Tax, Accounting and Auditing Services for Franchisors
Accounting for franchise fees, royalties, incentives and the variety of other transactions typical in franchise businesses can be complex.
Special Accounting Rules
There are special accounting standards that apply to the timing of recognizing revenues and expenses for franchisors, and the consistent application of these standards is critical to the preparation of accurate financial statements.
Accurate and timely financial reporting is a fundamental business issue for franchisors, because the Federal Trade Commission (FTC) and Department of Commerce require audited financial statements to be included in the annual Franchise Disclosure Document (FDD.) The FDD is a legal document that the FTC requires franchisors provide to franchise candidates at least 14 days prior to a sale. A FDD is intended to give candidates the information they need to make a wise decision on whether or not to buy a particular franchise.
FTC rules require that all franchisors update their FDDs within 120 days of their fiscal year end.
Managing the Critical Path
We work with our franchisor clients help them meet their reporting deadlines. This process hinges on good planning, developing a critical service path with milestones and clear communications, and following through to help ensure a timely and accurate report. We have found that our clients appreciate our relentless focus in this process, and the timely service it yields.