Franchise Bookkeeping Service

If you own a franchise, keeping on top of the financials is essential to running a profitable business. It’s also necessary to stay compliant with corporate for a mutually supportive relationship. But franchises come with unique bookkeeping responsibilities and even skilled bookkeepers who lack specific franchise experience may find it challenging to keep up. That’s why partnering with a seasoned bookkeeper for franchises is so valuable for compliance as well as strategic financial insights. This guide will help you understand what to look for in a franchise bookkeeping service.

What Is Franchise Bookkeeping for Franchisees?

Franchise bookkeeping means maintaining the financial records a franchisee needs to inform their own business decisions while complying with franchisor. Franchise bookkeeping duties include:

• Recording daily sales and expenses
• Preparing financial reports like income statements and balance sheets
• Managing accounts receivable and payable, including customer and supplier accounts
• Calculating employee wages, deductions, benefits and tax withholdings
• Gathering information for tax returns to comply with local, state and federal tax requirements
• Building budgets and financial forecasts
• Reconciling internal records with bank statements
• Maintaining records like charts of accounts for reporting to corporate
• Determining and tracking royalty payouts to corporate

What Makes Bookkeeping for Franchises Unique?

While conventional bookkeeping skills like financial reporting, accounts receivable and accounts payable apply to franchises, franchise bookkeeping comes with some extra requirements. A bookkeeper who understands the franchisee’s needs can meet these requirements, delivering significant business value. Here are three ways franchise bookkeeping is unique.

Franchise-Specific Reporting

Most franchisors require all franchises to report on their financial performance at regular intervals — weekly, monthly or quarterly. Each franchisor sets their own standards for the financial information they want to see, the format they want it in and how often franchisees must submit reports. Franchise bookkeepers must ensure they comply with all these corporate requirements.

Royalty Payments

Franchise expenses look different from those of other small businesses. Among the most important franchise-specific costs are royalty payouts. Most franchisees pay a monthly royalty fee to corporate in exchange for using their branding and other intellectual property. Rather than a fixed fee, this is usually a percentage of the monthly revenue. A franchise bookkeeper helps gather all the necessary financial data to run this calculation to corporate ahead of the monthly deadline and track payouts.

What Are the Best Practices for Franchise Bookkeeping?

Now that you understand what franchise bookkeeping involves and what sets it apart, let’s examine six best practices every franchise needs to have in place for financial clarity and compliance.

Record Expenses and Revenue

This is a vital process for bookkeeping in general, including franchise bookkeeping. The gold standard is consistent tracking of all the franchise’s transactions, including:

• Sales
• Inventory Support
• Utilities
• Rent
• Wages
• Net profits

Accurate, timely tracking of all these transactions supports efficiency and accuracy in monthly, quarterly and annual financial reporting. The more current a franchise’s financial records are, the quicker the franchise owner and management can respond to seize profit-boosting opportunities and avoid shortfalls.

Understand Franchise-Specific Costs

Franchise bookkeeping must account for franchise-specific costs, like:

• Initial fees: Your books must record the initial fees you pay to access the corporate name and branding for your local franchise. This is especially important if you’re paying the initial fees off over time as amortized initial fees. As well as providing corporate with complete financials, accounting for initial fees helps you as the franchisee track your return on investment against these costs over time.
• Marketing fees: Along with marketing expenses for your franchise, you may need to contribute a monthly fee toward corporate marketing. This collective marketing approach supports franchise success, and tracking contributions to it is crucial for financial clarity at local and corporate levels.
• Royalties: Calculating and paying royalties on time is a must to keep corporate on your side and benefit from their branding. You want a bookkeeper who gets that calculation right every time — corporate is sure to notice any late or missing dollars!

Keep Track of Deadlines

Franchisee bookkeeping marches to the beat of corporate deadlines. These deadlines include dates for:

• Paying amortized initial fees, marketing fees and royalties
• Submitting monthly, quarterly and annual financial reports
• Loading payroll, benefits and scheduling data
• Updating transaction ledgers and inventory records
• Preparing tax information

Maintain Your Customized Chart of Accounts

Many franchisors provide their franchisees with a customized chart of accounts. Corporate uses data from these charts to compare locations, track growth and monitor key performance indicators (KPIs). Depending on corporate priorities, categories in the chart of accounts could include income, expenses, assets, liabilities, equity and sales from specific products. Experienced franchise bookkeepers are well-practiced in maintaining these charts and ensuring franchise owners comply with corporate’s data reporting expectations.

Follow Preferred Vendor Requirements

Many franchisors require their franchisees to use preferred vendors. These include suppliers and professionals providing outsourced services. Working with preferred vendors can help franchisees improve financial forecasts because of more predictable purchasing patterns. Some preferred vendors offer reduced rates compared to their standard pricing, allowing bookkeepers to track savings over time. Bookkeepers should also track transactions to ensure compliance with the franchisor’s preferred vendor standards.

Partner With a Pro

Reliable bookkeeping is pivotal to your franchise’s lasting success. Partnering with a reputable professional helps ensure your bookkeeping practices are accurate, efficient and compliant. Outsourcing your bookkeeping allows you and your franchise’s management to focus on your primary roles while enjoying peace of mind that your financials are in order. It’s also more cost-effective and scalable than hiring an in-house bookkeeper.

Look for an experienced bookkeeper who understands the specific needs and best practices of franchise bookkeeping. Ideally, you also want someone who delivers a personalized service, and helps you understand your franchise’s financial health so you can make informed, strategic decisions.

Simplify Franchise Bookkeeping With Steph’s Bookkeeping Service

As a savvy franchise owner, you know you can only improve what you track. When it comes to franchise bookkeeping, the more accurate, thorough and efficient your financial tracking is, the better positioned you are to take your franchise’s financial health from strength to strength. You can count on Steph’s Bookkeeping Service for all your franchise bookkeeping needs.

Steph’s Bookkeeping Service has been helping businesses like yours achieve clear, compliant financial records for over 25 years. Our seasoned team is here to take corporate financial deadlines off your plate so you can focus on growing your franchise. Our personalized service will ensure you get the insights you need to make those growth-driving decisions based on a solid understanding of the franchise’s financial state. Plus, our outsourced solutions will spare you the need to recruit an in-house bookkeeper so you can keep those costs down.

Contact us today to streamline your bookkeeping.