I recently spoke at a franchise convention in Nashville. Now, I’m not naive — I know exactly what people think is coming when an outsourced CFO or accountant steps up to the mic. Eyes glaze over, people brace for a lecture on spreadsheets, and someone starts thinking about lunch—but what if I told you that buried in those spreadsheets is the clearest path to growth your brand’s been missing?
Here’s the twist: I actually love these presentations. Why? Because I get to dig into their data. And more often than not, the room is genuinely surprised — not just by what the numbers say, but by the fact that the data even exists.
At this particular event, I walked the group through their sales data. We covered close rates, average proposal and win values, seasonality trends — the kind of stuff that makes strategy come alive. What struck me was how many people in the room had no idea this information was at their fingertips, let alone how to use it to make smarter decisions.
And that’s exactly the issue facing many franchisors with 50 or fewer units. Most want high-performing franchisees, but they overlook one of the root causes of poor performance: bad bookkeeping and a complete lack of visibility into financial and operational data.
Without clean books and accurate data, it’s nearly impossible to build or execute a real strategy. In fact, when something does work, it’s often more luck than intention.
This article will dive into how poor books and missing data are hurting your brand. We’ll look at the current state of franchisee bookkeeping, the challenges it causes, and what best practices actually look like — so you can raise the bar for your system.
Get professional help with your data management through Krieger Analytics’ bookkeeping services.
Learn MoreThe Current State of Franchisee Bookkeeping
Why Bookkeeping Matters for Franchise Growth
Gino Wickman, creator of the Entrepreneurial Operating System (EOS), teaches that every successful business is built on three essential pillars: Operations, Sales/Marketing, and Finance. Each plays a critical role. Operations ensures your product or service is delivered consistently. Sales and marketing bring in new business and drive growth. And finance? Finance is the backbone — the truth-teller that reveals whether the other two are actually working.
In most small businesses — especially in franchise systems with fewer than 50 units — finance is often the weakest and most neglected pillar. Franchisees tend to focus on delivering the service (operations) and generating revenue (sales), while the financials are treated as an afterthought. That imbalance leads to shaky decision-making and stalls long-term growth.
The data backs this up. There are over 4,000 different franchise concepts in the U.S., and the median number of locations per brand is just 38. Most franchises add only 2–4 units per year. According to Franchise Grade, just over 30% of brands that launched four years ago still have one or zero locations, and only 16% have surpassed 100 units.
The truth is, most franchise systems get “stuck” between 20 and 40 units. Looking back at Wickman’s three pillars, a business can often survive on strong operations and sales — but it seldom thrives without finance pulling equal weight.
Where Most Franchisees Are Today
After speaking with several groups of franchisees, one thing is clear: most of them hate bookkeeping — and numbers in general. From what I’ve observed, franchisees usually fall into one of two camps: they’re either great operators or natural salespeople.
When a new franchisee launches, they typically start with loose systems for managing their books. They might spend a few hours a week sending invoices and paying vendors. At the end of the month, they carve out an afternoon to reconcile their bank and credit card accounts. Some even glance at their profit and loss statement to see how things are tracking.
But as the business grows and other demands take priority, bookkeeping gets deprioritized. Monthly reviews turn into quarterly catch-ups, and eventually, it becomes a once-a-year scramble at tax time.
What rarely happens is this: the franchisee sitting down to actually use the data to make decisions. They don’t analyze their books to find areas where the business should push harder or pull back — and that’s a missed opportunity.
How Poor Books Stalls Franchisor and Franchisee Growth
Operational Blindness
When I presented to the group in Nashville, I showed a simple graph: the number of proposals each location had sent out over the past year. The range was striking — the top-performing location had sent out over 450 proposals, while the lowest had sent just 70.
There were audible reactions across the room. It wasn’t meant to shame the low performer or crown a champion — but it was eye-opening. I knew from previous conversations that several franchisees genuinely believed they couldn’t send out more proposals. The data said otherwise.
With that information on the table, the conversation shifted. Franchisees leading in proposal volume could share what was working. The group could brainstorm better processes, identify roadblocks, and develop a plan to level up systemwide. The brand got stronger simply by seeing what had previously been hidden.
This is just one example of operational blindness. Without clean books and usable data, franchisees are flying blind when it comes to improving performance. And franchisors? They’re left guessing how best to support or coach their teams. The result is stagnation — for units and for the brand as a whole.
