How to improve visibility in franchise networks

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Lise Stothart is the Chief Financial Officer of San Churro – a nationwide chocolateria franchise. She introduced Xero into its franchise network several years ago. Her goal was to increase visibility and efficiencies between the support office and franchise partners.

Now, several years on, Lise explains why Xero is so highly-regarded by San Churro’s franchise partners and the support office alike.

“I started in this role in 2011, which began as a management accounting role at the time,” says Lise reflecting on her first day in the role, which has since grown to become CFO of the nationwide franchise network.

“Back then we wanted to integrate everyone’s accounting functions, which were scattered across previous platforms at the time. This was making it difficult to have the visibility we needed, and Xero was very much part of the decision to take this step.”

Trialling Xero in two stores

The first step was to start small and trial two stores to use Xero, and also centralise bookkeeping operations externally.

“To begin with, our two new franchise partners in Perth agreed to take part in the Xero trial – and also partner with our bookkeeper,” says Lise. “This way, we could test not only the efficiency of Xero, but also how it would work to centralise bookkeeping operations alongside this.”

Centralising subscriptions

This risk averse step paid off, with the two franchise partners choosing to keep Xero as their platform of choice beyond the trial. The decision was then made to retain the centralised bookkeeping model and roll Xero out throughout the franchise partner network.

However, Lise says that a valuable lesson was soon learned when it came to rolling Xero out across the network.

“From an efficiency perspective the trial worked really well,” she confirms. “So then we started to roll it out over the coming years, yet we made the mistake of allowing franchise partners to set up their own Xero accounts.

“It wasn’t until we were set up with the partner edition, when we owned all the subscriptions at the support office, that we could pass on the real benefits of Xero to the whole franchisee network.”

Transparent conversations of a real partnership

By owning the subscriptions at the support office level, visibility and transparency soared.

“By being able to access the financials of any franchise partner, and for them to know that we had this visibility, it significantly aided our conversations with franchisees. It helped us to really partner with them.

“It really helps that now we can understand how franchisees are going by accessing their numbers at any time. We can see who is doing really well, who is struggling, who needs our help and so forth.”

Boosting franchisee financials

These insights have brought tangible results, says Lise who reflects on one such example.

“We had one franchise partner who was struggling,” she says. “They took on a business that was initially very successful yet performance was soon lower than expected.

“We worked closely with him to see how the financial health of his business could be improved. Xero helped us is to drill into his loan account in more detail. It was here that we could see he had stretched himself. His loan repayments were just too high.

“He switched banks and his payments have now gone down to eight times less than what he was paying. It didn’t occur to him to see this as he was working so closely in the business. However we could delve into his financials to help uncover this cause”.

“Xero is so clear and simple that you can now have these kinds of open conversations with franchise partners,” says Lise.

Stay realistic

The transition to Xero didn’t happen overnight for Lise. She explains it took several years for the entire franchise network to come onboard.

“Don’t expect it to happen overnight,” says Lise to other franchisors considering taking a similar step. “The transition will take time – yet once it starts, it happens organically. We’ve now done two years of Franchise Relationship Institute surveys across our network and the one thing our franchisees always say is that they love is Xero.”

Leverage integration

Once Xero was embedded into San Churro’s franchise network, the next step was to leverage its integration functions to fully embed certain functionalities.

“Once we embed Xero, the next step is to integrate your systems with Xero,” says Lise.

“This includes our sales system and rostering tools. It means that all the systems we’re building to support our franchise partners integrate with Xero.

“In a very positive sense this further encourages our franchise network to take on Xero.”

Partnering with experience

As a final piece of advice, Lise encourages other franchisors to partner with an accounting firm that has specific franchise experience. This has been a game changer for San Churro she says.

“I would say to any franchisor to make sure you partner with an accounting firm with franchise experience. We do this by partnering with One Ledger. They now do quarterly benchmarking across our network to report on stores, highlight risk, and help us move the direction we want to.”

A better franchisee experience

Xero increases visibility for Lise as CFO and for her team at the support office. However the day to day benefits are keenly experienced by franchisees.

“I had one franchise partner ring the other day,” she says. “He could see on Xero’s dashboard that he had a payable that was very high and he didn’t understand why. Sure enough, it turns out that he was paying too much. It was the simplicity of Xero’s dashboard that helped him spot this.”

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