If you’re a franchisee, a franchise audit is necessary and, well, unavoidable. To ensure you’re crossing all your T’s and dotting all your I’s, you’ll want to partner with an experienced franchise auditor to complete your audit.
Let’s look at what a franchise audit is and how your franchise audit team can help ensure compliance with your franchise agreement.
What is a Franchise Audit?
Franchise audits help ensure your business operates under the agreed-upon conditions with the franchise. When you open a new company under a franchise agreement, you typically agree to uphold the franchise’s brand and operating standards to maintain quality and consistency from one franchisee to the next.
This means you’re responsible for ensuring your business practices comply with the franchise’s practices, maintaining the quality of the goods or services you sell, reporting sales and revenues, and paying the appropriate royalty payments to your franchise. If not, the audit will help uncover areas of improvement to restore your business to compliance.
What to Expect During an Audit with Your Franchise Auditor
Franchise audits make it necessary to partner with a third-party franchise auditor. Here’s what you can expect during your audit with an experienced CPA firm.
Audit Preparation
Before your franchise auditor begins their part of the audit, they’ll likely ask you to gather and prepare your documents. Having your documents, like your financial statements, revenue reports, standard operating procedures, and submitted tax returns, in a central location helps make the audit process run smoothly. If you’ve conducted an internal audit, you’ll also want to have those reports on hand.
On-Site Visit
While most parts of the franchise audit can be done remotely, your franchise auditor might need to make an on-site visit. (Side note: here at Assurance Dimensions, we value your time and space. That’s why we offer remote audits on our secure server).
During the on-site visit, your franchise auditor will assess business operations, conduct a site inspection, and evaluate your business practices from a customer’s standpoint.
Complete the Audit Report
After your audit team evaluates your business documents and conducts a site visit, your auditor will compile an audit report for your franchise.
The audit report will contain:
- A compliance check to ensure you’re meeting the requirements of your franchise agreement.
- A financial review to verify your financial records’ accuracy and determine if you’re correctly paying your royalty payments.
- A detailed list of corrective actions if your business is non-compliant with the franchise agreements.
With a completed audit in hand, you now know how to move forward with your business operations.
Work With an Experienced Franchise Audit Team
Franchise audits benefit both the franchisee and the franchise owner. They help ensure individual franchisees comply with and align with the brand’s operating standards and procedures.
At Assurance Dimensions, we understand the intricacies of franchise accounting and audits. With over 75 years of industry experience, our CPA auditors are committed to providing you with a personalized experience. Contact us today to learn more about our remote-friendly approach to franchise audits.