Consistency is the key for franchise network success

Picture a franchisor with twenty outlets trying to answer a simple question: which sites are making money on labour, and which are not? Half the franchisees code wages to cost of sales, the other half to overheads, and two count the owner’s drawings as wages. The question cannot be answered without rebuilding every set of books. Consistency is a theme that runs through many of the largest and highest performing networks. Strong branding controls, templated processes, and precise methods of execution allow franchise groups to control their delivery of goods and services. Yet, this control can easily be lost beyond that.

Seldom do franchisees join a network with a passion for back-office processes.

Even more seldom does a new franchisee, left to their own devices, replicate the structure of other network members.

But a successful franchise network does not let this situation play out across their business. Doing so can result in harmful flow-on effects such as inefficient processes and inconsistent data, leaving both the franchisee and franchisor stretched and exposed to real business risk.

Having Visory run the finance function for a franchise network is one way for franchise groups to roll out consistent finance structures and processes across every site.

The right tools for the job

If individual franchisees are left to source and implement their own back-office systems, they are not always able to make decisions from a position of experience or expertise. This is not only time-consuming but has the potential to be enormously costly to the franchise group if the wrong decision is made.

Providing guidance and preferred providers for your network saves each new site or group member the lengthy process of researching, comparing, and negotiating deals for their chosen software.

Add the time saved by negotiating with suppliers once at a group level, and the best practice processes the right technology supports, and the benefits add up across your network.

As group controllers, you aren’t left with the short straw for your efforts either. Having preferred suppliers across your group gives you access to a consistent technology suite, which means you can offer ongoing support to your network whilst also reaping the rewards of standardised data feeds and integrations. That makes network-wide management reporting possible: comparing sales, wages and debtor days site by site, and spotting the outlet that is drifting before the franchisee raises it.

Team blueprints for success

Delivery of goods or services within your network will require human capital in some capacity. Hiring, training, management, payroll, and ongoing performance monitoring are all time-consuming tasks.

Many larger franchise groups have addressed this by providing groupwide support or resources, at varying levels and with varying success. Payroll deserves particular care. Under the Fair Work Act a franchisor with a significant degree of influence or control over a franchisee’s affairs can be held responsible for that franchisee’s underpayments if it knew, or could reasonably have known, that the franchisee wasn’t following workplace laws and didn’t take reasonable steps to prevent it (see the Fair Work Ombudsman’s guidance for franchisors). Consistent payroll processes and reporting across the network are part of how head office sees problems early.

Without a structured and systemic approach, new franchise members will either take on the responsibility of managing their back-office personally, manage it internally or look externally for assistance. But you can predict these three options each come with its own drawbacks and impact.

• 1. Personally managed: The owner’s time is sunk into completing back-office work, lack of scale due to workload constraints, and absence of oversight or quality controls.
• 2. Internally managed: Increased human resource requirements and investment, siloed capabilities, key person risk.
• 3. Externally managed: Franchise data security, additional relationships outside of group controller’s knowledge.

Many of these impacts can be reduced with a preferred back-office support option. Owners are released from completing back-office tasks, and the work is already scoped and agreed for new members or sites.

Visory runs bookkeeping, payroll, accounts payable and accounts receivable for franchise networks and multi-site businesses, with a dedicated team and its AI, Delphi, overseen by that team. Each month, Visory Insights and a Business Performance Partner turn the numbers into decisions.

Accounts aren’t to be overlooked

The structure of your financial accounts is often overlooked by franchise groups, but it is one of the most impactful areas for getting consistency right.

A good example is the chart of accounts (CoA). A consistent CoA structure lets group controllers guide individual sites on leading indicators observed through consistent reporting. It makes benchmarking across sites possible and allows back-office management to be standardised across the group.

Consistency matters most in your back-office processes. Although it may feel overwhelming or uninteresting, without a structure in place it only becomes more inefficient and unmanageable as the network grows. If you want consistent back-office processes across your sites so you can focus on the delivery of your goods and services, book a discovery call.