Your franchise agreement – is it all encompassing?

 Of course it is. Between you, your franchise advisor’s and your franchise solicitor, you have this covered. In  every single way, if your franchisee contravenes the agreement, you have the power (should you choose to use  it) to apply sanctions, remedies or even void the agreement for gross breach of contract.

From my perspective, I am not qualified to comment on the legal minefield that is the franchise agreement. If  instructed to carry out a franchise audit, I will do so on the basis of my client’s instructions and under the  governance of specific terms in the franchise agreement. If I find areas of non-compliance, I will report these  on the basis that their disclosure will allow you to act on any relevant breached terms within the agreement.

Of course, this can be looked at another way… from the franchisee’s perspective.  What if you are a franchisee…

If you are a franchisee and don’t want to lose everything, you need to read, understand and follow the principles outlined below.

Your franchise agreement contains many provisions in addition to those requiring you to do what you are told and pay money to your franchisor on time. You probably never read them, and if you did, you didn’t appreciate what they mean. There are many “boilerplate” (contained in every franchise agreement) provisions that deal with financial transactions, intellectual property protection, ownership and transfer, consents and rights of refusal.

If you forget about these and do certain things that seem perfectly normal in any non-franchise business context, without following the requirements of the contract, your franchisor may declare you in default, and the default will in some instances not have a cure opportunity. You could simply be terminated and lose everything.

You may have done whatever you did that failed to comply with your obligations under these provisions many years ago. They didn’t affect the day to day operations of your franchise or relate to your normal monthly reporting routines. The fact that the franchisor failed to discover the failure to comply until many years later may not excuse what you did or failed to do.

This is an extract from an article written and first published by Richard Solomon on his website: www.franchiseremedies.com. Richard, who is a Franchise Lawyer based in Texas where of course litigation stemming from breaches of franchise agreements is commonplace, (within a franchise market which is considerably more mature than our own), feels very strongly that the interplay of clauses within an agreement should be considered much as one might write a song with various contrapuntal rhythms. The more complete the agreement, the better it is for both Franchise and Franchisor alike. Indeed, Oddly enough it is often franchisor conduct that, notwithstanding the contract language, gives the franchisee an avenue to outmanoeuvre a breach they are purported to have made. Curiously then, if they are aware of their obligations under the agreement and do manage to find a way to contravene it without prejudicing their position, the clauses within the agreement may be worthless. Which conveniently brings me back to my opening salvo: Your Franchise Agreement- Is it all encompassing?

Of course going to the effort and cost of generating full-proof and all encompassing franchise agreements is pretty pointless if you do not know that an agreement is being breached. Suspicions are one thing and within a network of franchisees, there will be those you suspect of breach and those who you do not. Sending in a franchise auditor to look at potential areas of non-compliance need not be costly, particularly if you generate revenue from that disclosed as a result of the process. Indeed, if your franchise agreement, includes terms where on exceeding certain levels of undisclosed revenue determined, this will make the franchisee liable for the auditor costs.

Deploying an external auditor, can also send a message your network, clean up your sales submissions and your working practices or else and with current research from the other side of the pond suggesting that 15% to 20% of franchisees are under-reporting sales by 15% or more. As a result, locating and correcting under-reporting behaviour can increase royalty revenues by up to 4% annually.

There are therefore two messages from this:

• Make sure the franchise agreement is all encompassing
• Follow through with regular auditing inspections to highlight that you are looking and locate  much needed missing revenue from your network

But I am sure you are all doing this already…

Chris Burton

11^th September, 2014

So how much accounting do you need and when?

When you start up a new business, whether it be a stand-alone, a franchise or a licensee, you won’t necessarily be worrying about when you should engage an accountant and what for. As a franchisee you should hopefully have been provided basic bookkeeping advice and perhaps installed accounting software, either as part of the package or as a recommendation. But you don’t need to worry too much about your final figures until a full 18 months have passed since your ‘Limited’ company incorporation date. There would appear to be a great deal of other things to turn your head to…

After the first eighteen months of your business, you will need to file some accounts and it is probably at that time that you will first consider the need for an accountant. Probably though, the accountant will be contracted only to file your year-end accounts at Companies House and to prepare your year-end tax return to HMRC for corporation tax. Indeed apart from your year- end  accounts and advice perhaps on credit control, payroll and funding, you won’t need an accountant for much else.

