November 16, 2022

A Look at Franchise Operational Audits

“It takes 20 years to build a reputation and 5 minutes to ruin it.”Warren Buffet  


In franchising, brand is the most valuable asset. Any business in history that has closed because of bad customer experience that stems from outdated practices and inconsistent quality control procedures can vouch for philanthropist and investor Warren Buffet’s quote.  

Maintaining brand consistency across all franchise units creates loyal customers, and for franchisors to achieve it, franchisee compliance with all brand procedures, practices, and standards is necessary. However, ensuring that all franchisees follow through is not easy.  

Every time franchisors onboard a franchisee, they often follow the most common pattern – screen new franchises, delegate branding guides, and delegate standards and training manuals. Yet as time goes by, each franchisee finds their way of doing business to make their franchise successful. While this happens, franchisors must ensure that all brand guidelines are maintained, and franchise operational audits allow this by giving visibility into individual franchisee performance and improving operations.  


What a Franchise Operational Audit is  

Franchise Operational Audits are often achieved by thriving franchisors who want to ensure their franchisees follow the brand guidelines. A franchise operational audit is rolled out in forms of a one-on-one meeting between a franchisor (franchise auditor for some cases) and a franchisee, or could be an ad hoc.  

The word mystery shopper may not be new to you. This is sometimes a way to audit the franchise operations of a unit without the franchisee knowing. Nevertheless, whichever kind of franchise operational audit a franchisor may choose to conduct, what they look for typically remains the same and can include the following:  

  • Use of brand logo and advertising  
  • Staff Appearance and Hygiene  
  • Customer Service  
  • Food Safety Practices  
  • Store Cleanliness  
  • Equipment and Plumbing  

A franchisor committed to growing the business and helping franchisees succeed must implement a well-designed franchise operational audit. It is meant to keep the brand’s reputation strong in the long run.  


Benefits of Implementing Franchise Operational Audits  

Many well-known franchise companies rely on operational audit process to maintain brand standards, address concerns, and ensure individual franchisee success. Some of the benefits are the following:  

  • Implement brand guidelines: Even the experts use guidelines and checklists to hold themselves accountable and produce reliable and consistent work. Each business area’s standards are most likely to be met when franchisees know there are consistent checks.  
  • Gain operational visibility: When franchisors base franchise operational audits on customer-based metrics and Key Performance Indicators (KPIs), they can better assess how well operations at different locations are faring. It also identifies any gaps in operations leading to risks that can be addressed to enhance revenue potential.  
  • Improved operational performance: Franchisees are inspired to improve their operations by regular audits, reinforcing standards the franchisor set forth. When franchisors have visibility on how individual franchisee performs, they gain actionable insights that help to focus on key business areas that need improvement.
  • Build conversation: Franchise operational audits ensure quality assurance that opens more discussion on what actions must be taken to resolve non-compliance faster or how to assist the franchisees with their needs better.  
  • Forecasting: Gathered operational data from audits can help franchisors plan to improve the production of goods or services in advance. When forecasting is maximised, franchisors can save resources and reduce expenses.   
  • Attract franchisees: A brand with consistent customer experience across every location naturally attracts franchisees looking to invest in a stable and growing brand.   


Getting the Most Out of Franchise Operational Audits  

To maximise the use and effectiveness of franchise operational audits, some things must be considered. 

  • Feasible audits: Auditing hundreds of questions on an Excel sheet or clipboard is time-consuming and inefficient. Software like TreeAMS can help streamline the process, saving auditors time to focus on problem areas. In addition, auditors will be able to provide staff with best practices because they have the time to do so.  
  • Conduct micro audits regularly: Auditing franchisees quarterly or annually gives a limited understanding of business operations. And when a new franchisee or employee comes in, daily checks become essential to improve accountability and efficiency. In addition, keeping franchisees connected and engaged with franchisors is easier by auditing their locations more frequently. Using a mobile-friendly platform like TreeAMS, franchisors can track day-to-day operations more effectively. Thanks to real-time notifications, important tasks are less likely to be overlooked, and the inbuilt audit scheduler allows franchisors to plan internal and external audits so franchisees can be assessed holistically on a daily basis and periodically.  
  • Accessible anytime, anywhere: Audit reports contain data that can be used by the headquarter to identify problem areas, build training programs, and make data-driven decisions. Reports can indicate areas where franchise or employee improvements need to be made, but this becomes complicated when it’s stored in spreadsheets or paper checklists. TreeAMS audit feature lets franchisors or auditors automatically draw out and generate reports on the same dashboard. Audit outcomes are reflected in the system, and reports can be generated in real time.  
  • Track corrective actions: Franchise audits identify and correct issues, but they lose some of their value if they do not provide and track actionable solutions. Automating the transfer of audit results into spreadsheets and emails improves response time. In addition, it makes it easier to manage issues that arise and prevent those from turning into patterns that affect customers. Cloud-based software like TreeAMS automates audits, and failure recovery is made easy with automatic alerts and follow-up action plans, allowing more efficient checks and balances.  
  • Compare performance: Having a unified view on one single dashboard of a franchisee’s performance against another franchisee or the entire franchise network reveals common failures and successes. A multi-functional audit tool can easily compare franchisee or network performance and identify areas for improvement quickly.   




If leaving a legacy by building a brand that scales sustainably is the goal of every franchisor, regardless of the current state of the business, it’s still never too late to design and implement franchise operational audits.

Along with financial audit, conducting franchise operational audit ensures that every franchisee is committed to maintaining the brand reputation as their top priority. Franchisees’ compliance with all brand procedures, practices, and standards is now possible with emerging technologies focused on improving franchise operations for a consistent brand experience for customers in all locations.