Franchisee Outsources Back Office

API invoice approval screen, image/API Outsourcing

ST. PAUL, Minn. — Restaurant owners increasingly want the hassles and complexities of accounts payable, invoicing and financial statements taken away. Franchisees are particularly hungry for management information at the touch of a button, and are used to standardizing practices according to robust guidelines.

One of Wendy’s largest franchisees, DavCo Restaurants, announced it would beef up its back office automation to improve operations and reduce costs using API Outsourcing. According to API, outsourcing the back office includes benefits such as improved cash flow, reduced processing costs, increased business intelligence and improved customer/vendor relationships.

The Wendy’s franchisee wants the energies of management more focused on the customer experience, not accounts payable, the mail room and archiving documents. Some franchisees think that these functions provide few competitive advantages, and so they are willing to outsource them.

“After an extensive due diligence process including testing system functionality, an ROI analysis, and a site visit, DavCo concluded that API was the firm best suited to partner with us in this new endeavor,” stated John Rusnak, Senior Director at DavCo, a multiunit franchisee with over 150 restaurants.

What’s unusual about these new back office service providers is a new level of management sophistication. The new vendor for the Wendy’s franchisee performs SAS 70 Type II audits, a set of standards issued by the Auditing Standards Board for service organizations. But the notch up is that API Outsourcing utilizes and develops Six Sigma practices, a method invented by Big Business, Motorola in particular, for improving the quality of process outputs by identifying and removing the causes of defects. The system continually improves through quality management methods, statistical tracking, and by building Six Sigma process experts within the organization known as "Black Belts," "Green Belts” and the like.

Such tools are highly unusual in franchises. They are even rarely used with franchisors, who tend to have a larger white collar work force.

Gary Halleen, president and CEO of API Outsourcing, stated, “We know that the status quo, and not changing longstanding processes, is the easy path. It takes an industry leader like DavCo to have the vision to see how their (150+) restaurants can process payables by using only electronic invoices, automated workflows and creating a paperless process.”