 

As your business develops and you take on staff; you will hopefully find that you have more time to actually develop and manage the business.  Perhaps you have started to generate monthly spreadsheets which show where your business was in relation to last month, last year etc. Again, as new projects start and the business begins to gather momentum you probably find you have less time rather than more time to monitor those accounting trends and yet bizarrely the need for them grows. Perhaps now is the time to consider the appointment of that first accountant. But wait do you really want to? You don’t mind taking on new staff where you can see that there employment will actually generate income for the business. More sales staff, more warehouse staff, more customer service staff, but an accountant? What part of their role actually helps to generate business for the company? And it is all still about growth isn’t it? Actually perhaps the time when you actually do need an accountant, is when your business enters a stage when perhaps ‘profit’ and not ‘growth’ is the major player. Control of costs and the supply of information becomes critical to decision making and to strategic thinking. Surely now you must employ an accountant?

Actually, you could consider taking one on at a much earlier stage. Who would think that your accountant could actually play an active part in the operation and growth of your business? Could his monthly information packs allow you to make those strategic business decisions in the knowledge that you are armed with the most up to date information possible. Could the analysis of costs help you to recognise that when benchmarked against your competitors you are charging too much for a core product or service? If you adjust the price, could this generate more sales? In this way and many others, your accountant or finance manager becomes a key member of your operational team and he will be knowledgeable too; there are few other staff members with an overview of the whole companies functionality, other than perhaps yourself of course. Small wonder that many Finance Directors take over the reigns as CEO, when the  MD retires…

Of course, your business does not need an accountant or finance manager until it reaches a certain size and that size differs from sector to sector. But information is king and whilst there will be others in your organisation who can provide you with figures; e.g. your Operations Manager or your IT Manager, neither will have a grasp of the whole…  So my advice? Bring an accountant in early and make the work that he does pay for your business…  And consider other options too. Perhaps you can employ an accountant part –time or engage a freelance accountant, to work for you a few hours a month, with the number of hours growing as the business does.

A business is the sum of the people that it employs. You need good sales staff, good operational staff and good processing staff, but despite the lack of importance attached to your accounting in the first few years of your business, you will one day find that your business can not operate at the top of its game without a good accountant… But be wary. One day he may be after your job.

 

 

 

FRANCHISEE DATA COLLECTION AND BENCHMARKING

How many of your franchisees provide you with their financial data in compliance with their franchise agreement? Probably not many based on my experience. Even if they do, once you have the data, does anyone actually do anything with it, or do you just rely on the declarations made each month to quantify how your franchise network is doing? Not surprised if you do.. business priorities and all that…

Those of you who know me and have worked with me before will know that CBCS already offers a comprehensive franchise audit service to help you monitor your network and keep on top of levels of under-declared sales or rogue franchisees. Many will know also that we offer a data collection service to allow you to keep on top of your franchisees financials, without antagonising the franchise relationship by requesting an audit be carried out. We have now taken this offering a step further with our Franchisee Data Collection and Benchmarking Service…

In the attached example : A fictitious case, we have collected basic financials and VAT declaration details. From here we have determined a summary of the network  which shows amongst other things: Top 5 overall performers, Top 5 Net Profit and 11 franchisees with over £7k of under-declarations.

Obviously you can add a whole multitude of benchmarking metrics to be analysed, ( e.g. rates per hour, staff costs and advertising costs) potentially reducing your costs and time, site visits and those of your franchisees too, with all the data collected and analysed for you. Once you have all the data, you can incentivise your top performers by perhaps offering a discounted MSF or a reduced advertising levy or presenting a coveted prize at your annual conference. This way your franchisees can see a material benefit to providing you with information.

The benefits to the franchisor are clear:

1	Collect data from franchisees to ensure adherence to franchise agreement for reporting of                               company accounts etc.
2	Analyse data from franchisees
3	Determine under-declarations for potential future audit
4	Look for areas where franchisee underperforming to ensure adequacy of future support
5	Benchmark against network
6	Incentivise based on full network results
7	Data Collection helps makes franchisees clean up their act

More information is on CBCS’s website, in addition to the Franchise Audit services already offered.

 

 

 

 

 

So how do you choose our accountant?

All Things Financial

Cost? Reliability? Accuracy? Compliance? Speed of delivery?

