‘CBCS make a compelling case to audit…’ (a UK based franchisor)

Spare a thought for your poor franchisees…

In this economic climate, times are tough for all of us. We all have to tighten our belts and your franchisees in particular have to scrutinise the spending of every penny. 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 can they delay paying or who can they avoid paying….  Where can they hide the money, so that they don’t have to declare it? Suddenly those healthy and consistent sales returns from your franchisees can lower dramatically…

Does this sound familiar?

The problems that cash strapped or profit starved businesses face is very common. There is hardly a network of franchisees in the country where this is not an issue. 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 franchisee hard and question why their returns have reduced so markedly… But 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 franchisees, will have a two-fold effect. On the one hand; just by announcing that an auditor has been appointed will result in a 3% increase in sales declared (US auditor source) and that is even before the auditor has visited. On the other, following an audit, on average we recover sufficient undeclared revenue to cover 95% of our fees, which are by the way, just £500 per audit (standard price, subject to variation).  

Our auditing visits are designed to make the franchisee feel comfortable about our attendance. We want them to feel that there is a mutual benefit to our 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 franchisee to come clean and to make a fresh start with you; with any highlighted issues which you can assist with coming to the fore.

We offer a variety of different auditing solutions. The ‘Standard audit’ involves a maximum five hour visit to their premises, alternatively, we can carry out a ‘Take Away ‘Audit (where we visit, remove the files and return them once the audit is completed) or a ‘Virtual’ Audit (where records are passed to us on-line) We also offer a Franchisee Business Review service, where you are picking up the cost of our assisting your franchisee, we carry out an audit behind the scene. We even offer an International auditing service; often your overseas franchisees are the worst offenders! In each case, we will then generate a report to you within 48 hrs of the audit.

The report will highlight issues which the franchisee needs to address and of course undisclosed sales. You can then approach the franchisee and request payment of your missing fees.  We can take on the role of ‘Enforcer’, should this be required, where we will chase the franchisee to make payment, based on the findings in our report. 

Of course much of this is dependant on your franchise agreement and on what authority you have to access your franchisees financial records. Assuming this authority is in place, you can feel comfortable that engaging the services of CBCS to carry out your auditing requirements will result in increase revenue. 

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.

If you would like to know more, please do not hesitate to contact me on 01428 743932/ 07759 248490 or by e-mail on chrisburton@cbcservices.org 

Further information is available on our website: www.cbcservices.org

 

We look forward to hearing from you.

 

 

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Franchisee Financial Training

http//:www.cbcservices.org/Training–and–Support.php

Often overlooked but critical to the success of your and their business. your new franchisee will walk away from their franchise training week with everything they need to start trading. Their business will soon be up and running and within a few weeks, they will start to incur their first ongoing trading costs. What they do with them and how they record them, pay them and prepare for them, is critical to their cash flow and profit cycle.

Of course, you may already offer an in house training solution to financial issues…. But in a week ( or however long your training course is) of often detailed product, administration and sales and marketing training; financial training can get buried in the detail. Sub -contracting an external partner to provide this resource will make this critical aspect of business stand out for the new franchisee.

We can work with you to establish a bespoke financial training seminar to form part of your new franchisee training course; including the development of a financial guidebook for new franchisees.

Would you like to know more?

How are your overseas franchisees / master franchisees performing?

Do you have issues receiving info, sales or MSF’s from your non-UK franchisees & if so how are you trying to resolve this? Receiving information & /or payment from far flung places can be much more complex than receiving the same from UK franchisees & often because revenue levels are lower, they can be overlooked. Of course, assuming you had the resources to chase your overseas franchisees, could you afford the cost of verifying how they are performing?

Looking to see how big a problem this is so would value your comments..

How much does your accountant charge?

Probably a great hunk of cash that goes straight against your bottom line & with low profits & difficult cash flow; small businesses in the UK need to remember they don’t need their accounts audited. They can actually submit their accounts to Companies House themselves, although they still need to be accurate and conform to all aspects of the Companies Acts. If you do need an accountant, get them to quote for the whole service you have applied for including phone calls & e-mails… That way you can compare like with like and there will be no surprises .

In my capacity as Franchise Auditor, I do come across some exorbitant accounting fees being charged by accountancy firms to carry out basic year end accounting. Small franchisees and other small businesses are being exploited by professional firms. It does not take long to analyse a set of accounts, especially a computerised set. With on-line submission to companies house, once the draft documents are available the process of submitting is straight-forward and as most of these smaller firms can claim exemption from full filing of accounts. There is no excuse for over-charging with over complicated analysis and cross-referencing with prior years, trends etc.

Of course, with different industries and business types there is no way you can put a maximum figure to how much you should be paying. Some manufacturing businesses, for example may consider a £5k spend on year end accounting good value, whereas a retail shop, with point of sales tills and computerised stock listings may consider £1k a more likely maximum. The best advice is to look at what you are getting and then shop around.