As a franchisor, you want to feel secure knowing that your franchisees are operating in line with your brand’s standards, as well as the terms of the franchise agreement. This is important to franchisors for a number of reasons, and you can read about why in this article. However, explicitly knowing that franchisees are complying with the terms and standards you’ve set out, including finances, security, brand, service and much more is difficult to do alone. You would need to be in multiple difference places at any one time. It’s impossible. Your franchisees are less likely to operate in a compliant manner if they know their work isn’t going to be checked and verified, leading to a vicious circle, where franchisor is unable to check compliance and the franchisee isn’t motivated to comply.
That’s why Venners, with their 250 strong national auditing team, can help. Here are the areas of compliance where a franchisee audit can help you gain more visibility of your franchises and how compliant they are with regard to your terms.
Service Standards checks
Many areas of a franchise business are crucial to the positive reinforcement of a brand and service is one of the most important. With the potential impact of failing a service standard felt across the other franchisee sites, it is so important to verify that it’s being done correctly in all of your franchisee outlets. A franchise audit will check the quality and compliance of a welcome and the ordering process, all the way through to exiting the outlet. If there are drive-thru points, those will be checked and your report will contain details of how the auditor was served and the friendliness and helpfulness of the server. The franchise audit report would make note of the quality of the food and the speed with which it arrived. We would also report on the cleanliness of the dining areas, availability of condiments and general ambience.
Finance and royalties checks
Royalties are typically paid to the franchisor based on sales data. But unless you have a centralised EPoS and above- the-till CCTV, there’s absolutely no way of knowing whether your franchisees are under-reporting their sales in order to reduce royalty payments to you. A franchise compliance audit would check all paperwork associated with sales data submissions and reconcile those with the outlet’s EPoS data to verify the fidelity of the sales reports. This typically uncovers tell-tale patterns in EPoS usage that point toward sales data falsification. A franchise audit works to engage franchisees in the process, helping them to accurately report information to the franchisor, keeping the correct equilibrium intact.
Security checks – stock, staff, money
In your franchise agreement, you may have standards for keeping the security of stock, staff and money tight. Keeping stock and money secure is important from a financial risk perspective and a franchisee is responsible for the secure working conditions and the safety of their staff. If a franchisee fails in either of these areas, then there could follow a good deal of reputational damage, which reverberates negatively around the wider franchise business.
A franchise compliance audit would check all storage areas for security. We’ve witnessed franchises where stock is stored in an open container at the back of the building, out of sight of CCTV, where anybody could drive up and fill their car boot. We’ve witnessed liquor storage areas inside building left unlocked and we’ve often see stock left in a quiet corner after a delivery, waiting to be put away while customers walk freely by. Your franchise agreement should include a stock delivery protocol to protect the company from losses. In any case, a franchise compliance audit would check for you whether stock was being received, moved and stored securely at all times.
Our society is becoming ever more reliant on card transactions, but cash is still widely used and sometimes how that cash moves from customer to till to office to safe can be open to abuse. A franchise compliance audit would check till receipts, banking slips, floats, safes and associated paperwork to guard against banking fraud, helping to keep finances secure.
A franchise compliance audit would also check that the security of your staff is being adhered to. It would verify that the outlet’s CCTV is working and up to date. That staff protection measures are in place and that branch security is maintained in line with any agreed terms.
Brand standards are absolutely crucial to a franchise and as a franchisor, you should make every effort to control these standards to a very high degree. For example fast food chain’s customers seek a consistent experience when they visit an outlet; from the food to the service, the ambience and the overall experience. Failure to achieve the requisite level of consistency damages a brand no end.
A franchise compliance audit would show you periodically how compliant an outlet is in regard to food, service, staff uniform, greeting, signage, POS and menu. We’ve seen franchisees ordering in cheaper food items, against their agreement, delivering an inferior product, an inferior food experience with the aim of reducing their costs and improving their cut after royalty payments are taken. If you’re concept relies on delivering excellent doughnuts, but one of your franchisees starts selling cut price doughnuts, the customer will think that all your doughnut outlets have gone downhill. It can be very damaging. A franchise compliance audit will check that your franchisees are only using agreed food items from approved suppliers. It will report on whether your staff are wearing the correct uniform. Anything you stipulate, from a brand perspective, will form the brand part of your compliance audit, helping you and your franchisees maintain brand standards, upholding the strength of your brands reputation in the market.
Food safety – reputational damage
Reputational damage can be terminal, or at the very least hit your bottom line hard through much reduced footfall. Whether your franchisees are dealing with a poor hygiene rating or something worse, these all come about through a lack of compliance with not just your franchise agreement, but also government safety legislation. A franchisee compliance audit would check elements of food safety in an outlet, such as storage, non-contamination and write-off systems, HACCP, cleanliness, safe cooking procedures and much more.
A special mention is that of food allergens. Much has been said in recent months of how companies can ensure their customers are safe and aware of any potential allergens in food. There have been a number of high profile tragedies related to food allergens in the food service industry in 2018 and this reinforces the need for stringent controls, careful placement of ingredients on packaging and the provision of allergen advice on menus. To manage liability, you should set out in your franchise agreements how franchisees are required to operate in regard to food allergen safety. A periodic franchise compliance audit will verify the safe production of food in your outlets and help guard against further tragedies. One tragedy is already too many. Plus the reputational damage it would do to a franchise business means that auditing these areas is the only sensible approach.
Arranging franchise compliance audits with Venners can help your franchise business trade sensibly, profitably and securely. We are a 3rd party audit company, completely impartial and independent. This means we act on the behalf of all parties within an agreement to ensure that all needs are met. We operate in a friendly, business minded and non-confrontational manner, able to mediate and provide solutions where necessary. Our franchise compliance audits are very scalable and suited to new franchises as well as mature businesses with hundreds of sites.
Our pricing is competitive and we work with you to create a program of audits that is affordable and gives the requisite level of risk reduction. We are also able to offer volume discounts. Speak to Venners today about franchise compliance audits and never worry again that your franchises aren’t running to your brand’s standards. You can call us on 01279 620 866 or email [email protected]
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