Your business is successful, busy, profitable and you are ready for your next step. You have options – you can expand your business yourself, start-up in new locations or you could consider the franchise model. With franchising you expand using people who buy-in to your business model and whom run it themselves.

On the surface, that sounds fairly simple, but the reality if you want to make it successful means you need to consider it in an objective manner. Follow these steps and you have a far better chance of getting your franchise off the ground, widening the reach of your brand and delivering extra income for you.

So what are the key things to consider when franchising your business?

1. Check if it is a franchisable model
You may be running your business successfully – but what is it about your business that makes it successful? If it is because it relies on your unique skill or ability and would be difficult for someone else to replicate or would take a long time to be trained, then it is highly unlikely you have a franchise proposition. If it is something that can be replicated or requires skills that are easy to acquire then it is a far more viable idea.

2. You need to document your processes
The key to franchises is that the customer knows what to expect when they use them – it is a replication of a business. To take a huge example, when you go into a McDonalds, anywhere, you know what the menu will be, you know how you will be served, you even know the toilets will be clean. This is because they have strict procedural instructions for every franchisee of how to run that operation. This will require you to document exactly how you run your business; how you take and process orders, how you pack items, how you clean, the systems, managing the bookkeeping and even what products you use. All of this is no doubt instinctive at the moment, but it all needs to be documented so you have a manual that a franchise can take to replicate the business model.

3. Make sure your brand is protected
When you start to franchise your business, the most important element is your brand – that is what you are replicating and that is what you need to protect. If you haven’t registered it as a trademark, both from a word perspective and also the logo itself, then do it before you go any further. It could also be worth investing in a brand manual, similar to the process document, that establishes how your brand can be used – from the font to the minimum size, to the way it can be shown on vehicles to what should appear on a business card.

4. Test to make sure it will work
It may be a great idea, but will it work. The reason your business is successful could be down to something you haven’t even considered like its location or a particular type of customer who happens to live in your town. Testing could mean you set up a second location yourself or you could find a franchisee who will work for a lower investment as you both work out the right way of getting the franchise off the ground. This gives you the opportunity to understand the training that will be required, test the procedural documentation and a myriad of other things that you may not have considered at the outset. Get those smoothed out and when you add the next franchise, you will be far better prepared to support it to success.

5. The legal aspects
You will need to appoint a solicitor who has experience of franchises to put together the legal documentation you will require. They will help you to draw up a franchise agreement and will be aware of some of the key elements to include such as exclusivity, franchise length, whether it can be sold on and how to terminate. It is important to use someone who has prior experience of how franchises operate to ensure all of the relevant aspects are included. Organisations such as the Approved Franchise Association – – can be helpful in providing support too.

Franchising your business may very well be the best option for you – but make sure you take the decision with your eyes wide open. We provide expert bookkeeping services in Edinburgh, Stirling and Glasgow to help franchises like yours. Contact us today!





Wanting to run a successful franchise business takes a bit more than a ‘wing and a prayer’ when it is your good name that is at stake. You have established your own business that has grown and developed and now you want others to take it further, and benefit themselves, by establishing a franchise business. In and amongst all of the support you arrange for them, taking care of the financial management of their franchise businesses is critical. Why? It can not only impact on their ability to operate their business, but it can also have a direct impact on your own.

Here are five reasons why bookkeeping matters for a franchisor and their franchisees:

It can help with managing the debt in the early days

Starting a franchise business is a costly experience, not only from the funding required to buy into the franchise, but also things like the shopfitting, purchase of goods, branding, advertising, the list goes on an on. The last thing you want is for your new franchise to be overwhelmed by the debt and not manage it effectively. Good bookkeeping can feed in the information needed to assess their status and what they need to do to bring that debt down and move into a profitable status.

