Importance of Franchise Operations Audits for Sustainable Brand Growth

The success of any franchise system depends largely on the ability of the business owner to ensure that standards are maintained and executed the way it is designed. This is to ensure the consistency across the system, from branding, marketing, merchandising to customer service and quality of product. When left to various stakeholders to manage, the effectiveness of the business system comes under pressure as different people have differing views of standards.

Audits are one way to maintain standards to ensure quality across the franchise system. Audit initiatives need to be properly planned, communicated and executed to gain support from everyone in the ecosystem.

Franchise Operations Audits

Operations audits are more comprehensive and go beyond financial data reporting of the franchise business.

Operations audits are a ‘deep dive’ into every facet of franchise management.  The various aspects of an operations audit are usually captured in the Standard Operations Protocol (SOP) of any business. The operations audit is often an extract of the SOP, where the protocols are delivered in a form of a checklist and for either the operators or internal auditors to assess level of standard compliance. These audits may be used to deliver various outcomes and can be implemented internally either by managers, or by internal field auditors and in the case of a franchise system, by the franchisor to ensure that the operational aspects of the business are on track.


Different Aspects of a Franchise Operations Audit

As the Franchise Operations Audit often follows closely to the Franchise SOP of the business, operations audits have subcategories that cover specific business functions and operations:

Financial Audits or Review: Financial audits focus on financial controls as they relate to reporting of overall sales performance. These audits help ensure that outlets are reporting performance accurately with no discrepancies between reported sales, invoices and inventory.

Daily Operational Audits: The day to day operational activities (i.e. staff appearance, conduct, store appearance, store readiness, product quality, customer service, inventory, and hygiene standards) are key areas that need to be audited to ensure maintenance of sustainable quality standards and fulfilment of the Brand Promise to consumers.

Information System (IT) Audits: Information systems audits investigate overall infrastructure and networks, technical operations, data center operation, and project management. It also reviews security status and procedures.

Marketing Audits: A marketing audit is a broad-based audit into the marketing aspects of the business. How a brand is represented by individual units in a franchise system is important to sustaining brand equity. An audit holds both an external situation analysis and a thorough review of internal marketing practices, alignment of goals, strategies, capabilities, processes, and systems. The result of the audit offers actionable recommendations to improve progress toward the business’ overall brand building objectives.

Implementing a Franchise Operations Audit System

When implementing an operations audit, business owners need to first identify the key areas that influence the brand’s operational efficiency. A lot of these factors are drawn from the Franchise Standard Operations Protocol (SOP). Identifying the key processes and breaking them down into key sections and then listing them down into piecemeal, identifiable and measurable processes become the cornerstone of the audits.

For enquiries on designing your own franchise audit system, contact [email protected]

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