Franchise Compliance Audits, which is also widely known as Brand Audits, discreetly evaluate franchisees to ensure corporate standards are being met. Franchise locations should not look or operate differently. There should be consistency in pricing, product quality and overall customer service experience. A Franchise Compliance Audit will be helpful to discover any potential non-conformity in the customer experience and enlighten opportunities for franchisee improvement. This will not only help franchisors to evaluate franchisees and improve their sales performance, but it can also act as a testimonial if a franchise is terminated due to violation of franchise agreement.
Whenever there is a Franchise contract between two parties that requires some form of self-reporting and payment, underreporting can occur. While approximately 20-30 percent of underreporting is a result of fraud, about 40-50 percent is due to interpretation issues and a large proportion of it stems from human error.
As a franchisor, a franchisee compliance audit program can help you avoid the fate of leaving money on the table and determine whether the underlying data reported by franchisees is correct. Such a program also ensures that both parties fully understand the franchisee contract and can identify and address misunderstandings that often exist.