9 Franchise Bookkeeping Challenges & How Outsourcing Can Solve Them
Franchisees not required to use a certain bookkeeper by their franchisor often struggle with bookkeeping. Complex financial requirements, compliance obligations and time constraints are just a few of the issues they face.
Here are some of the common franchise bookkeeping challenges our clients have faced, and how choosing a professional bookkeeping service like BookWerksTM was a lifesaver:
1. Managing royalty & franchise fees
Challenge: Franchisees usually must track and pay three types of fees to their franchisors:
- Marketing fees (can be volume-based)
- Royalties (volume-based)
- Management fees (typically not volumed-based)
Errors can lead to penalties or disputes.
Solution: An independent bookkeeping company that understands the franchise model ensures these payments are accurately calculated, recorded and paid on time, preventing costly mistakes.
2. Complying with franchisor reporting requirements
Challenge: Franchisees must submit top line financial data such as
- sales,
- cost of goods sold and
- gross margin
in a specific format and timeframe set by the franchisor. Keeping up with these requirements can be overwhelming, especially when you are just starting to run your business.
Solution: An experienced bookkeeper that works regularly with franchises understands franchise reporting standards, and ensures financial records are prepared correctly and submitted on time.
3. Tracking cash flow & expenses
Challenge: Many franchisees struggle with monitoring cash flow, leading to shortfalls when unexpected expenses arise.
Solution: A professional bookkeeper
- provides regular cash flow reports,
- tracks expenses and
- helps franchisees plan for seasonal fluctuations or unforeseen costs.
Working with BookWerksTM, you won’t be caught not knowing the status of your business.
4. Collecting sales tax & paying annual federal, state and local taxes
Challenge: Franchisees must collect and remit sales taxes correctly, as well as file their annual business taxes on time. Mistakes can lead to expensive and disruptive audits and fines.
Solution: A professional franchise bookkeeper ensures timely remittances and prepares the documents your CPA needs at tax time, reducing the risk of noncompliance and an audit.
5. Reconciling transactions across multiple systems
Challenge: Franchisees often use multiple financial systems, such as
- POS systems,
- vendor accounts and
- payroll software,
making reconciliation difficult.
Solution: An outside bookkeeper consolidates financial data, reconciles accounts, and ensures accurate financial statements.
6. Managing accounts payable & receivable
Challenge: Late vendor payments or slow customer collections can disrupt cash flow.
Solution: A bookkeeper helps track invoices, which can help ensure timely payments to suppliers, and allow for follow up on outstanding receivables to maintain financial stability.
7. Budgeting & forecasting
Challenge: Many franchisees lack the financial expertise to create accurate budgets or forecast future expenses.
Solution: A bookkeeper provides insights on spending patterns, helps set realistic budgets and offers financial planning support.
8. Preventing fraud & financial mismanagement
Challenge: Without proper oversight, franchise locations can be vulnerable to fraud or financial mismanagement. Franchises can be particularly at risk if a family member or staff member with limited bookkeeping experience keeps the books.
Solution: An outsourced bookkeeping service provides independent financial oversight, implements internal controls and monitors for irregularities. You have more privacy with a bookkeeper outside your organization.
9. Managing time & reducing stress
Challenge: Many franchisees spend time on bookkeeping that would be better used helping customers and planning how to grow the business.
Solution: By outsourcing bookkeeping, franchisees can focus on running their business while ensuring their finances are in expert hands. They can have a better work/life balance and prevent burnout by sending non-revenue-producing tasks outside the organization.
BookWerksTM is a trusted franchise bookkeeping service.
We help all types of franchises maintain accurate records, enjoy financial stability, and improve operational efficiency.
Give us a call any time to set up a free, no-obligation consultation to learn how we can help you thrive.