The temptation of course is to go for reliability and accuracy as your determining factors, with obviously cost as a significant factor and compliance equally important, but a given. Speed of delivery is important, but not the determining factor. Reliability and Accuracy usually sway most towards the high street accountant, the local chartered accountancy firm, whose staff and employees will generate your accounts reliably, accurately and compliantly. What they will do, is follow both the rule of law, ( the companies acts and taxation laws) in strict compliance, and their own governing bodies accounting conventions. There is absolutely nothing wrong with that. In fact, this is the right way (but not the only right way!), the correct way to get your year-end accounting statements prepared for Companies House and HMRC. But is it really what you need?

We are a very important and…

View original post 478 more words

Franchise audit – 6 good reasons to start auditing today.

An older post, but still just as relevant…

All Things Financial

Why should you outsource your franchise auditing?

1) Improved Revenue and Profitability. Auditing encourages your franchises to declare their revenues correctly; where previously you may have missed out on fees and profit.

 2) Outsourcing to a trusted and professional business partner, takes away the contradiction between you and your franchisees. We carry out the audit, as per the franchise agreement, allowing you to carry on supporting your franchise network, without the ‘we don’t trust you contradiction.’

3) The temptation to generate additional undeclared income for a franchisee is enormous, especially in these troubled times. It they know you are watching them; they are far less likely to try to defraud you.

4) The benefit of a partnership between the auditor and the franchisor creates a greater understanding of the requirements of both the franchisee and the franchisor. The auditing process frequently highlights areas where improvements can be made to the…

View original post 237 more words

How can we make Franchise/Royalty auditing more attractive to franchisees?

Let’s face it. If you have come to the decision to either audit in-house or appoint external auditors to visit your franchisee or franchisee network, it is usually for a reason. Unless of course, an annual, or periodic or end of term audit is programmed into the franchisees agreement and explained in clear, concise terms during the franchise recruitment process. But how can it be a benefit to the franchisee? Most will see it as an intrusion to their business and a 1984 approach to ‘watching’ how you are doing.

The benefit to the franchisor is clear; quite apart from identifying undeclared or missing sales from which royalty revenue can be derived, but also to seek out trends where the franchisee or network as a whole are going wrong plus of course making the network feel as if you are watching them. For the franchisee it needs to be seen to be ‘support’ rather than ‘watching’. Will there be a material benefit to them for actively and voluntarily participating?

So how do you choose our accountant?

Cost? Reliability? Accuracy? Compliance? Speed of delivery?

The temptation of course is to go for reliability and accuracy as your determining factors, with obviously cost as a significant factor and compliance equally important, but a given. Speed of delivery is important, but not the determining factor. Reliability and Accuracy usually sway most towards the high street accountant, the local chartered accountancy firm, whose staff and employees will generate your accounts reliably, accurately and compliantly. What they will do, is follow both the rule of law, ( the companies acts and taxation laws) in strict compliance, and their own governing bodies accounting conventions. There is absolutely nothing wrong with that. In fact, this is the right way (but not the only right way!), the correct way to get your year-end accounting statements prepared for Companies House and HMRC. But is it really what you need?

We are a very important and growing part of UK PLC.

The process by which even a small high street accounting firm delivers your accounts is often long winded, not least because of the enforced checks and balances brought about by their accounting conventions, but also because frequently the accounts themselves are generated by junior, often not fully trained staff, whose work needs to be checked and monitored by supervisors and then ultimately signed off by a partner. As I say, all perfectly correct and compliant, but long-winded, inevitably costly and oh so time consuming.

So is there an alternative?

Yes, of course, but you still need to ensure that the fundamental issues are addressed; Cost, Reliability, Accuracy, Compliance and Speed of delivery. Freelance accountants can and do offer an alternative. Most can offer a full year–end accounting service reliably, accurately, inexpensively and promptly and of course compliantly; i.e. delivering accounts in compliance with company and taxation laws. Where they stand out though is in the delivery of that service in terms of cost and speed, but also in terms of actually helping you to run the business, a spare pair of hands if you like, who can help monitor the things you need to be doing, help keep your business costs down and help make sure there is enough cash in the business. They will not be hindered by the incessant checks and balances and the unnecessary and fastidious governance of their accounting conventions. They will probably still pay homage to them, but use them as a yardstick, rather than a brick wall… As a result, they will inevitably be cheaper and they will deliver your accounts to you promptly and accurately.

