Franchise audit requirements and how to get started
2021 has the potential to be a good year for business. How much of a bounce-back there will be is open to debate, but with an estimated £250bn of savings in UK bank accounts by June, it makes sense to ensure everything is ready to take advantage of the upturn.
During the pandemic, franchises had to operate and execute differently. Some rode the waves, others didn’t have much chance. But improving business efficiency was important for everyone. Now, we need to ensure that our brand’s core values and standards are up-to-date and up-and-running.
There is no doubt that franchise audits are crucial to standardising service, rolling out best practices and, ultimately, protecting and growing your brand. In the current climate, the audit is also vital in defining and maintaining the “new normal” as we start on the road to growth. Let’s explain in more detail.
Why regular franchise audits have never been more important
Audits help you understand what’s going on and how changes are actually rolling out on the ground. You also need to maintain ongoing cooperation between you and your franchisees. Fundamentally, they are critical to running an efficient franchise network.
The most significant opportunity for franchisors and franchisees is to treat audits as a broader coaching and improvement opportunity to uphold brand standards, develop customer success, and drive the business forward. You can do this by looking at the types of audits needed — and ensuring you optimise for each one.
1. Finance audit
When anyone mentions audit, finances immediately spring to mind. It’s a business fundamental to ensure their franchisees do not under-report sales and adhere to sound financial practice. Much like training, financial audits might be necessary, but they are far from sufficient.
2. Operations audit
Beyond testing revenue, you have to check that a franchisee is complying with your franchise agreement. Post-COVID, there is work to do to ensure that operating procedures are up-to-date, especially in the Health and Safety area. New best-practice may have formulated and need to be acted upon.
3. Brand audit
Assessing and managing brand consistency across a network ensures all franchise outlets adhere to brand guidelines and marketing practices. A brand audit can also help reveal regional variations, and capture insights on how to tailor your brand to those idiosyncrasies. Fundamentally, it offers the ability to identify and orchestrate responses to areas of failure, and can ensure consistency in how each franchise reports.
Franchise audit best practices
Auditing can be time-consuming. It requires audit and candidate selection, site visits, and data review. Developing an effective auditing programme is important to make sure that the benefits far outweigh the costs. There are three distinct steps with any audit program which will deliver the required benefits.
Step 1: Creating a detailed outline of audit procedures
The first stage is to ensure the scope and frequency of review are thought through. Don’t think of an audit as a fixed event. Limiting measurement to set periods only gives you insight into one snapshot in time of your operations. By carrying out audits more frequently, you can build a clearer picture of how franchisees perform on a day-to-day basis. This also helps keep you and your franchisees connected.
To summarise the process:
- Choose your benchmarks from your KPIs.
- Choose the number of questions (just-enough, but not too many).
- Map every question to a relevant KPI, processes or systems.
- Ensure the audit includes enough KPIs to evaluate the results rigorously.
Pro tip: It’s important to review KPIs in order to ensure they are still relevant. Having an effective KPI reporting and analysis system is a fundamental part of successful franchise audits.
Step 2: Performing the audit
It’s in everyone’s interest to obtain the necessary information in the minimum amount of time and with as little disruption as possible. Standardised survey templates are a great way to centrally distribute resources to your teams. However, custom surveys may be important depending on the nature of your business.
Using franchise audit software (more on that later) simplifies the distribution of all survey material, and often includes tracking features that allow management to see who has and hasn’t completed surveys according to set deadlines.
Pro tip: At this stage, the aim is to gather data to validate performance or non-compliance, and generate corrective actions. Don’t forget about that next step.
Step 3: Documenting the audit and enforcing its findings
Franchise audits serve as a way for you to identify issues, but audits lose their value without the corrective component. To ensure issues are resolved quickly, it’s essential to develop solutions with your franchisees based on actionable insights.
Manually entering audit results into excel sheets and using emails delays reaction time and makes it difficult to manage the process. It’s essential to set up a transparent process for tracking corrective actions. Otherwise, issues can slip, or even be forgotten.
Pro tip: By making sure survey scores can be surfaced on a dashboard as a KPI — across all business levels — you will dramatically improve your ability to take actions based on audit data.
Moving from standard audits to real-time review
Auditing is a powerful tool, but one that is limited by its scope and time-specific focus. Real-time and continuous review of business performance data can augment standardised audits with more regular review, and further improve outcomes. The right business intelligence tool will help you do just that — along with simplifying your ability to follow up on audit results, communicate actions and track success.
Full disclosure: We built our business intelligence tool, Loop, to deliver such real-time insight. Using audit-focused business intelligence software (like Loop) not only improves the outcome of audits, it makes them simpler, faster to conduct, and an integral part of your business intelligence data strategy. For example, you can contextualise audit data with standard business intelligence, and review results using a balanced scorecard, or customisable dashboards. Fundamentally, audits carried out in this way become learning and improvement vehicles rather than merely enforcing compliance.
Understanding audit data in the context of other franchise network data will give a truly holistic picture of your network. You move your audits to the next level and gain insight into the processes and priorities across your franchise. You seamlessly go from information gathering to visibility in shared dashboards, to analysing problems, to actionable insights and putting things right.
Suggested reading: If you want to learn more about Loop, check out our article — 3 Business Intelligence Problems We Build Loop to Resolve.
Without actions and context, audits won’t help — no matter how many you conduct
Data without action is meaningless. It’s vital to create a cycle of transforming audit data collection into KPI-driven goals and activities. Audit success means managing the conversation between you and your franchisees in a way that fosters openness and collaboration. This is what we built Loop to deliver — and what moving to “real-time review” is really about.
You communicate actions: what needs to be done, why, and how to measure results; who will do it, where, when, and how. You turn audit insights into actions and outcomes.
Effective communication is one of the most significant challenges franchises face. Your franchisees are all different in some respect. They’ll have diverse work experience, different ways of doing things, different priorities, and they may even have other franchises too.
By moving your audit approach to near real-time review, you can assess and manage brand consistency across your network while recognising differences. All franchise outlets can still adhere to brand guidelines and operating practices. You ensure consistency in how each franchise reports back while centrally orchestrating how your extended business performs and improves. That should be your goal for 2021, book a demo if you want to learn more about how Loop can help you achieve exactly that
