Franchises offer fantastic benefits to entrepreneurs who want to set up their own business; they provide access to expert support and help minimise risk. But running a franchise unit comes with its share of complex financial procedures, so hiring an accountant is always a wise move.
Starting a franchise business usually involves a significant investment, and you’ll probably be required to pay royalties and other fees on an ongoing basis. No matter how good you are with numbers and spreadsheets, it’s a good idea to consult a finance professional to monitor your activity.
Whether you’re new to franchising or a seasoned investor with decades of experience, hiring an accountant will help you understand how your business is performing and take steps to boost its profits. The unique processes of the franchise model bring various risks, but hiring an accountant with experience of the industry will help you avoid the dangers and enjoy the benefits.
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The benefits of working with an accountant
They can help you access the best business loans
To set up a franchise business and access expert training and business support, franchisees often have to invest tens or even hundreds of thousands of pounds. You’ll need to finance this cost before you earn a penny, so unless you have a huge pot of savings, you’ll probably need to apply for a loan.
Your franchise accountant will help you manage your debt and keep costs down so you don’t end up in hot water. They’ll be able to make sure you can afford the loan and establish a repayment structure.
They can provide support with managing staff salaries
If you launched an independent business, you would probably start small and hire employees one at a time when you’re ready. Franchising is different. You’ll be running a unit with established strategies, and you may be expected to create a workforce ready for day one. You’ll need to be prepared to organise the payroll, offer training resources and introduce a benefits scheme.
Hiring a franchise accountant is a great way to get expert advice during the recruitment and onboarding phases. Many consultants recommend making use of the various management software packages and apps available and are able to guide you through the options.
Some digital tools take the hassle out of calculating wages and tax and even pay money directly into staff bank accounts. There are also apps enabling business owners to create staff rotas and share them instantly with employees from their mobile. Although you might think you can manage these tasks on your own, automating certain processes can save you lots of time and energy when you’re busy running a franchise unit.
They can help you monitor your cash flow
As a franchisee, you’ll have to keep on top of a number of monthly fees. These payments could include royalties, rent, utilities, staff salaries and marketing costs, as well as any other expenses like tax and insurance payments. There might be times when you need extra working capital to stay afloat when you’re waiting for customers to pay for products or services you’ve provided.
Being ‘undercapitalised’ is one of the main reasons for franchise business failure, so you must monitor your cash flow carefully. Hiring an accountant should help you keep a close eye on your finances. A consultant will be able to review your franchise contract before you invest, so you can develop a clear understanding of your financial commitments ahead of time and plan accordingly.
Once you’re up and running, you can ask your accountant to create a cash flow dashboard to track all your transactions. With this handy tool, you’ll always know how much you’ve spent in relation to your earnings and be better placed to handle day-to-day budgeting.
They’ll help you stick to your franchising obligations
When you buy into a franchise brand, you agree to run your business according to the rules set out by the franchisor. Regulations may cover everything from the suppliers you can use to the way you submit your royalty payments. Often, there’s a particular procedure for reporting your accounts and specific tax implications for your franchise fees.
Having an experienced accountant who knows the ins and outs of franchising will help you make sure you adhere to your obligations as a franchisee. You could be faced with harsh penalties for late or inaccurate reporting, so it’s worth making sure you stay on top of things.
They’ll be able to offer extra insight
A franchise accountant may be able to offer support with more than just financial tasks. If they’ve been working in the industry a while, it’s likely they will have developed a significant level of expertise and experience. So, they may be able to offer more general advice about your operations and help you avoid some of the pitfalls other business owners face.
To really get value for money, you could even consider hiring an accountant who has worked with other investors in your franchise’s network. They’ll be familiar with the specific requirements for running a business under the brand and should be able to provide extra support with any challenges unique to the franchise.
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Make a success of your franchise business
Franchise accountants can offer a significant level of support to franchisees, not only as they set up their unit but also as they continue to develop it. They can help you keep a close eye on your cash flow and monitor your key performance indicators, as well as offer guidance on other potential challenges along the way.
We always recommend investors consult a finance professional for their business, as well as a legal advisor. The sense of security and access to efficient funding options should more than make up for the initial outlay of hiring an accountant.
To learn more about running a profitable franchise business, take a look at our other articles for franchisees.
Alice Tuffery, Point Franchise ©