What do accountants need to know about franchising? As financial transparency increases and franchise regulations change an informed franchise accountant adds significant value to the business.
Put accountants together and they might just talk numbers. Bring lawyers and advisors in and things start to get interesting…
These are the takeaways from this year’s Franchise Accountant Network’s conference:
The ACCC is looking closely at financial matters
Michael Schaper, deputy chair at the ACCC, reminded us that the ACCC is active in prosecutions. Financial matters are often at the core, including earnings claims and disclosure around marketing funds. This highlights that accountants have a very important role to play in franchising and need to be well informed about the issues.
Kate Carnell is batting for small business and accountants can help
Australian Small Business and Family Enterprise Ombudsman Kate Carnell’s advocacy takes in issues including payment times, small business lending and industrial relations. It was great to hear what she’s up to, but my take away was how accounting professionals can help small business.
Whether it’s helping reduce the compliance burden, using technology to improve cashflow, or getting things set for Single Touch Payroll, the right accountant can help free up an owner’s time and money to invest in her business.
Franchise financial models need to be reviewed
Franchises are facing cost increases from power bills, rent increases and wage increases (especially as, according to Kate Carnell, many EBAs are looking unlikely to survive). This flags the need for careful modelling of financial profiles for existing franchises.
Retail is tough and we need to talk about the numbers
Barry Barber pointed out that while developers continue to invest in retail, franchises need to stand out if they are to survive. He also pointed out that being across the numbers, while vital, is often a weak spot in franchises.
Sharing data is about more than the technology
Franchise Relationships Institute founder Greg Nathan reminded us that having a mechanism to collect financial information from franchisees doesn’t mean people will use it or make the most of it. We need to establish relationships that foster the sharing of data, and that includes learning how to have good conversations about difficult topics.
Being CFO isn’t just about the numbers
Angela Wagland (Foodco) and George van Wyk (Pizza Hut) are two franchise CFOs. While they have very different team structures, they each have a pivotal role as adviser and sounding board for Boards and investors. Both highlighted the importance of people and communication skills if an accountant wants to progress in their career.
Safe Harbour protections may save your business from insolvency
Alicia Hill from MST Lawyers explained the new Safe Harbour provisions in the Corporations Act. This means that, under certain circumstances, a business can obtain a breathing space to fix financial problems without placing the director’s assets at risk.
An interesting add on to this is for franchisors to consider their response if a franchisee enters Safe Harbour.
Franchisors need to engage with payroll issues
Siobhan Hennessy from PPB Advisory is flagging that wages compliance programs should be part of a franchise system and franchisors need to take this seriously. Technology can help make compliance and investigations cost effective, but different franchise systems will need different approaches.
Misclassification under an Award can be very expensive
Barrister and mediator Glen Pauline explained how one complaint by an underpaid worker led to an expensive legal case. He flagged that misclassification under an Award was a key factor and encouraged us to get expert advice on classifications.
A mistake with classifications doesn’t just affect wages, it also flows on to tax, Super and leave payments.
The Fair Work Ombudsman has a friendly, helpful side!
Greg Jennings pointed out that the FWO has a large and growing range of free resources to help small business owners understand their obligations, including foreign language resources. It’s definitely worth having a dig around in the FWO’s web site!
We can learn a lot from mediators
In just a few minutes, Derek Minus alerted us all to the important role of mediation in franchising. He’s the man to contact if you have a complaint.
It was good to be reminded that one hallmark of a good mediation is to “listen to the other side and be prepared to adjust your position”. It’s not just advice for mediations, but for life generally.
