Franchise Ad Funds and Cooperatives By Barry Knepper
Since marketing fund contributions are not the franchiser's assets, many franchisers, although not required to do so, will actually segregate those contributions from the franchiser's assets by having them collected by a separate entity that then is responsible for managing the marketing fund. This structure helps take these funds, which aren’t the franchiser's asset, out of the reach of the franchiser's creditors. They also tend to provide some degree of simplification of the franchiser's financial statements – if the funds are collected by the franchiser, the balance sheet will typically reflect corresponding entries on the asset and liabilities sides to show the amount of the funds held by the franchiser.
The marketing fund entity can take a variety of legal forms, with some franchisers even opting for the creation of a trust, the trustee of which is typically the franchiser's affiliate. This allows the franchiser to control the marketing fund while avoiding unintended tax consequences that might flow from other legal forms.
THE FRANCHISERS ACCOUNTING PRO
Barry has experience with all financial aspects of the franchise industry having served as the CFO of a multi-concept franchiser, part time CFO to several franchisers, auditor of both financial statements and royalties for more than 70 franchisers and as a franchisee himself. Because of his experience as a franchisee, he understands the sensitive nature of the franchiser/franchisee relationship and works hard to preserve that relationship.
Through his part-time CFO services he meets the needs of franchisers that do not need or cannot afford a full-time controller or CFO. He will help improve your financial performance and free up your time to so you can do what you do best -run your franchise.
Please contact Barry for a complimentary no obligation consultation on how he can help you increase your profitability, increase your cash flow and reduce your stress.