Probably a bit controversial this. I can just hear the ACA and CIMA, qualified accountants jumping with rage at the suggestion that their service could in some case be inferior to the freelance and often ‘unqualified’ accountant. But that is ok, because on this forum alone, there have been many references to the importance of using a ‘qualified’ accountant, whilst also pointing an unfavourable finger at those who have not qualified professionally. But actually drawing a line in the sand, there is a real point here. There are some businesses, which even in their infancy require a fully compliant set of accounts generated by a chartered accountant and for them as they grow this is the only way. For most others, their businesses, either in their infancy or where will never grow ( by choice or by market restriction) to the point where there is pressure to appoint a chartered accountant and these businesses are better off appointing a freelance accountant. They will save money, expect prompt and accurate accounts and enjoy the benefits of a partner to their business.

It’s about time some someone stood up for the freelance. We are a very important and growing part of UK PLC.

What is Business Turnaround?

If your business is in trouble, you will know it already and so will your management and probably your staff. They will all be aware that the business needs something to stop it from spiralling out of control. Of course it may be too late. It may be that you consider that there is no way back and therefore some form of corporate recovery or as a last resort insolvency proceedings are appropriate. If recovery or turning the business around is still an option, it may be appropriate to engage a recovery specialist to assist you. This process is colloquially known as Business Turnaround.

A Turnaround specialist, will look at a business from an outsiders perspective, a fresh eye, with the knowledge and skills to provide complete objectivity. They are able to identify problems and recommend solutions that may not be visible to the company’s management and staff simply because they are too close to the subject. In addition, experience within a particular industry may mean little when a company is in severe difficulty. A turnaround specialist/ consultant brings objectivity and experience in crisis situations; the ability to make critical judgements quickly in order for the business to have the best chance at recovery. Operating in the eye of the storm, the consultant must deal equitably with angry creditors, scared employees, wary customers and a nervous board of directors. With the highest stakes on the table, clearly this is no assignment for the faint-hearted.

Signs of a Troubled Business

A company may require the services of a turnaround specialist for many reasons. Here are the most common signs of trouble. In most cases a troubled business will display more than one of these signs:

Behind the Market  Changes in the marketplace can leave a company lagging behind, with depressed sales and lost market share. For some, the deficiency is technology, for others, the problem lies in sales and marketing; their products or services slide into obsolescence because the company hasn’t kept pace with the needs of the marketplace.

Insufficient controls and reporting Managing a company without adequate procedural and reporting mechanisms is a bit like flying an air plane without an instrument control panel. If management is making decisions on old or inaccurate information, the company can easily head in the wrong direction.

Over diversification Many businesses feel the pressure to diversify in order to reduce risk and increase sales. However, too much diversification may cause them to spread themselves too thin. As a result, they become even more vulnerable to the competition.

Explosive growth Companies are sometimes tempted to add value by engineering a growth spurt. However, a company cannot expand its way out of trouble. Growth often carries a very high price tag and leveraging a company to such a degree means that management must operate with little or no margin for error.

Operating without a business plan Surprisingly, a number of growing companies operate without a coherent and regularly updated business plan. Management decisions can change the direction of a business overnight because it is based on their own “feel” for the market. In other cases the business plan exists in everyone’s head rather than in writing. The result is that plans are carried out according to individual interpretation.

Ineffective management style Senior Managers and company founders may find it difficult to delegate authority. No decision, big or small, can be made without their blessing. As a result, the rest of the management staff is without solid experience or any feeling of ownership. If the founder suddenly dies or becomes incapacitated, the whole company is in danger of collapse.

A precarious customer base Few businesses have the luxury of determining the exact proportions of their customer base. Nonetheless, some companies do put too many eggs in one basket. If a manufacturer selling to large retail chains has two customers who represent 60 percent of the business, the company is obviously vulnerable. The loss of just one customer could put a significant proportion of the workforce out of work or worse still make the business insolvent.

5 Steps to Business Turnaround:

Step 1: Checking the business vital signs Before a consultant recommends any major changes they must obviously determine where the big issues are. This means the first day or so is spent gathering information and measuring the scope and depth of the company’s ills.Key questions to be answered are:

a)     Just how sick is the company?

b)    Is financial CPR required or a milder form of treatment?

c)     Is the business beyond rescue or would a form of formal administration or Corporate Voluntary Arrangement be more appropriate In the meantime, there are various groups that must be dealt with. The first is creditors who may have been kept in the dark and are angry. Employees are confused and concerned about the security of their jobs and customers may be wary about the future of the firm. The Consultant and the business managers will need to pacify these audiences until an action plan is agreed.