It lets your franchises keep on top of your cash flow

Cash really is king, they certainly got that right and the easiest way to understand your cash flow is to set up a budget and monitor the spend and income. With bookkeeping you can identify the regular bills that have to be paid like regular franchise payment, payroll, utilities and so on, and ensure the money is there for them. And it can also help you identify any shortfalls and put plan in place to manage them. It gives you a fighting chance of managing the situation if you are on top of it.

It provides essential information which can be shared

How do you know one franchise is doing better than another if you only see the top line? With consistent bookkeeping, there is a window which other franchisees can use to measure their effectiveness and to learn from others. Who is delivering the most profitability and how are they doing it? Why is someone’s cash tied up when no-one else’s is? When you measure and report in a consistent manner, everyone can benefit.

It feeds in to running a compliance franchise business

If you are managing a compliant business, you need to know that your franchisees are compliant too. Bookkeeping can give the visibility to ensure funds are available for the taxman and a good bookkeeper can even make sure people are being paid on time by running the payroll, so franchisees don’t even need to worry about paying employees in a compliant manner.

It makes the work of running a business easier

No one made money working in the dark – except maybe a mushroom grower. Effective bookkeeping enables you to work with the realistic situation you are in; if the franchise is struggling with profitability, then it can highlight where the problems lie and enable them to do something about it. Bookkeeping enables your franchisees to take smart decisions.

When you start running a franchise business, setting up as you mean to go on is definitely a sensible thing to remember. By establishing good bookkeeping practices from the outset, you set your franchise businesses up in a way that will make it easier to manage, to learn, to grow and to become more profitable. So make it a part of the franchise arrangement from the outset.


Every profession has its own set of words and acronyms, its everyday short forms and terms that everyone in that profession appears to understand. But those new to the profession or people who have to interact with those professionals, well, it can be very daunting indeed. You nod your head, smile and scribble notes to check later but when you are in a position of having to know and understand, that makes it very different indeed.
Bookkeeping and accounting terminology is full of terms that you have no doubt come across. But what do they mean? Which ones are the important ones for franchisors to really get their head around to help them to take control of their business?
Whether you are using a franchise bookkeeper or starting out with some cloud accounting software, the following important bookkeeping terminology includes the main terms that franchise owners need to understand.
H2 tag: Financial statements
There are three main financial statements that you will encounter when getting an overview of the financial status of your franchise business and these are the Balance Sheet, the Income Statement (which can also be known as the Profit & Loss Account), and the Cash Flow Statement. We are going to look at each of these in a bit more detail.
H2 tag: Balance sheet
The Balance Sheet summarises the financial health of a company; it is a view of a company’s financial position at a specific time showing how it is funded and how it has used the funding. It includes details of the company’s assets and also its liabilities and equity (the total capital employed in the company). It is called a ‘Balance Sheet’ because these should balance, ie, what the company owns (its assets) should equal its liabilities (the debts it owns) plus the Owner’s Equity.
This includes all of the things that the business owns and is split into two types of assets. A company uses capital to invest in plant and machinery. buildings and so on – these are considered ‘fixed assets’ in that they cannot quickly be turned back into cash so have a lasting benefit. It will also have what is known as ‘current assets’ and these are either cash or can be turned into cash in the short term – this covers the obvious things like cash itself, monies in the bank and also the inventory/stock and supplies.
These are all the items on the other side – the debt of the company. It includes obligations that must be paid soon such as for loans or stock ordered. (This directly relates to the assets because the stock itself will sit in the asset column while the debt to pay for it sits in the liability column.)
This is the money that has been invested in the company and is available to acquire assets. In small businesses it tends to be the money the owner has invested and is shown in a Capital account. In larger businesses it will be shown as Shareholders’ Funds or stocks. Retained earnings are also included and this shows the company profits that have been reinvested rather than paid out
H2 tag: Income Statement
This income statement, often known as the profit and loss statement, gives you a view of the profitability of a company over a given time period, showing the sales of the company compared to the costs of generating those sales. Income statements tend to cover periods of a month, a quarter or a year. It is calculated by taking the total revenue earned in that period, including sales of goods/services and money from other sources such as interest or sales of a fixed asset, and subtracting the expenses incurred in operating the company such as wages, advertising, business rates and any losses, for example if a fixed asset is sold for less than it was valued by the company.
If the income is more than the expenses/losses, the company is making a profit. What happens with the profit or loss will appear on the balance sheet.
H2 tag: Statement of Cash Flows
Cash flow statements show when cash is earned and when costs are incurred, not when the cash is physically paid. It enables you to see where the cash is coming from and where it is going over a given time period. The aim is to reconcile the profit made (as identified in the Income Statement) with the movement in the balance of cash in the same period.
It is divided into three sections:
Cash profit from operations – from the day-to-day company operation
Cash from investments – capital expenditure and investment in assets and cash from selling long term assets
Cash from financing – looking at the effects of financing on cash balances of the company and shows loans taken and those paid off, interest paid, or shares issued or bought back.

