Accounting is a crucial part of any business, but accounting for franchise businesses is a different endeavor. Most accountants remain unaware of the additional requirements, opportunities, and traps that exist in franchising. Unless you have extensive knowledge of franchise accounting yourself, you’d be groping in the dark, unaware of the treasure trove to your right or the deadly pitfall to your left. An accountant experienced in the field can not only fulfill their duties, but also give valuable advice on your future.
They Will Help You with the Additional Obligations of Franchises
Other than the usual costs and requirements of an organisation, there are agreements, obligations, and legislative documents that are unique to franchises. An example of such is the disclosure document you need to submit when getting into a franchise agreement. Please refer to the law for more of details, but in terms of financial data, it should contain the following.
- Summary of the most recent financial statements of the franchisor (section 20)
- An estimate of the total costs involved in establishing a franchise and any ongoing payments to the franchisor (section 13)
- Report on financial performance (section 19) however, franchisors are free to not disclose information.
Like any obligation required of you, failure to submit to them will have consequences. Not only will you have unfamiliar requirements to prepare, you will also have to settle the penalties which (for people new to the business) can interfere with plans or be simply a headache (to more experienced businessmen).
Only Franchise Accountants Can Give the Best Financial Advice for Franchise Businesses
Franchising isn’t your surefire way to financial stability. This is a common misconception that spreads, but more notably in Australia. Here, more than half of all franchises generate a profit of less than $50,000 while around 80% are considered profitable. 20% is a big enough portion to make people hesitate before buying a franchise. There is a large chance for you to be a part of that portion.
Accountancy services that have knowledge and experience with franchises can improve your chances by not only fulfilling the everyday tasks expected in bookkeeping but also having the wisdom to offer suggestions on your best course of action - or even act for the better of your business. Most franchise accountants give you access to a wealth of franchise experience and insight that cannot be found anywhere else, since it is such a specialised role.
They Gear You Towards Franchise Success
Some franchises offer a guaranteed income to better attract buyers. Who could refuse a stable income, especially for first-time business owners unsure of this field? However, this can be a trap that lures buyers with promises of short-term stability. If you’re looking to be a franchise owner, you need to look at the long-term if you want to be able to retire comfortably.
Whether you’re a prospective or a veteran franchise owner, there are certain aspects of a franchise that need closer examination like the example above. You may be too busy to notice such minor signs of trouble or need a different, more financially experienced perspective on the matter. Market suitability, trends, operator skills, and other aspects can all trap you into financial problems if not examined more closely before buying or treated immediately if you’re the owner.
Finding an accountant specialising in franchising is an important first step to ensuring a prosperous and stable future for your franchise. If you have any questions on bookkeeping for franchises or are looking for an accountancy service with expertise in this field, schedule a consultation with us via the link below. Get started on your franchise and improve your financial management today.