Beyond Covid-19

When change is the only constant, you need help to prepare for the ride ahead, says BDO

Covid-19 has brought into stark relief the need for businesses of all types to embrace change. This is especially true for franchises, which may operate across several different regions and response levels.

‘That’s why franchisors should take a fresh look at and truly challenge their system’s preparedness for change in the wake of Delta disruption,’ suggests Tristan Will, BDO’s Franchise and Retail Sectors National Leader. ‘After working closely with a wide range of franchisors, we’ve put together a list of key areas to consider and a practical checklist of questions for you to consider when assessing your franchise’s readiness for change.’

Prepare for the worst – expect the best

‘Operating in uncertainty means you need to prepare for the worst while expecting the best – but that’s easier said than done,’ says Tristan. ‘Fortunately, BDO has advisors in 16 locations across the country who are dedicated to helping your franchise adapt and flourish.

‘Our team has a range of expertise across numerous sectors, meaning that, no matter what part of the franchise journey you’re on and what industry you’re in, our advisors can help you refine and implement your strategy and act as a sounding board.

‘We have a bespoke knowledge of the intricacies of franchising, while our wider network includes over 900 people so, whatever your goal, BDO can help. We also provide those services no one wants to talk about - accounting and tax.

‘As a strategic partner of the Franchise Association of New Zealand, we have assisted in their webinar programme to help share knowledge among franchisors, and our Covid-19 Business Support Hub has proved essential for businesses wanting to understand developments in real time, and adapt to change. Over the past year, we’ve been focusing on a number of different areas to help our franchising clients adapt and thrive.’

3 key questions for franchisors

When assessing your technology systems, there are three key questions it helps to ask:

1. How do you feel about the integration and reliability of your systems?

2. How did they perform remotely under lockdown?

3. What issues do you need to overcome now and adapt for the future?

‘Modern systems enable you to receive information about all of your franchisees in real time, so you don’t have to wait until your regular financial review to see whether some of your franchisees are having profit problems or pending cashflow issues,’ Tristan explains.

‘BDO provides full system reviews to ensure you are using a system that’s fit for purpose. Our global partnership with Xero is a recognition of the great work we’ve done with them and with other providers to ensure you have a holistic system where payroll, budgeting, stock and point-of-sale technology all talk to each other, giving you the best possible overview of your franchise.’

Readiness for change

Knowing your business is essential for success. For franchisors, this extends to knowing your franchisees and understanding their challenges. That’s even more important during difficult times when you need detailed information to make better business decisions and build resilience across your network.

As we move into the next phase of New Zealand’s Covid-19 approach, it’s essential to take a step back and assess your business’ readiness for change. BDO has recently been assessing the 7Ps: profit, performance, people, productivity, processes, purpose and place.

‘It’s about knowing where you are currently, and working out what you need to do to get to where you want to be,’ says Tristan. ‘If all your franchisees can also assess where they’re at with these 7Ps and highlight where their focus areas are, it’s a great opportunity to start an open dialogue with them.’

‘This initial assessment then highlights what areas to focus in on utilising other tools or methodologies. Talk to your BDO advisor about the best framework to use.’

End-to-end franchising advice

Over the last 18 months, BDO’s clients have needed help ranging from evaluating and engaging new franchisees, to exiting franchisees not up to the challenge, implementing new systems, reviewing supply chains and tax restructuring. ‘And we’ve also been involved in assisting franchisors and franchisees with the banks, as getting funding has been a challenge,’ says Tristan.

‘In fact, wherever you are in the franchise journey, BDO can help. We’ve been with one real estate franchise from early on. Originally, we helped them set up new franchise arrangements and worked with lawyers to ensure their agreements were in order and included the right tax settings. Now, we offer a huge range of advice, helping them deal with day-to-day tax problems, ensuring consistent reporting, buying out original system franchisees and bringing in new systems and automation to strengthen reporting and governance.

‘Having national coverage means we can help franchisors and their franchisees – at every stage. To learn more, get in touch with your local BDO office today by heading to www.bdo.nz/franchising.’

SET YOURSELF UP FOR SUCCESS

Here’s a checklist of questions to ask as we transition through Covid-19

1. What are your challenges that need solutions immediately?

2. What ‘business as usual’ matters that you’ve been distracted from by lockdowns now need immediate attention (eg. franchisee reviews)?

3. Are your underlying technology systems fit for purpose in the current environment?

4. Have you assessed your business against the 7Ps or other relevant framework?

5. Have you reviewed your operating structure and distribution policy recently? Are you proactively managing your financial risks?

6. Have you and your franchisees completed threeway forecasts for the new environment? Are there any risk factors arising from the forecast?

7. Are your financiers on board for your plan/ requirements?

8. If you provide services or goods to NZX-listed companies, have you looked in detail at the NZX sustainable reporting requirements commencing shortly? Are you prepared to meet your customer reporting requirements?

Advertiser Info

BDO New Zealand

Contact Tristan Will

P 0-4-472 5850

tristan.will@bdo.co.nz

www.bdo.nz/franchising