This basic introduction will help you to understand what your franchise bookkeeper is doing for you and the Financial Statements they will prepare for you, allowing you to more effectively use them to understand what is happening from your perspective as a franchisor and also from your franchisees’ perspective.


Keeping on top of the finances of your franchise is really easy – on the surface of it; you just need systems and control mechanisms. If these are put in at the outset, you will always have the information to hand that you need to understand your business; and that gives you the informed knowledge to pinpoint any changes that you need to make.
Too often franchises are set up in a whirlwind of funding and excitement. Setting up premises, taking on staff, stocking up – you soon end up with a pile of receipts and invoices which grows month on month. When you are busy, getting on top of your finances gets pushed to the bottom of your priorities because it has become a monster and it’s just easier dealing with the day to day concerns of running your business.
If this is you, then here are 5 steps that will turn the monster into a helpful friend.
1 Cash flow management
Your franchisees are relying on you so it’s important to get on top of your daily income and expenditure. Running out of cash is not an option! There are plenty of easy to use software packages available like Xero and its associated apps, that will make this a lot easier, although initially there may be some past months’ work that needs to be considered too. Dependent upon your situation, it may make sense to bring someone in to help you – there are lots of bookkeepers around who have the staff available to do what you just don’t have the time to do – sort out and record all of that income and expenditure, get on top of that cash flow and give you a clear picture of your financial status.
2 Keep up-to-date accounting records
Not just occasionally but daily or weekly at the worst, whenever is convenient, at the end of the day or first thing in the morning, record all financial transactions. Using bespoke software linked to your mobile phone or tablet will make this a lot easier for you. Or again, pass it on to your friendly bookkeeper.
3 Visibility – costs and income
Once you have got your records up to date, you will be able to do some simple analysis. If you feel confident enough you can do this yourself but again, bespoke software will make the job easier, as would a reputable bookkeeper. Setting up appropriate benchmarking and monitoring franchise performance is vital. One poorly performing franchise could potentially jeopardise the reputation and finances of all.
4 Credit control
Managing how quickly you are paid can make a big difference to your cash flow. Being on top of your accounting records will enable you to ensure franchises keep within the terms you have set and protect your cashflow. Franchisee businesses will suffer if credit terms are breached – so set up systems to help them keep this under control.

5 Compliance
We all know, HMRC doesn’t wait. The worst thing for a franchisor is to be landed with a large VAT bill when they haven’t allowed for it. Franchises need to be monitored to ensure they are all compliant – poor compliance will put all at risk. There are a number of other taxes to consider too – corporation tax, income tax and of course MTD possibly needing to be factored in if your turnover reaches the threshold of £85.000pa. Being on top of your business’s finances will mean there are no shocks and you will have been able to plan and put aside money to keep the taxman happy.
Whether you take on your business finances yourself or use appropriate software and look for assistance from a reputable bookkeeper, facing up to these responsibilities isn’t an option. Take action now to protect your franchise and put the systems and control in place to ensure you are always compliant and have the information required to keep your business growing and your franchise reputation protected.