And the fix? It starts with better books and better data. Working with an Outsourced CFO can help bring clarity to your data, and streamline your operations.
Inability to Mark Smart Decisions
There’s no shortage of literature on business strategy — but most of it is written for large organizations with deep pockets and big teams. For small businesses, the challenge isn’t just understanding strategy; it’s figuring out how to implement it with limited resources.
After years of working as an outsourced CFO, I believe I’ve uncovered one of the simplest ways small businesses can put strategy into action: by consistently reviewing their numbers and leveraging operational data.
When a business has reliable financials and solid metrics, it can spot trends, identify problems early, and take meaningful action. From that process, tactics emerge — and those tactics start to form real strategy.
But without good data? Strategy becomes guesswork. Tactics are often misaligned, and efforts feel like shots in the dark. Worse yet, there’s no way to measure whether those actions are actually working.
That’s why franchisees without a strong finance function are at a serious disadvantage. Without clean books and timely data, they simply can’t make informed decisions — and the entire system suffers for it.
Franchisor Frustration
The franchisors I work with genuinely want the best for their franchisees. Most invest heavily in systems for marketing and sales to support unit-level growth. They implement operational processes to improve efficiency and enhance the customer experience. And they put real effort into supporting and coaching their franchisees.
But there’s a major issue: most franchisors are flying blind. They’re addressing problems they think they see with strategies they hope will work. Without accurate, timely data, they don’t really know what’s going on — and that makes effective coaching nearly impossible.
This gap often creates tension. The franchisor believes they’ve rolled out tools and programs that should be driving growth. When results don’t follow, the blame tends to fall on the franchisee. On the flip side, the franchisee starts to believe the franchisor doesn’t truly understand their challenges or the realities of their local market. Both sides end up frustrated, spending time and energy on strategies that may not be the right ones.
Better data could break this cycle. With real insights, the franchisor could coach with confidence, tailor support to what each franchisee actually needs, and build trust across the system. And that trust? That’s what drives sustainable growth.
Brand Reputation
One of the secrets for franchisors to unlock growth is a strong brand. Brand growth typically has a multiplier effect — the systems that scale quickly often continue to attract more franchisees, more customers, and more market share. Success tends to build on itself.
Strong financial performance and happy, profitable franchisees are two essential drivers of that growth. They create momentum. They fuel validation. And they help the brand stand out in a crowded market. That’s why it’s so bewildering that many franchise brands, especially those aiming to scale, aren’t more assertive in implementing standardized systems for bookkeeping and data reporting.
Financial consistency isn’t just about clean books — it’s about brand control. It’s about protecting unit-level economics and giving leadership the insight needed to support and grow the system effectively. When franchisors treat financial reporting as optional or inconsistent, they’re effectively handing over one of the most powerful tools they have to shape the brand’s future.
Brands that prioritize financial clarity not only support healthier franchisees — they attract stronger candidates, gain more credibility with lenders, and build a foundation for long-term scalability. In short, a strong finance system isn’t a nice-to-have — it’s a growth engine.
Key Best Practices for Effective Franchisee Bookkeeping
How to Larger Franchisors Handle Bookkeeping
Some of the most successful franchise systems have long understood the power of standardized bookkeeping. Take McDonald’s, for example. Franchisees are required to use one of a small handful of approved bookkeeping providers. This ensures consistency in financial reporting, streamlines benchmarking across locations, and allows corporate to identify trends and outliers quickly. As a result, McDonald’s is able to make data-driven decisions at the brand level — and provide targeted support to franchisees who may be underperforming.
Other systems have followed suit. Brands like Two Men and a Truck and Servpro have centralized much of their financial reporting by partnering with dedicated bookkeeping vendors or offering in-house accounting services. These systems don’t just promote financial consistency — they enforce it. Franchisees are expected to submit timely and accurate financials each month, often through pre-formatted templates or cloud-based portals that feed directly into the franchisor’s analytics tools.
The benefits are clear. Franchisors with access to clean, real-time financial data can coach more effectively, roll out strategic initiatives with confidence, and quickly identify which units are thriving and which are struggling. Meanwhile, franchisees benefit from professionalized books, better tax compliance, and actionable insights into their own businesses — without having to become accounting experts.
