A chief financial officer (CFO) for a franchise organization is a unique role in business and has obligations to two very different stakeholders. On one hand, the CFO has a fiduciary responsibility to the franchisor as a business entity to provide accurate and insightful financial information.   On the other hand, the CFO has a responsibility to the franchisee to present business model financials and best practices to franchisees who range from having limited experience in running a business to being successful multi-brand operators focused on building a business portfolio. 

Most often, it is the established brands that have CFOs as part of their leadership team, and yet, emerging brands could really benefit from a financial advisor who is focused on helping them reach their goals. The CFO in franchising has a significant depth of impact across the entire franchise system.


The CFO and the Franchisor

When working with the franchisor, the CFO has two lanes of focus. 

The first is to advise the franchisor on the financial elements impacting its business. This means being current with macro-level information about the economy and applying a forward-thinking lens to issues and opportunities that could be forthcoming. For example, when inflation and interest rates are on the rise, that can impact available capital options or increase debt servicing obligations Solutions that target how to offset increased expenses will be critical to mitigating any risk for the organization and increasing the franchisor’s bottom line.

A macro-level view of the industry is also a key component of the CFO’s role. Knowledge of any changes to tax, FDD or wage regulations across all states and countries where the franchise operates can become part of strategic planning for the franchisor and franchisees alike. The ability to create evolving accounting and tax best practices, and communicate those best practices, allows both parties to make solid decisions moving forward. 

The second lane of focus is on the data collected on a monthly (or more frequent) basis.  This data is helpful to create accurate corporate forecasts and to gauge the progress of the franchisees. The CFO has important oversight on this data — being able to note any inconsistencies, track trends, and explain any significant differences month over month and year over year. This financial oversight can also alert the franchisor to any red flags that could be addressed early and prevent a difficult situation from advancing. It again lends to providing advice on the strategic direction of the franchise.

The advisory role of the CFO also comes forward in the preparation of the audited financial statements, tax filings, evaluating the competition’s promise, and ensuring the franchise disclosure document financials are presented with integrity. The franchisor-franchisee relationship is built on trust, and a significant part of that trust comes from the financial aspect of the business. The CFO has to be a beacon of integrity, which leads to strong and trusted relationships not only between CFO and franchisor, but also between franchisor and franchisee.


The CFO and the Franchisee

At Stratus, the CFO has a direct role with franchisees. The CFO is an advisor and participant in the financial training and support needed to run the business and acts as a resource to franchisees who are  interested in improving performance, increasing cash flow, or discussing business concepts. Stratus is very focused on franchisee profitability and cash flow, such as identifying cost variances between franchisees which may lead to decreased costs across the network, or training on accounts receivable collections best practices. So being vigilant in the financials is crucial, and knowing how to spot trends in the franchise financial data is imperative when advising franchisees.

It is important to remember that the franchisees are individual business owners themselves, and many will have an accountant or bookkeeper providing their financial services, at least to some degree. The role of the CFO is not to interfere with that relationship but rather to bring an upper-tier level of industry knowledge and peer group performance to the franchise owner. While a franchisee’s accounting is focused on the individual business, the franchisor CFO provides bigger-picture information that can be used beneficially. A significant advantage of franchising is having this peer financial data available, and franchisor support, to help a franchisee succeed to their full potential.

Introducing the advisory services of the CFO can be done in a number of ways, including presentations by the CFO at the annual conference and regular training or support gatherings. The CFO is the most in-touch member of the franchise leadership team when it comes to knowing the financial position of the franchisees. The explanation and interpretation of that information can lead to unique ideas and advice that all franchisees can benefit from in their individual businesses.


The Important Takeaways

As CFOs, we are often a bridge between two different stakeholders the franchisor and the franchisee. Who are ultimately seeking to increase their respective performance. Identifying the needs of these two distinct stakeholders is an important characteristic that the successful franchisor CFO has to possess. Certain metrics, such as unit growth and average unit volume, are important industry-featured statistics used to attract the attention of potential franchisees. However, the franchisor CFO role can have a far deeper impact to franchisee success when the franchisor is open to being that integrity-driven brand. 

If you are a franchise without a CFO, consider adding that position to your leadership team and benefit from the knowledge and unique financial perspective that a CFO brings to the organization. If you already have a CFO in the franchise, engage them and ask if they have growth-oriented or best practice ideas that could be explored. 

The CFO is a key resource to your brand. When you mine their potential, you will grow your brand’s potential. That creates a win-win situation for everyone.


David Earl, CFO of Stratus Building Solutions, is a Strategic execution and growth-focused Senior finance executive with 25+ years of leadership experience with multiple liquidity events. Harnessing in-depth finance and accounting experience to help lead company efforts in creating maximum value.  He has also led multiple territory expansions, executed acquisition synergies, and acquisition ROI.  Before entering the Franchise space, David started his career with United Parcel Service (UPS) and spent twelve years with The Walt Disney Company before pivoting into private equity backed companies. David is an innovative leader who believes in strong collaborative teams and champions the implementation of new systems and tools that will improve overall company operation, effectiveness, and profitability.