Step 2: The plan Once the major issues are identified, an action plan can be formulated. The plan must then be sold to all key parties, including the directors, management team, and relevant employees. If appropriate, confidence must also be instilled in the bankers, supplier’s major creditors, and vendors.

Step 3: Actioning the plan. If the company really is in critical condition, the action plan may be simple but drastic. Emergency surgery needs to be performed to stop the haemorrhaging. There may be a whole range of measures which are appropriate, including widespread redundancy, a reduction in employee’s wages or a temporary freeze on all accounts payable. The goal is to halt the bleeding immediately. At this time emotions can run high especially if employees have to be made redundant and the role of the consultant can be two-fold, acting as a bridge between employer and employee.

Step 4: Surviving the crisis In many ways surviving is the most difficult step of all. Eliminating losses is one thing, but achieving an acceptable return on the firm’s investment is quite another. Once the haemorrhaging is over and the administrative costs are cut, one crucial issue remains: Are the anticipated revenues enough to keep the company’s doors open? What is the long-term outlook? Of particular concern is the state of the core business of the company. If the core business is irretrievably damaged, then the outlook could be bleak. Management must decide if the company is capable of long-term survival. If it is, the company must now concentrate on sustained profitability and the smooth operation of existing facilities. During the turnaround, the product mix may have changed, requiring the company to do some repositioning. Core products may have been neglected and require immediate attention to remain competitive. In the new, leaner company some facilities might be closed simply because they are no longer needed. The company may even withdraw from certain markets or move its products into a different niche. Survival, not tradition, determines the new shape of the business.

Step 5: Returning to profitability In the final step of the turnaround, the company slowly returns to normal. This time period is the longest, lasting for up to five years for smaller companies. While earlier steps concentrated on correcting problems, this focuses on internal and external development. New marketing initiatives are encouraged to broaden the business base and to increase market penetration. To facilitate revenue growth, new products are sought and customer service improved. Financially, the shift is from cash flow concerns to a strong balance sheet and return on investment.

The turnaround has now completed and the business returned to health.

Business Funding – How easy is it to get it?

Not easy at all, is the simple answer and it is not just about your businesses credit score… although it helps to have a good one.

Who you approach and in what order and how you prepare for it is key. If we assume for the moment that your business has a good credit score, is profitable, has consistent financial ratios with a strong balance sheet and assuming you have a good relationship with your bankers you should always approach them first. As long as your business is not overly reliant on debt or other loans (highly geared) and you are not over-stretching the business with the new loan proposal, there is a good chance you will be successful and the process will be relatively painless and simple.

Yes… Banks do still say yes; but what happens if your bank says no? Is that it or should you try to find out why and whether you may be more successful elsewhere?  The ‘why’ is always an important question. Banks like all commercial organisations use in the first instance credit scores and your business financials to determine whether they will lend. They will also look at your business plan and the reasons cited why you are seeking finance. How you present your loan application to the bank or indeed to any prospective funder is critically important. In the short term there is not much you can do about your credit score, unless you have satisfied County Court Judgements (CCJ’s) which can be removed. Likewise your financials cannot be improved overnight and you cannot change your profit and loss account and balance sheet from a period which has already finished.

You can though showcase your business in a favourable way, by projecting your financials forward, showing that the business is growing and that profitability levels and balance sheet ratios will improve. Putting this in a concise and easy to read format will help a prospective funder to view your loan application more favourably than it might have done had it just been reliant on your credit score and year end financial statements.

The 5 Year Plan

So how do you achieve this? Keep it simple. Draft a one page business summary, introducing your business and its strengths, then outline on the same page, your 5 year plan and why you need funding.  The 5 year plan, should try to show an increase in sales, gross profit and net profit, but keep it realistic. Too big an improvement in any area will make your plan look unachievable. You should summarise your 5 year plan like this:

A O BUSINESS LTD- 5 YEAR PLAN
year	sales	gross profit	gross profit %	net profit	net profit %
1
2
3
4
5

As suggested above and within the same A4 page, you should detail what the prospective funding will allow you to invest in. e.g.; 2 additional staff members, new software and a marketing programme. And try to make it look as if the additional investment in staff etc, will assist your growth and profit plans.