Perhaps most importantly, these systems build trust. When both the franchisor and franchisee are working from the same data, conversations shift from blame or confusion to problem-solving and collaboration. In an industry where growth often stalls due to misalignment, standardized bookkeeping can be a catalyst for system-wide performance.
Watch This Video: Key Best Practices for Effective Franchisee Bookkeeping
Six Best Practices
If you want better data, it starts with better books — and that means building systems that are standardized, streamlined, and scalable across all locations.
Standardized Chart of Accounts across all locations
Creating a franchise-wide chart of accounts ensures consistency in how financial data is recorded and reported. This allows for apples-to-apples comparisons between units and makes it easier for franchisors to identify trends and anomalies.
Monthly Book Closings
Books should be closed every month — not quarterly, and definitely not just at tax time. Automating the close process with clear procedures or outsourced support keeps financials timely and accurate.
Cloud-Based Accounting Software (e.g., QuickBooks Online)
Requiring franchisees to use the same cloud-based platform allows for centralized access and consistent formatting. It also reduces the friction of trying to pull reports from 20 different systems.
Outsourced Bookkeeping Services that specialize in franchising
Consider partnering with a franchise-savvy bookkeeping provider. This eliminates the variance you get from each franchisee using a local bookkeeper and ensures every unit gets books done right, on time, and in a consistent format.
Financial Reviews
Numbers alone don’t drive performance — interpretation does. Regular financial reviews help franchisees understand their data and take action. It also opens up more meaningful coaching opportunities for the franchisor.
Franchisor Portal or dashboard to centralize data reporting
Having a single place where unit-level financials are submitted, reviewed, and benchmarked is a game-changer. Whether it’s built in-house or through a third-party platform, a dashboard allows the franchisor to track performance across the system in real time.
Core KPIs Every Franchisee Should be Tracking
When I work with franchise systems, I typically develop 3-5 custom KPIs based on their business, industry, and data available. However, there are several KPIs that should be tracked in almost every system.
Good data is only useful if it’s tied to the right metrics. Below are essential KPIs every franchisee should be reviewing regularly — ideally with benchmarks provided by the franchisor:
- Gross Margin – Are you pricing correctly and managing cost of goods?
- Labor % of Revenue – Is your staffing efficient and sustainable?
- Marketing Spend % – Are you investing enough in lead generation — or too much? The next level metric is look at customer acquisition costs (see below).
- EBITDA or Net Profit Margin – What’s actually hitting the bottom line?
- Average Ticket Size – Are you maximizing every customer interaction?
- Customer Acquisition Cost – Are your marketing dollars delivering results?
- Cash on Hand / Cash Burn – Can you weather a slow month or unexpected expense?
- Break-even Revenue – Do you know how much revenue it takes just to cover costs?
Bonus: KPI Trends Over Time
Looking at a single month of data can be misleading. Trends tell the real story. Every franchisee should be tracking these KPIs over time to spot growth opportunities — or looming issues — early.
Conclusion
To build a powerhouse franchise, you need more than just a good product—you need a solid financial foundation. Clean books and consistent KPI tracking aren’t just operational tasks—they’re game-changers. They provide the insights you need to make smarter, data-driven decisions, enhance coaching conversations, and accelerate brand growth.
When your books are organized, every decision is backed by clarity. And with the right data, your systems perform at their peak.
Better books = Smarter decisions = Explosive growth.
“Krieger Analytics has connected me with experienced, honest leaders in the industry and beyond. If they make a referral or recommendation for you, listen. You will not get more realistic observations and insights in a more succinct, direct manner from anyone else.”
How Krieger Analytics Can Help
Messy books are more than a headache — they’re a liability. If you’re spending your time chasing down numbers, wondering if your reports are accurate, or worrying about cash flow surprises, it’s time for a smarter solution.
We’re excited to now offer our Franchise Bookkeeping service, tailored specifically for the unique needs of franchisors and franchisees. We don’t just keep your books clean — we give you the clarity and confidence to reach your full potential. Our expert team delivers consistent, reliable financials you can actually use to make informed decisions and grow your business.
Whether you’re running one location or scaling across multiple territories, we’re here to help you stay ahead of the curve, spot red flags before they become problems, and finally take bookkeeping off your plate — for good.
