Franchise Accounting Software

MDF stands for Marketing Development Funds. It’s essentially a pot of money that a franchisor makes available to its franchisees to help them with local marketing and advertising efforts.

Under cash-based VAT, the VAT is only paid when an invoice is paid. On accruals it is paid when the invoice is received. These rules apply to both Sales and Purchase Invoices.  Generally most small businesses will take the cashflow advantages of cash-based VAT until their turnover grows to greater than £1,350,000.

Benchmarking is the technique of comparing Franchisees with each other using the most important Key Performance Indicators for the business. To make the benchmarking more meaningful, Franchisor may group Franchisees into different categories so that the comparisons carry more weight.

If a Franchisor collects client receipts on behalf of the Franchisees and then deducts any fees before distributing the money back to them, best practice is to use an Escrow Bank Account.  An Escrow Bank Account holds the money in trust on behalf of the Franchisees and its contents are owned by them, not the Franchisor.

The standard SME offerings from Xero, Sage and Quickbooks are not designed to scale and combine accounting information from multiple franchisees.  Put simply, they don’t have the horsepower.

A hotel franchise can cost several millions of pounds. McDonalds or Subway is in the range of £500,000 to a million.  Then there is virtually every prices point down to a £10,000 for a cleaning franchise or a low-cost supermarket.

Yes, the Franchisee must be entrepreneurial, motivated, an excellent communicator and sales person, but also and most importantly they must follow the Franchise model.  Don’t go off-piste!

Carefully! It is a big commitment and should not be rushed.  Do your research?  Talk to the British Franchise Association. Talk to multiple Franchisors AND their Franchisees. But choose a franchise which plays to your personal strengths and that you enjoy.

The successful Franchise combines a strong brand identity with a proven business model, comprehensive training and support, efficient operating systems, effective marketing and strong franchisee relationships. On top of all of that they must remain nimble and change with their customers.

It is less risky. Some studies indicate that around 90% of franchises are still operating after five years, compared to only about 20% of independent businesses.

The short answer is that they want to scale. Successful franchises combine the entrepreneurial talents of the Franchisee with a proven operating model to grow a mutually symbiotic business.