Most franchise owners are aware of the Stages of Development model that Servpro Industries has created. It guides a franchise along in terms of volume, staffing, equipment and where the franchise should be in its life. The Stages board has recently revised the percentages that franchises should measure their expenses against. It is quite amazing to sit in a Board meeting and listen to a franchise owner who doesn’t have a good handle on where the money is being spent. These percentages are set up as a percentage of revenue. It doesn’t matter if the franchise is brand new or a franchise that is well established and maybe has additional licenses. The biggest expense, labor is often discussed in the board meeting, but the franchise should be in line with other expenses as well. Office expenses and marketing are just two of the other accounts to keep an eye on.
Larry gets the same question quite often-“Why aren’t we making more money”? Check the percentage worksheet at the link below. If the expenses of the franchise are out of line, this is a great place to start. There are instructions in Bulletin 4455-F from December 2013 that will help the franchise to create a P&L in QuickBooks that reflects expenses as a percentage of income. Let me know if you need/want help creating it. Could become your most useful reporting tool!