The books behind one franchise location
Updated 16 October 2026
A franchise location keeps the same books as any small business, plus a set of accounts for the charges the brand collects. This page lists the reports, the accounts and the monthly routine, with one worked example from a brand's 2026 Franchise Disclosure Document (FDD) in each section. The FDD is the document a franchisor gives a buyer before a sale.
Three reports
| Report | What it shows | How often |
|---|---|---|
| Profit and loss statement | Sales, costs and profit for a period | Every month |
| Balance sheet | Cash, money owed to the business, money the business owes, and the owner's stake on one date | Every month |
| Cash flow statement | Where cash came from and where it went in a period | Every month |
The profit and loss statement is the report a brand's FDD compares with. Brands that publish costs in Item 19, the FDD's sales and profit section, publish them as lines of a profit and loss statement.
The Goddard School's 2026 FDD lists its average mature school's profit and loss in five lines: revenue of $2,507,631, wages of $968,761, building costs of $329,645, other costs of $662,671 and profit of $546,554. A Goddard owner whose monthly statement uses the same five lines can compare with the FDD every month.
One account for each brand charge
The chart of accounts is the list of categories a business records its money in. A franchise location gives each brand charge its own account: royalty, brand fund, local advertising, technology fee, and any required supplier program. One combined "franchise fees" account hides which charge moved.
Club Pilates charges an 8% royalty, a 2% brand fund, 2% local advertising and a $550 monthly technology fee. At its average studio sales of $987,810, that is $79,025 of royalty, $19,756 of brand fund, $19,756 of local advertising and $6,600 of technology fee a year. Four accounts carry four lines that total $125,137.
The monthly close
The monthly close is the routine that finishes a month's books: every bank and card account matched to its statement, every bill recorded, and the reports produced. A close finished by a set day each month gives the owner the month's figures while they can still change the next month.
i9 Sports reports average sales of $514,066, or $42,839 a month. Its fees total 10.31% of sales, about $4,417 a month. An i9 Sports owner closing by the 10th of each month sees the prior month's sales, fees and wages against those figures within ten days.
What the royalty is charged on
The franchise agreement defines the sales the royalty is charged on. Some brands charge on money collected and some on money billed. Gift cards, discounts and refunds each have a treatment in that definition. The books record sales the same way, so the royalty can be checked line by line.
Woodhouse Spa collects royalty weekly on point-of-sale sales, including gift cards. The average franchised Woodhouse spa sold $851,161 of gift cards in 2025, so $51,070 of its 6% royalty was paid on treatments still to be delivered. The books record those gift cards as money owed to customers until the treatment happens.
The opening budget
Item 7 of the FDD is the table of estimated costs to open. Each line of Item 7 becomes a line of the opening budget, and the actual spend is recorded against it. Equipment and build costs go on the balance sheet. Pre-opening wages and rent go through the profit and loss statement.
i9 Sports lists a cost to open of $59,900 to $69,900. The Goddard School lists $1,003,500 to $8,908,000. The low end of Goddard's range is 16.8 times the low end of i9 Sports' range. Both owners record the actual spend against the Item 7 lines, line by line.
Common gaps in franchise books
- One account for all brand charges, so a new fee cannot be spotted.
- Sales recorded on a different basis from the royalty definition.
- Gift card and membership cash recorded as sales on the day it arrives.
- No profit and loss for each location when an owner has more than one.
- A close with no set date, so figures arrive weeks late.
The median brand in Averan's library of 431 FDDs charges 9.00% of sales in fees. On the median location's $748,885 of sales, that is $67,400 a year. A $1,000 monthly change in one charge moves the total by 18%, and a single combined account shows only the new total.
What this means for an owner
A franchise location needs three monthly reports, one account for each brand charge, and a close finished by a set date. The royalty definition in the franchise agreement decides how sales are recorded. Gift cards and memberships are money owed to customers until the service is delivered. Item 7 sets the opening budget, and each actual cost is recorded against its line. With those in place, the owner can compare each month with the brand's FDD.
Check one location
The Franchise Numbers Check is a free tool on this site. It takes one location's figures and sets them against the brand data Averan has published.
Where to next
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If you want this done for you
What happens next
Reading about it and having it done are different things. Here is exactly what happens if you want the second one.
- The call takes thirty minutesYou describe the business and where the numbers are letting you down. We give you an expert view of your situation, and what we would start with. There is no pitch deck.
- We look at the fileYou give us read access to the books as they are. We come back with what is wrong, what it will take to fix, and whether the answer is bookkeeping, controller work, or something else.
- We send a written scope and a priceIt lists what we do each month, what you get, the date it lands and the fee. We agree it before anything starts, and it does not change unless you agree.
- We take over the books and close the first monthWe set up access and systems and enter the opening balances. The first close lands on the date in the scope, and every one after it does too.