The creation of a franchise business has met with great success in recent years. Relatively simple in appearance, opening a franchise requires the intervention of chartered accountant services at all levels.
The forecast analysis of the creation project
Before even choosing his network, the franchise creator must hire chartered accountant services to assess in detail the strength of his case. This expert will carry out the analysis of the turnover, the gross financial charges, and the cash budget of the franchise.
Indeed, it is the only way to ensure that the creator is on the right course! A step that will allow the professional to bring real added value to his client.
The forecast study will have to be established in close collaboration between the manager and the accountant who will know, through his experience in the sector and in financial management, to have sufficient perspective to analyse the “gross” forecast figures provided by his client, with a critical eye.
Thus, the turnover and the details of the expenses will be evaluated with the method, rigor, will be realistic and, consequently, reliable.
The study will result in emphasizing the points of vigilance that the manager very often did not anticipate, and which could be corrected upstream more easily. It will be at this stage that the management of the company will start!
The results of this study will be used above all to study the future profitability of the entity and to make the necessary modifications before opening. These data, then presented in the form of a business plan, will also be used to convince a banker to grant a loan to finance the launch of the franchise.
Negotiating the franchise contract with the network manager
The chartered accountant then supports the business creator in choosing the franchisor who corresponds to the profile defined in the forecast analysis. He then takes care of scrutinizing all the accounting and financial documents of the selected network, to have a precise picture of its competitiveness in the market.
He then takes a critical look at the pre-contractual information document provided by the franchisor.
He will also advise the business creator of the relevance or otherwise of the clauses mentioned in the document. It, therefore, establishes a line of arguments to be used to negotiate the conditions of engagement, the participation price, and the methods of transmitting know-how with the franchisor.
The legal structure of the franchise
If the negotiations lead to an agreement between the head of the network and the franchise candidate, the accountant takes care of gathering all the documents and legal files necessary for the creation of the entity.
The drafting of the legal status, the registration of the franchise with authorities are all procedures that the accountant can carry out during this stage. Even after the start of the franchise, the chartered accountant can still intervene in audit and advisory missions to better support the franchisee in its activities.
This content is meant for information only and should not be considered as an advice or legal opinion, or otherwise. AKGVG & Associates does not intend to advertise its services through this.
Posted by
CA Aman Aggarwal
AKGVG & Associates