Accountants for franchisees and franchisors
Franchise accounting runs inside someone else’s rules. The franchise agreement decides how royalties and marketing levies are calculated, what the franchisor sees each month, when the fit-out has to be refreshed and what happens when the owner wants to sell. What separates a strong franchise business from a tired one is usually structure, site-level reporting and timing.
New Wave works with franchisees from their first site to multi-site operators across several territories, and with business owners turning a proven model into a franchise network, across the Gold Coast and Australia. The day-to-day side is covered on the franchise bookkeeping page. This page is about the business: buying in, structuring the group, profit by site and the exit.
The questions franchise owners bring us
Is this franchise worth buying
The disclosure document, the franchise agreement and the outgoing owner’s figures tell most of the story when read together. We rebuild the site’s profit after royalties, levies, rent and award wages, check the lease term against the franchise term, price any refurbishment the agreement requires and confirm whether the purchase can be a GST-free supply of a going concern. That due diligence is done before the contract is signed.
Royalties, levies and the franchise fee
Ongoing royalties and marketing levies are generally deductible, with GST credits claimable on them. The upfront franchise fee is generally capital and not deductible, so the split of the purchase price between the franchise right, fit-out, equipment and stock matters, because the fit-out and equipment can be depreciated. We check each charge against the agreement, including whether royalties are calculated on GST-inclusive or GST-exclusive sales. For franchisors, the Franchising Code requires marketing fund contributions to be held in a separate account and reported on each year.
One entity per site, or one for the group
Many multi-site franchisees hold each site in its own company under a family trust or holding company, so one site can be sold, refinanced or closed without unwinding the rest. It does not protect owners who have signed the lease personally, and money moving between the sites, the trust and the family needs documenting, because a company’s loans to its shareholders or their associates can be caught by Division 7A. Companies under common control are also grouped for payroll tax, so the threshold applies once across the group, not once per site. We set up the structure before the second site opens.
Which sites are actually making money
Sales by site are easy. Contribution by site after royalties, levies, rent and wages is the number that decides whether to renew, relocate or sell a store. We report it monthly through a virtual CFO arrangement, with a cash flow forecast that allows for refurbishments, renewal fees and the next territory.
Selling a site, or selling the group
A resale usually needs the franchisor’s consent and may bring a transfer fee and a refurbishment, and buyers value it on maintainable earnings after royalties and the term left on the agreement and the lease. The small business CGT concessions can reduce or remove the tax on the gain where the turnover or net asset tests are met, and selling the shares in a site company rather than its assets changes the result. We prepare valuations and run the tax numbers well before the sale.
What the work looks like
- A designated team that handles each site entity, the holding structure and the owners’ personal and family entities together, on one monthly package agreed up front.
- Bookkeeping in Xero that reconciles point of sale, royalties and marketing levies, and reports profit by site.
- Tax planning in May with real numbers across every site, not a tax return in October.
- Annual review of the structure, payroll tax grouping and the royalty and levy reconciliation.
- Advisory for the group’s next move: another territory, a resale, a buy-out or a step back.
Who we work with
Franchisees and multi-site operators in food and hospitality, retail, fitness, health and beauty, home services, automotive and childcare, along with master franchisees and emerging franchisors, across the Gold Coast, Brisbane and interstate.
Getting started
Book a FREE discovery call, 30 minutes with a New Wave team member. Bring the franchise agreement or disclosure document and the last two years of site results if you have them. If it is a fit, a proposal follows within the week with the monthly package set out.