We’re thinking of buying a franchise but we are put off a bit by the paperwork. I don’t really like filling out forms and reports every five minutes. Do franchisors usually demand lots of paperwork to be completed?
Operating a small business, whether it be a franchise or an independent business, requires the owner to constantly attend to paperwork.
Get business news first
Sign up to SmartCompany’s daily newsletter
The saying I have here is “there’s no such thing as a small business if you own one!”
The type of business will often determine how high the mountain of paper is on a day-to-day and week-to-week basis. However, you can safely assume that irrespective of the type of business, if you are planning to operate it properly and compliantly, there will be a genuine need for you to dedicate chunks your time and attention to the administrative and reporting duties required.
That said, tasks such as bookkeeping and payroll can all be outsourced through very cost-effective arrangements, which will drastically reduce, but not eliminate, the need for you to be bogged-down on these tasks.
In regard to franchisors’ demand for reporting, the nature and sophistication of the franchise model you are considering will determine how much paperwork and reporting you personally will be required to do.
The better franchise businesses will have efficient systems in place which automate the reporting requirements of their franchisees.
An example of this would BE those food retail franchises that have the ability to directly poll sales and product mix data from their franchisees’ point-of-sale systems.
Less efficient franchises will not have these technologies in place and as a result, will require the franchisees to report their data and information manually.
In general, franchisors require you to report for two main reasons. Firstly, they want to track the performance of your business to ensure it is operating compliantly, profitably, and to identify and remedy any opportunities which might exist which have the potential to hinder the growth of your business.
Secondly, franchisors by their very nature are usually remunerated via their percentage royalty and/or fee structure, and as such they need to know the exact sales performance of the franchisees business in order to calculate and invoice their franchisee and marketing fees.