’s complaining about not making any money.”