Let’s first look at what a compliance audit involves. It is an independent evaluation that ensures that an organization adheres to laws, regulations, policies, and procedures, whether they are laws, rules, or regulations. Also, they provide insight into whether a company is compliant with agreements. Most people are familiar with financial audits, like those of public companies through Financial Intelligence Centre Act or of individuals and corporations done by the South African Revenue Service (SARS).
In auditing the bottom line of the franchisee’s business, many other elements become important – whether the franchisee is providing the franchisor with the necessary reporting regularly, like a monthly profit and loss statement, budgets, etc, and whether this is done on a timely basis. Performance audits should dig deeper into the engagement of franchisees within the franchise system by examining whether they attend meetings and conferences and if they send team members to franchisor-facilitated training programs.
An organization’s shopfront, office, and even vehicles are how the public perceives it. For long-term success, it is critical that these standards are always met. This involves auditing the premises for cleanliness, accessibility, health, and safety obligations, and ensuring equipment is maintained properly.
This includes:
Compliance with the range of core services
Using approved and preferred vendors
Display and merchandising of products
Maximizing sales through product mix ratios
Franchisees should be provided with a corporate style guide that details what they can and cannot do with brand elements, what type of social media they can use, etc. It is important to mention uniforms and other standards that franchisees and their employees must adhere to.