Franchisors 

What We Do for Franchise Organizations

Royalty and Business Standards Assurance

A franchise concept is based on independent franchise owners paying a percentage of their unit’s sales to the franchisor for the right to use the name, recipes, production methods, etc. There are many ways for a franchise owner to intentionally underreport sales to the franchisor, thereby reducing the amount they pay in royalties.  A few methods of underreporting may include:

• Voiding sales, refunding, item deleting, and failure to ring all transactions.
• Ringing sales in training mode.
• Not recording outside catering sales.
• Using unauthorized registers at varying times during hours of operation.
• By reporting and paying fees on a sales number less than what the sales actually were.

Solutions to Prevent Underreporting & Improve Operating Standards Set by Franchisor

Our primary objective is to create a program for each client meant to deter underreporting of sales, and to determine if franchised stores and restaurants are in compliance with policies and standards. The Mershimer Group combines the use of various tools, including consultations, audits, investigations, mystery shops, awareness materials, etc., to create an atmosphere of sales reporting integrity. 

These programs consist of some or all of the following components.

FRANCHISE ROYALTY AUDITING: We will conduct franchise audits using your existing audit template or one that we create together. The audits will be used as training tools for your Franchise Owners as well as to identify underreporting and theft indicators.

UNDERREPORTING INVESTIGATION & DOCUMENTATION: Franchised stores can be investigated as needed to help obtain evidence of underreporting, unauthorized transfer, unauthorized distribution and supply channels.
INTEGRITY & STANDARDS SHOPPING: Mystery shops can include any components as directed by the client. Are sales being recorded into the register, is money being placed in the register, etc.

UNANNOUNCED PROBLEM STORE VISITS & CONSULTATIONS: Visits are used to raise awareness, deter underreporting of sales, and to provide independent guidance to Franchisees on various loss prevention standards, which will deter employee theft in their businesses.

BUSINESS STANDARDS EVALUATIONS: Using our national workforce we conduct standards inspections as frequently as required by client. Reports of findings and areas of serious non-compliance are presented to our client’s legal department in the form of an actionable data. This will allow our client to follow up on issues using curable non-curable defaults.

Work done to date with other global, franchise organizations have demonstrated significant income results, and sales increases after the program has been in effect for a period of time. It takes high visibility, consistent and regular communication of program components and success stories, to realize a “halo” effect in sales and raw material to sales yield system-wide.

Potential results Can Include:

• Higher royalty collections on the same customers and raw materials.
• Reduced cash, inventory and food loss, with Improved food, labor, and paper costs
• More informed and profitable Franchise Owners
• Wealthier Franchise Owners = More profitable Brand!!