The Value of Transparency in a Franchise Organization

In franchising, the operating system becomes identified with the Brand or trade name that is licensed to an entity. In a world class Brand each franchise replicates all processes, technology, people behaviors and philosophy, systems and methods used to service and satisfy the customer.

So why hasn’t financial planning and tracking been seen to be as important?

Over the years franchising has made many changes in how businesses are operated. It has been an evolving process that has established franchising as a viable strategy for franchisors and their franchisees. Yet some important aspects have been ignored.

Intuit, the creators of QuickBooks and the largest provider of financial solutions to small and medium sized businesses for over 30 years, and Management 2000, a growth strategy company that has worked with franchise clients for over 30 years, are working to bring the concept of financial transparency to franchising. Franchisors who insist on financial transparency across their franchisees/strategic partners will increase the success of the whole Brand.

A crucial part of operating a business and replicating it across multiple units requires that a common financial plan is developed, using thorough analysis to achieve the business goals. In the past, franchising was regarded as an “individual sport”…. Franchisors and franchisees did not establish common goals. Successful franchisors in the 21st century, take a different approach. Franchising is now correctly viewed as a “team sport” where the franchisor and the franchisees [or strategic partners] align themselves to mutual goals. An essential part of this process is transparency which enables the sharing of financial metrics with the whole franchise Brand.

Some franchised Brands already leverage financial transparency and have experienced increased profits and efficiencies. Using tools like QuickBooks Online across the Brand have enabled the consistency necessary to generate this teamwork atmosphere and an environment where best practices are shared and all ships rise. So why are there some franchised Brands not doing this?

Management 2000 has studied what the World Class Brands do and has been able to identify 12 areas that World Class Brands focus on in order to become leading brands. One of those 12 areas is business and financial planning.

In the times past, franchising was a way for an entrepreneur to gain financially for him or herself and provide a better income and lifestyle. No one was thinking about branding, market share or market dominance. The space became very crowded and people began to realize that in order to dominate a market they had to make the Brand more visible, with more and more locations, in order to gain a sustainable competitive advantage.

As we used to say of franchisees: “You are in business for yourself, but not by yourself”, we now know everyone is in the business of financial excellence driven by creating and retaining very satisfied customers. There was no need in the mind of the company founders, to have consistency in systems – particularly financial systems – within the company, because in their minds, the franchisees were individual owner operators – end of story. Just as the franchisor didn’t want anybody meddling in the way they spent their money, they didn’t want to get into the company operations of their franchisees. They began to discover that without financial transparency they could not help the franchisees grow their businesses.

So some companies, like Two Men and a Truck, began to have total financial transparency and, using QuickBooks and a file consolidation tool, individual franchisees could even see the chart of accounts which were now all common with their fellow franchisees. So if somebody grossed $2.8 million and made a net pre-tax profit of 20%, and I made $2.8 million and I made a net pre-tax profit of 8%, I could go to that person and talk to him and find out what he was doing differently. Hopefully he would say “Well, I follow the systems and you don’t”.

So, while you’re thinking about the importance of replicating your brand’s processes, technology, philosophy, and behaviors, you should also be thinking about instituting financial transparency and standardizing accounting solutions throughout your organization. Management 2000 and Intuit’s QuickBooks Franchise Team are dedicated to helping franchises streamline their processes and improve the financial health of their franchisees.

Management 2000 Consulting


Intuit QuickBooks Franchise Team


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