Audits for Franchises

Franchisee Audit Service

Our Franchise audits help ensure compliance and financial performance within the franchise business. They assist franchisors in maintaining standards and identifying risks. Understanding these audits enables franchisees to enhance operational efficiency and financial health.

Does your business need an audit?

Companies are required to have an audit if any two of the following criteria are met:

• Turnover of more than £15m
• Gross Assets of more than £7.5m
• 50 or more employees

The audit thresholds are changing for financial years beginning on or after 1 October 2024. The new thresholds are as follows:

• Turnover of more than £15m
• Gross Assets of more than £7.5m
• 50 or more employees

Find out more below on how we can help audit your solar business. 

How It Works

What You Get

Tailored Pricing to Meet Your Needs

We understand that every business has unique financial requirements. Our pricing is tailored based on the specific services you need to achieve audit readiness and financial clarity. Contact us to discuss a customised pricing plan that fits your business.

Want to learn more?

Get in touch with our in house expert Chris Morey to see how we can help.

What are Audits in Franchising

Franchise audits in franchising are about compliance and financial performance of the franchise business. They help franchisors to maintain standards and identify risks. Understanding these audits will help franchisees to improve operational efficiency and financial health.

What is the purpose of Audits for franchises?

Audits are a big part of franchising to ensure franchisees follow the financial policies of the franchisor. These audits will give a true picture of a franchisee’s financial health by reviewing financial statements including profit and loss, balance sheets and cash flow, of the franchisee’s financial performance.

Regular audits keep the franchise network open so franchisors can pick up on discrepancies or areas of concern. So franchisees are compliant with their contracts and don’t mismanage their finances. The process builds trust and accountability and a cohesive franchise system.

We know audits are key to compliance and financial performance. Our audits help franchisors maintain high standards, identify risks and run their franchise network smoothly. For franchisees understanding these audits will improve operational efficiency and financial health.

Financial Audits vs Other Audits

It’s important to distinguish between financial audits and other audits like operational or performance audits. Financial audits look at the accuracy of a franchisee’s financial records and financial compliance. A franchise compliance audit ensures franchisees follow the franchise agreement, maintain brand integrity and comply with all franchise regulations.

Operational audits check if franchisees are following the franchisor’s operational guidelines and running efficient business, while performance audits assess the engagement and effectiveness of franchisees within the system. By separating these different audits we can ensure every part of your franchise is thoroughly checked and improved.

What is a Compliance Audit?

Our compliance audits is a systematic and independent review of a franchisee’s compliance to the franchise agreement. We check compliance to the franchisor’s standards, policies and procedures to ensure the franchisee is operating according to the agreement and regulations.

A good compliance audit is the key to a healthy and successful franchise network. By identifying non-compliance to brand standards or operational guidelines we help franchisors to ensure their franchisees are operating as expected and legally compliant.

Our audit process covers the entire franchisee’s business from financial records to operational practices and customer satisfaction metrics. We also review compliance to regulatory requirements such as employment laws, tax laws and health and safety standards.

Benefits of Compliance Audits

Compliance audits have many benefits. Franchisees will operate as per the franchisor’s expectations and will have a good reputation and increased customer loyalty. We also give franchisors valuable insights to their franchisees’ businesses to identify areas for improvement and provide support for growth.

By identifying risks like non-compliance to regulations or poor financial controls our audits enable franchisors to act before the risk happens and ensure franchisees are operating compliant and sustainably.

In the end our compliance audits will have a successful franchise network by ensuring franchisees follow the franchisor’s standards and policies and maintain brand reputation and customer trust.

Financial Statement Components in Franchises

Understanding the components of financial statements will help franchise owners make informed business decisions. These components are income statements, balance sheets and cash flow statements each gives different insights to your franchise’s profitability and overall financial health.

Income Statement Analysis

The income statement shows a franchise’s profitability. We review this statement to see revenues, expenses and profits over a period. We look at factors like Cost of Goods Sold (COGS) to help franchisees understand how these costs affect net income. We also review sales performance and Average Unit Volume (AUV) across locations and major expenses like rent and wages which affects profitability.

Balance Sheet Analysis

A balance sheet is a snapshot of a franchise’s financial position at a point in time. It shows assets, liabilities and owner’s equity. We analyse the balance sheet to check the capital structure to ensure a healthy balance of debt and equity. We also review current and long-term liabilities and assets like inventory and property to assess financial health and growth potential.

A well structured balance sheet means financial stability and ability to grow, both of which is key to long term success.

Cash Flow Statement Analysis

The cash flow statement shows how cash is generated and used in operating, investing and financing activities. Our team reviews these sections to see how the franchise manages cash for daily operations and growth. We also review outflows like loan repayments and dividends to see financial commitments.

Positive cash flow is key to run the business smoothly and support future growth and we help you achieve that through detailed cash flow analysis.

The Audit Process

Conducting a full audit is essential to maintain compliance and financial health in your franchise system. Our audit process is efficient, planned, data collection and reporting.

Planning and Preparation

We start by defining clearly the scope and objectives of the audit. This includes outlining the areas to be audited such as financial records, royalty payments and compliance to standards. We work with you to schedule the audit at a convenient time and ensure all staff involved are informed and ready.

We create an audit plan that outlines timelines, resources and specific audit procedures. Using internal and external auditors can give a balanced view of the franchise’s health. Our planned approach ensures every area is covered thoroughly and efficiently.

Data Collection and Review

Once the planning is done we collect and review the data. We use advanced tools to aggregate financial documents, sales records and other relevant information to get the data up to date and accurate. The quality of the data affects the findings of the audit.

We review the data thoroughly to identify anomalies or patterns that may indicate areas of concern. We also review performance metrics and franchise agreements to ensure full compliance and financial health.

Reporting and Follow Up

After the audit we produce a detailed report of the findings. The report highlights areas such as compliance issues, financial variances and opportunities for improvement. We make the report easy to read and use visuals like charts and tables to present complex data.

After the audit we schedule follow up meeting with relevant stakeholders to review the findings and provide guidance. We work with you to fix the issues and schedule future audits to monitor progress, to maintain compliance and continuous improvement in your franchise system.