Working with a major fast-food franchise and running into LOA issues. Corporate wants us to audit all 340 locations but individual franchisees are the account holders and pay the utility bills directly. Some franchisees are cooperative, others don't want corporate involved in their operations. Has anyone dealt with this franchise vs corporate audit authority issue before?
Franchise operations - who signs the LOA when franchisee pays the bills?
George, this is tricky territory. Legally, the account holder has to sign the LOA - that's the franchisee. Corporate can't authorize access to accounts they don't control. We've had success when corporate offers to share any recovery 50/50 with franchisees. Money talks and suddenly they're more willing to sign.
Ed's right about the legal side. I've also seen franchise agreements that give corporate certain rights over operational expenses including utilities. Might be worth checking if that language exists in their franchise contracts. Could give you the leverage you need without having to negotiate with 340 individual owners.
Thanks Ed and Wanda. The 50/50 recovery share is a good angle - I'll propose that to corporate. Wanda, I'll ask about the franchise agreement language too. Hadn't thought to look there for utility audit authority. This could actually turn into a nice recurring revenue stream if we can get the framework right.