The twenty-four month profit and loss and cash-flow projection.

That was the easy bit. A prospective funder is going to want some flesh to be added to the skeleton plan that you have outlined. Don’t go mad and give them 5 years of detailed data. Take your last set of financial results and current monthly actuals and breakdown for the next twenty-four months, month by month, your Profit and Loss account. Then link the data to your current bank account and try to produce a working cash-flow forecast for the same period, making sure you include the anticipated injection of cash (the loan) and the new costs for which the cash will buy. Linking the two documents together, to show changes on one document will make changes on the other is a little complex, but will make it more credible, particularly if you are sending a soft copy of this document to your prospective funder. Remember, that the 1st and 2nd year end of year figures here should equal the year 1 & 2 figures on your 5 year plan. Finally, if you have the gumption… have a go at generating a balance sheet from the data derived from the end of the 24 month period. If you can tie this in accurately, to really shows you mean business.

So who do you approach for funding?

As suggested above, you should always try your bankers first, as they already know you and the process for obtaining perhaps an increased overdraft or a new loan, may well be quite straightforward. If this is unsuccessful, then you need to find someone who will agree to fund your requirements and at a good rate and post 2008, there are now a whole raft of additional areas to explore. Perhaps the most popular form of business funding now is peer to business lending or crowd-funding.  This is where individual lenders each bid to lend you part of the loan at their preferred interest rate, thus making up the whole loan required with a large number of lenders. Once you loan application has been approved by the Funding Company and a bidding platform has been opened; over a period of days, a large number of individual lenders will build up to the point where the loan becomes fully funded. With new bidders coming in and gradually reducing the overall interest rate. If you leave the fully funded loan right to the end of the bidding process, you will frequently see interest rates similar to those offered by the banks. Loans of this type have become very popular. They are usually web-based, fast and as long as you follow the rules and make your funding proposal attractive will usually be successful. An alternative to this is of course peer to equity lending, where individuals provide equity for your business and are given shares in return. This is a little more complex and is akin to seeking funding from business angels or indeed the ‘Dragons Den’, but this may be an option worth considering if you are prepared to let go of some of your share of the business, rather than burden your business with a repayable loan. There are of course a number of other funding options, notably from local chambers of commerce etc which should be considered, but for sheer simplicity crowd-funding looks to be the way forward.

It goes without saying that I am more than happy to discuss any of these points in more detail if you think that I can be of assistance. Please see our website for details of how to contact me

 

Reloaded – 6 good reasons to start auditing today

This is from last year and I thought I would refresh because the message is still valid.

New evidence from the US, based on auditors research shows that approximately 15% to 20% of franchise locations are underreporting sales by 15% or more. As a result, locating and correcting underreporting behaviour can increase MSF revenue up to 4% annually. So if franchise msf revenue is £1M,on average £40k additional revenue can be generated.

Indeed, further evidence from the US franchise market, where franchise or royalty auditing is more widespread than in the UK, suggests that a program of audits across the franchise network will derive greater results and greater support from the network, than one off specifically targeted audits against franchises known to be under declaring sales.

With these compelling statistics in mind, here are my 6 good reasons to start auditing today:

1) Improved Revenue and Profitability. Auditing encourages your franchises to declare their revenues correctly; where previously you may have missed out on fees and profit.

2) Outsourcing to a trusted and professional business partner, takes away the contradiction between you and your franchisees. They will carry out the audit, as per the franchise agreement, allowing you to carry on supporting your franchise network, without the ‘we don’t trust you contradiction.’

3) The temptation to generate additional undeclared income for a franchisee is enormous, especially in these troubled times. It they know you are watching them; they are far less likely to try to defraud you.

4) The benefit of a partnership between the auditor and the franchisor creates a greater understanding of the requirements of both the franchisee and the franchisor. The auditing process frequently highlights areas where improvements can be made to the benefit of both of the franchise parties.

5) Cost. It need not cost you anything. If you can identify franchisees who you suspect our under-declaring, you can recover the cost of one or even multiple audits from just one visit.

6) Critical Mass. If your business is growing, the chances are that you are using your franchise recruitment fess to support your business. When you achieve Critical Mass, the revenue derived from your management service fees will reach a point where your business is self sustaining and gross profit from each and every new franchisee will go straight to your bottom line. If you audit you increase the prospect of achieving Critical Mass faster.