Franchise Accounting Pain Solved

Franchising World / February 2022

During times of economic challenges, franchising systems tend to remain strong.


COVID-19 represented an opportunity in the franchising world, as people were laid off and furloughed due to an unprecedented pandemic. Many took the opportunity to bet on themselves and took the entrepreneurial path to business ownership through owning a franchise. People invest in a franchise because they have a community of support behind them and a proven business model. In addition, the era of COVID-19 presented multiple government programs to support ownership. The result is growth in franchising communities.

Creating success is a team effort as franchisees wear many hats. A vital part of creating a successful and mutually beneficial franchisor-franchisee relationship is timely financial insight. Many franchisees rely on a traditional CPA to deliver their financials, but find that the accounting industry is falling behind in terms of technology and cannot provide the monthly reports in a timely manner. Others may resort to do-it-yourself accounting, which cuts into the time that could be spent on sales, marketing and other activities to grow the franchise.

The solution lies in the digitization of traditional services, such as expert cloud-based bookkeeping and accounting. This gives valuable time back to franchisees and provides timely, actionable insight to franchisors, which helps them work together to expand the business.


Digital Transformation in Franchise Financials

When cloud-based accounting is paired with the support of an expert accounting team, franchisees enjoy innovative solutions for their financial needs, including digital bookkeeping along with bank and credit card reconciliation — all done through a tax-saving lens. Each month, key financial reports are generated in their online accounting platform in a timely manner and available to be sent out to the franchisor.

A vital part of creating a successful and mutually beneficial franchisor-franchisee relationship is timely financial insight.”

For franchisors, timely access to franchisee financials presents the opportunity to understand top-performing trends and best practices. This also enables franchisors to provide guidance and insight to support the growth and success of their franchise community.

With the modernization of business, traditional accounting services are falling behind in supporting companies due to a lack of expertise in technology trends in digital-first industries. Non-specialized CPAs may lack the specific knowledge required for franchise bookkeeping, technological connectivity, and time to support the franchisee.

Traditional accounting also requires high proficiency and time to accomplish all the necessary tasks. If the franchisee chooses to do their own accounting, it could take time away from other activities essential for growing the business.

By pairing cutting-edge software with expert support, cloud-based accounting provides franchisees with accurate, up-to-date financial data. Franchisors are able to focus on expanding their franchise, while the finance experts behind the accounting platform deliver timely insights each month. Franchisees can also use the real-time information to make informed business decisions and seek support from franchisors as early and often as needed.


“A vital part of creating a successful and mutually beneficial franchisor-franchisee relationship is timely financial insight.”

Accuracy in Item 19

In addition to bolstering franchisee success, timely financial insight helps franchisors answer the number one question asked by prospective franchisees: “How much money will I make?”

To respond to questions about profitability, franchisors need to consolidate data from franchisees’ Profit and Loss Statements for Item 19. Item 19 is the franchisor’s opportunity to make oral or written representations about the financial performance of their business and the average net profit of their franchise community. Accuracy is critical to establishing trust and transparency in the sale process to new franchisees.

In IFA’s 2021 Economic Outlook for Franchising, FRANdata projected franchise employment to produce nearly 800,000 jobs in the United States by the end of 2021, with franchise establishments increasing at a rate of 3.5 percent. With more and more individuals exploring the franchise space, franchisors have the opportunity to attract new, qualified and forward thinking franchisee candidates.

Detailed financial disclosures instill a sense of trust and honesty, enabling franchisors to secure the ideal franchisees for their growing franchise community.”

Including Item 19 enables franchisors to provide a complete picture of their franchise’s financial health and set a standard of transparency, while remaining compliant with franchise laws. It gives potential franchisees a data-driven estimate of how profitable they could be by joining the franchise, and enables them to weigh their options and make an informed decision. Detailed financial disclosures instill a sense of trust and honesty, enabling franchisors to secure the ideal franchisees for their growing franchise community.


Looking Ahead

Accurate and timely financial information is the key to unlocking success for franchisors and franchisees alike. Franchisees thrive on flexible, personalized bookkeeping and accounting support for financial compliance and the reporting necessary to grow their business. Franchisors depend on streamlined reporting to disclose revenue and profit information to prospective owners and provide key performance indicators for new franchisees.

As the business world undergoes a digital transformation, cloud-based accounting offers modern franchise businesses the tools they need today to prepare for tomorrow.

Lil Roberts is CEO and founder of Xendoo, a cloud-based fintech company that specializes in online bookkeeping and accounting for small businesses. For more information about International Franchise Association (IFA) supplier member Xendoo, visit

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