ADVICE
Inspection affection
Andrew Hayward outlines the value of regular franchisee audits
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www.franchisornews.co.uk
businesses in accordance with the system and rules laid down by their franchisor, most franchise businesses will at one time or another have experience a franchisee who doesn’t. Franchisee ‘misbehaviour’ comes in a number of forms but a common complaint relates to jobs done ‘on the side’ for a customer, often for cash, where the income is
W
hile it would be unfair to tarnish the reputation of the majority of franchisees who operate their
neither recorded in the franchisee’s books nor declared in its returns to the franchisor for the purpose of calculating management services fees or royalties. Not only does this reduce the franchisor’s revenues, but also probably constitutes illegal tax evasion on the part of the franchisee that, if exposed, presents a risk to the reputation of the franchised brand. The media do not instinctively tend to advise their readership of the distinction between a franchisee’s misconduct and the brand and franchisor. It usually remains for the franchisor to attempt to highlight the distinction, usually after the initial bad publicity
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