Franchise Owners
Royalty tracking, franchisor reporting, and unit-level profitability for single and multi-unit franchise operators.
The Industry
Franchise owners operate businesses within a system they did not design. Every dollar of revenue comes with obligations attached. Royalties calculated as a percentage of gross sales. Marketing fund contributions on top of that. Required purchases from approved vendors at prices you did not negotiate. The franchise disclosure document showed projected unit economics, but your actual performance depends on your market, your team, and your execution. The gap between projections and reality is where most franchise owners live.
The franchisor relationship creates accounting complexity that most businesses never deal with. Monthly or quarterly financial statements submitted in specific formats. Sales reported through POS systems that feed franchisor dashboards. Financial covenants in your franchise agreement that define what default looks like. For multi-unit operators, each location needs separate tracking while franchisors often want consolidated reporting. Miss a deadline or submit incorrect numbers and you receive default notices that create stress and damage the relationship.
Who This Covers
Who This Covers
Single-unit and multi-unit franchise operators across QSR restaurants, service franchises like cleaning or home repair, and retail franchise systems. Anyone operating under a franchise agreement with royalty obligations, marketing fund requirements, and franchisor reporting deadlines. Franchise owners in the Merrimack Valley and Greater Boston looking for accounting support that understands their specific situation.
What Makes It Complex
What Makes It Complex
Royalty calculations based on gross sales, not net profit. Marketing fund contributions tracked separately from royalties. Financial reporting in franchisor-required formats on their timeline. Franchise fee amortization over the license period instead of expensing upfront. Multi-location accounting with unit-level P&L statements. SBA loan reporting requirements if that is how you financed the unit. Payroll across multiple locations with different staffing levels and schedules.
What We Handle
Royalty tracking has to be accurate because franchisors audit. The definition of gross sales matters. What counts as revenue for royalty purposes varies by franchise agreement. Some agreements exclude certain revenue streams. We track sales by location, calculate royalty obligations according to your specific agreement terms, and reconcile against what the franchisor claims you owe. Marketing fund contributions get tracked separately so you see both obligations clearly on your financials. Franchisor reporting gets produced on their timeline because late submissions create problems you do not need.
Multi-unit operators need to see each location as its own business. Unit-level P&L statements showing revenue, labor, cost of goods, occupancy, and contribution margin tell you which locations perform and which ones struggle. Consolidated reporting shows overall business health while location-level data informs operational decisions. If you financed through an SBA loan, those come with their own reporting requirements and financial covenants. We handle the covenant calculations and produce the financial statements your lender needs to see throughout the year.
Royalty and Franchisor Compliance
Royalty and Franchisor Compliance
Accurate gross sales tracking for royalty calculations based on your franchise agreement definition. Marketing fund contribution tracking kept separate from royalty obligations. Financial reports in franchisor-required formats delivered before deadlines. Franchise fee amortization over the license period with proper accounting treatment. Documentation and records organized for franchisor audits.
Multi-Unit Economics and Lender Reporting
Multi-Unit Economics and Lender Reporting
Unit-level P&L statements showing true location profitability after all costs allocated. Consolidated financial statements for overall business health and lender reporting. SBA loan covenant compliance monitored throughout the year. Labor percentage, food cost or COGS, and key operational metrics tracked by location. Payroll processing across multiple locations with proper tax handling.
What Goes Wrong
Franchise owners who do not track gross sales precisely underpay or overpay royalties. Underpay and the franchisor audit catches it, often with penalties and interest. Overpay and you are giving away margin you did not have to. Gross sales definitions are specific to each franchise agreement. Some agreements exclude catering revenue, gift card sales until redemption, or certain promotional discounts. If you are not reading your agreement carefully and accounting accordingly, you might pay royalties on revenue that is actually exempt.
Unit-level profitability gets murky without proper accounting. A location looks profitable because the registers are busy, but when you actually allocate labor, occupancy, supplies, and all costs, the margin is thin or negative. Multi-unit operators often subsidize struggling locations with cash from performing ones without realizing it. When it is time to decide whether to renew a franchise agreement, open another location, or close an underperformer, the decision happens based on gut feeling instead of actual numbers.
Royalty and Reporting Issues
Royalty and Reporting Issues
Incorrect gross sales calculations leading to royalty disputes with the franchisor. Late financial reports triggering default notices under the franchise agreement. Franchise fees expensed immediately instead of amortized over the license term. Marketing fund contributions lumped together with royalties making it hard to see true obligations. Franchisor audits that turn up discrepancies because the books do not match what was reported.
Hidden Unit Economics
Hidden Unit Economics
Locations that appear profitable on the surface but are not when all costs get allocated. Cash flowing from strong units to weak ones without visibility into what is happening. Expansion decisions based on revenue growth instead of actual unit profitability. SBA loan covenant violations discovered at year-end instead of addressed proactively. Renewal decisions made without understanding whether the unit actually makes money.
What Changes
Royalty calculations become defensible. Gross sales tracked according to your franchise agreement definition with documentation supporting exclusions where they apply. Reports submitted to the franchisor on schedule in the formats they require. When the auditor shows up, your books match what you reported. No surprises, no disputes, no default notices for administrative failures. The franchisor relationship stays clean because the financial side is handled properly.
Unit-level visibility shows actual contribution margin by location. You see which units make money and which ones drain resources. Expansion decisions become data-driven. You know what revenue a new location needs to hit profitability based on actual performance from existing units, not the projections from the franchise disclosure document. SBA loan covenants stay in compliance because you are monitoring them monthly instead of discovering problems at year-end. You operate from a position of knowledge rather than hope.
Compliance Confidence
Compliance Confidence
Clean royalty calculations that reconcile to franchisor records. Financial reports delivered before deadlines in required formats. Franchisor audits that go smoothly because your books are accurate and organized. Marketing fund tracking, amortization schedules, and all reporting requirements handled consistently. No default notices, no disputes, no relationship damage from administrative failures.
Growth Decisions Based on Data
Growth Decisions Based on Data
Unit-level P&L statements showing true profitability by location after all costs allocated. Clear visibility into which units perform well and why. SBA loan compliance maintained throughout the year with proactive monitoring. Expansion analysis grounded in actual unit economics from your existing locations. Renewal and closure decisions made with real numbers instead of guesses.
The Merrimack Valley's Trusted Accounting Partner
The Next Step:
A 15-Minute Call
Tell us about your business and what you're dealing with. We'll listen, ask a few questions, and give you a straightforward quote.