By Diane Williams, Interim Head of Twinfield UK at Wolters Kluwer
The franchise sector is a modern-day success story for British business. While the UK economy shrank by 2.5% between 2008-13, franchising revenues grew by 20%, making it one of the few industries to demonstrate strong growth during the recession. By 2013 the franchise market grossed £13.7 billion, contributing almost 1% to UK GDP.
According to a 2014 survey by the British Franchise Association, 92% of UK franchise businesses are profitable, whilst both franchisors and franchisees believe that improved trading conditions will drive further growth. The future appears bright. But as UK Plc builds on the green shoots of recovery, maintaining profitability in an increasingly competitive marketplace remains a significant challenge for franchise organisations.
For franchisors seeking to increase their market share, or for entrepreneurial franchisees looking to grow their franchise, progress will depend on their ability to adopt new innovation to bolster business as usual. And although success for retail franchises will continue to be measured at the front of store tills, the real catalyst for growth may well be found, away from the customer’s gaze, in the back office.
Successful franchising depends upon nurturing a strong relationship between franchisor and franchisee. There is risk and, often, significant investment, on both sides – so the ability to squeeze every last drop of profit out of an organisation is critical. Both parties need instant access to real-time information, with clear visibility of financial performance and the ability to measure progress against Key Performance Indicators. Yet, among franchise organisations, the current approach to accessing key business intelligence is commonly suboptimal. Franchisees typically have back office technologies foisted upon them by franchisors, but many lack the interoperability and accessibility to provide meaningful real-time insights for either party. As a direct consequence, processes can become riddled with hidden inefficiencies and operating costs can escalate through increased waste and myopic decision-making.
The rapid development of cloud accounting solutions is helping franchise owners and franchisees bring greater connectivity, collaboration and intelligence to business and financial planning. Cloud accounting brings speed, accessibility and ease of use to stakeholders across the franchise organisation. What’s more, the inherent centralisation the Cloud enables, empowers senior management from both franchisor and franchisee with real-time data to support operational and strategic decision-making. In multi-site franchises with a large national footprint, such centralisation provides much-needed financial visibility.
The most effective Cloud solutions go beyond accounting. They will integrate with back office systems across the enterprise to give senior management a more detailed holistic view of operations. The ability, for example, to integrate with EPOS and cash till technology can help franchises chart customer footfall, itemised sales and stock levels, as well as monitor product wastage and evaluate appropriate resourcing levels. All of this vital granular data can be aggregated and fed into accounting processes to help develop accurate P&Ls for robust financial reporting, forecasting and planning. The data can be used to support franchisor/franchisee engagement, as well as help ambitious franchisees seeking additional investment to expand into new territories.
In the competitive world of franchising, the most progressive companies are those who aren’t trying to tackle today’s challenges with yesterday’s solutions but are instead leveraging technology to drive productivity and efficiency gains and, in the process, facilitate real growth.
From the front till to the back office, truly integrated cloud accounting solutions could help the UK franchise sector cement its place as one of the jewels in the crown of British industry.