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Chapter 5. Selecting and Monitoring Fran... > Monitoring and Controlling Financial...

Monitoring and Controlling Financial Reporting

Financial controls are typically designed to protect the financial interests of the franchisor. Because franchisor compensation is usually based on a percentage of sales, ensuring that all sales are reported is a key element to protecting the company’s financial interest. The most basic concern of franchisors is therefore efficient reporting of sales. The process of collecting financial data enables you to establish a more thorough monitoring and control system.

One advantage of having a broad-based information technology monitoring system is that with it you can capture every aspect of the business, from sales to inventory, to marketing, to labor hours, in an easily aggregated, understandable, and transferable form. The best way for you to capitalize on such an information system is to set parameters both positive and negative, above and below which the controller will organize an exceptions list of variances that will help focus the auditing process on the line items or stores that fall outside the accepted parameters.


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