The Benefits of Outsourcing Finance & Accounting for the Franchise Business Model

Finance and accounting are areas that are pivotal for the success of any franchise. With this in mind, many franchises are now choosing to outsource these functions to a trusted partner. Outsourcing brings specialized expertise and technology to handle complex financial tasks for growing franchise businesses, making it an increasingly popular choice among companies that seek to enhance efficiency and focus on their core operations.

How Traditional Accounting Can Create Problems For Franchises

Growing franchises face unique challenges that stem from their structure and scale. Managing finances across multiple units introduces complexity in tracking and consolidating financial information. These challenges grow as the franchise expands — details can get lost, and it can be difficult to consolidate and compare financial information from the different locations – especially if each is using a different process and templates. Outsourcing financial management and accounting can standardize accounting across locations, and help franchisees by providing expert financial services that support their day-to-day operations while allowing them to focus on growth and customer service. This benefits individual franchisees and strengthens the overall brand by ensuring consistency and reliability.

Key Benefits of Outsourcing Accounting for Franchises

1. Cost Efficiency

Outsourcing accounting and finance functions provides significant cost savings for both franchisees and the franchisor. Franchisees benefit from reducing the need for in-house financial staff, which lowers expenses related to salaries, benefits, training, and technology. This means franchisees can redirect resources toward customer-facing activities and expansion efforts. When franchisees outsource their accounting needs, they leverage the provider’s economies of scale. An outsourcing firm serves multiple clients and spreads the costs of its staff and technology across them. Not to mention they also have the technology to automate parts of the process to add efficiency. This efficiency translates into roughly 30-50% lower costs for the same services, allowing franchisees to enjoy professional accounting services at a much lower cost than an in-house team. This cost efficiency extends to the franchisor as well, who can feel confident in the consistency and accuracy in financial reporting across all franchise units without the need to invest heavily in centralized financial staff or systems themselves for oversight.

2. Enhanced Financial Expertise

Outsourcing finance and accounting functions offers franchisees access to a team of experts with diverse financial knowledge and experience. Franchisees may not have the resources to employ specialists in areas like tax compliance, financial analysis, and strategic financial planning. An outsourcing firm typically has professionals who are well-versed in the latest financial regulations and best practices by industry, ensuring that franchisees receive top-tier guidance and support – which most franchisees find they desperately need especially as they are starting up or in growth mode. This broad spectrum of expertise enhances financial decision-making for franchisees. With the right data and professional advice, franchisees can make more informed choices regarding investments, cost management, and growth strategies. Expert financial analysts can identify cost-saving opportunities or revenue-enhancing strategies that a franchisee might overlook. The financial compliance aspect helps franchisees avoid penalties and legal issues that can arise from non-compliance with financial regulations. For the franchisor, the benefit of having franchisees managed by expert accountants means it is easier to assess the overall financial health of the franchise system, plan for expansions, or pitch to potential investors.

3. Scalability

Outsourced accounting services offer significant scalability. This can be particularly beneficial for franchises that are currently in a growth mode. Franchises must ensure that all franchise units are operating efficiently and in compliance with brand standards and financial regulations. As the franchise network grows, the franchise benefits from knowing that each franchisee can access adequate and professional financial services that scale with their individual needs and operations. Franchisees can adjust the level of services they receive based on their current business needs, whether they are expanding to new locations, experiencing seasonal fluctuations, or adjusting to economic downturns. During periods of expansion, franchisees can easily scale up their accounting support to manage increased transactions, new employee payroll processing, or additional tax requirements without the need to hire more staff.  During slower periods, they can scale back services to reduce costs without the challenges and potential liabilities associated with laying off in-house accounting staff.

4. Improved Financial Reporting and Analysis

Outsourcing finance and accounting services ensures that both the franchise and franchisees receive timely and accurate financial reporting, which is crucial for maintaining the health and compliance of their operations. Professional outsourcing firms employ advanced accounting systems and standardized processes that streamline data collection and reporting. This systematic approach reduces the likelihood of errors and delays that can sometimes occur with in-house teams. Outsourcing firms typically invest in the latest technology to provide their clients with a competitive edge. These technologies include advanced software for data analytics, cloud-based accounting systems and approval workflows, and automated tools for financial forecasting and budgeting. Such tools offer franchisees actionable insights into their financial status, helping them understand their revenue streams, cost centers, and profitability in real-time. This level of detail supports franchisees in making decisions about daily operations, strategic investments, and potential areas for cost reduction. For the franchisor, technology provides a consolidated view of financial health across the franchise network. This integration can help franchises monitor performance, enforce compliance, and identify trends that could affect the overall business strategy. By having access to detailed and accurate financial reports and analyses, franchises can better support their franchisees’ success and ensure the brand remains competitive and profitable.

5. Risk Reduction

Outsourcing accounting functions significantly reduces risks such as fraud and non-compliance for franchisees. Professional outsourcing firms employ stringent internal controls and adhere to high standards of financial governance. By implementing robust internal controls, outsourcing providers ensure that there are checks and balances in place to monitor financial activities. An outsourcing firm might implement advanced auditing tools that continuously monitor transactions and flag unusual activities. These tools, combined with regular reviews and audits, strengthen the financial resilience of franchisees, providing peace of mind and allowing them to focus more on business growth and less on operational vulnerabilities. Outsourced accounting firms stay current with financial regulations and compliance requirements, which vary by region and industry. Their expertise in compliance helps franchisees avoid costly legal penalties and reputational damage that can arise from failing to meet regulatory standards. For franchisors, the professional oversight provided by outsourcing partners means enhanced assurance that all franchise units operate within the legal and financial frameworks set forth by the brand. This oversight helps maintain uniformity and integrity across the franchise network, protecting the brand.

The Right Finance and Accounting Partner For You

Quatrro Business Support Services (Quatrro) is a leading finance and accounting service provider with 25+ years of experience working with thousands of franchises across the restaurant, retail, automotive, home services, and health and wellness industries. By partnering with Quatrro, you gain access to expert accounting solutions that enhance efficiency, ensure compliance, and drive growth. Contact us today to learn more about our flexible financial services and how we can help you optimize your franchise’s performance. If you are interested in learning about how outsourcing finance compares to insourcing for CFOs, you can read that article here.