Franchises exist all around us, but you might not be aware of it. Whether you’re grabbing a sandwich at Subway, dropping off a package at UPS, or staying at your neighborhood Best Western – each of these businesses are franchises. A franchise includes a legally binding agreement that allows business owners to gain access to proprietary and trademark names of the franchisor.
The accounting of franchises differs from traditional businesses. Although franchises operate somewhat independently, they must follow specific rules and guidelines. Franchisors share financial information with their franchises and must follow rules governed by the US Federal Trade Commission (FTC). Many states also impose laws in which franchisees must be compliant. Understanding the unique accounting needs of a franchise is key to successfully growing the business.
Why is Franchise Accounting Unique?
Franchise owners have to follow contractual obligations with their franchisor unlike other small businesses. Since franchisees borrow the rights to a business’ logo, name and operating model, they must also be transparent with their financial statements. Franchisee financials need to be submitted on a monthly, quarterly, and annual basis so that the franchisor understands each franchise location’s strengths and weaknesses.
Each franchise typically pays royalties in the form of profits ranging from 4% of revenue up to 12% or more. High-volume businesses such as restaurants pay lower royalties while lower-volume businesses such as consulting firms pay higher fees. Individuals who own multiple locations of the same brand are subject to additional layers of complexity.
Let’s say you’re the proud owner of five local coffee shop franchises. Each location has revenue coming in on a daily basis. You have to manually reconcile revenue and understand where all payments are coming from. You have cash deposits, credit card transactions, and even checks to be accounted for. Additionally, it can be difficult to track daily deposits to ensure accounts match. Having to do this on a daily basis can take hours. Over time, this results in countless hours wasted.
Franchise owners with several locations often rely on a single, centralized team to handle all of their back-office tasks. While this decreases administrative costs, it takes more time on the accounting side. What if there was a simpler way to easily manage your franchise’s accounting tasks? Docyt can help.
Docyt Specializes in Franchise Accounting
Successfully growing your franchise is a team effort. Docyt can give you the edge to help scale your business. With the help of accounting automation technology, Docyt simplifies accounting for franchise owners using artificial intelligence.
Let’s take another look at our previous example, but this time you have Docyt. You’re attempting to manage revenue for all locations. Docyt allows you to view your revenue in detail. You can easily track what you earn by payment processor, spend category, or by day. Whether it’s cash or credit card – Docyt tracks each merchant processor separately for accurate reconciliation. Docyt can even produce revenue reports for each location or create a consolidated report for all businesses. If you have multiple revenue-generating departments, such as a hotel, Docyt can even help you view individual reports for food and beverage, retail, or spa services.
Docyt makes life simpler for franchise owners. If you’re searching for an accounting automation software platform that will help manage your franchise’s accounting, Docyt has your back.
Docyt Can Help Franchise Owners Scale their Business
Docyt helps franchise owners grow their business with confidence. Get real-time financial insights, manage franchise expenses, and access real-time financial statements to make timely, well-informed decisions. Docyt can even share performance data with business partners and investors.
Docyt’s stakeholder dashboards help business owners scale their franchises. Performance data can be easily shared with business partners and investors to provide complete real-time insights across all locations. Business owners can also step away from the day-to-day operations by empowering their general and department managers with financial performance data on their respective area of the business – helping them grow and scale organically.
If you’re looking for a tool to better manage your franchise accounting, Docyt is here to help. Schedule a free consultation today.
