An Audit You Can Live With?

When someone mentions the word "audit",  do chills run down your spine? 

They certainly do if you are a Dunkin Donuts franchisee, and if the audit is by Dunkin Brands Loss Prevention. It can mean the end to your business.

It doesn't have to be that way according to Golden Corral Buffet and Grill's Ken Houck in the International Franchise Association (IFA) magazine Franchising World.

In an article titled An Audit You Can Live With, Houck says: Franchising is about relationships. When the relationship exhibits mutual respect, it will flourish. What could be more important than the financial health of a franchisee to the franchisor and the long-term affects it will have on their relationship, as well as the brand? Some folks say "the harder people work, the luckier they seem to become." This type of effort pays off bigger than a Vegas slot machine any day.

Houck also says: From a franchisor’s perspective you would want to know the financial health of the franchisee and also ensure that the sales are reported correctly.

Let me get this straight, franchisors do audits to know the financial health of the business, really?  Why would they need an audit to determine financial health, wouldn't a P & L do?

Mr. Houck sounds a little disingenuous here, In my experience loss prevention is the one and only reason for an audit.

Franchisors have the right to and deserve to collect 100% of the royalty income due them. Strong royalty growth and fulfillment is important to every successful franchise system. Most franchisees support the franchisors efforts to ensure that all royalty and ad fund obligations are met honestly. As a royalty and ad fund paying franchisee, of course you want the franchisor to be diligent in collecting fees it's the basis of successful business format franchising system, you want them to make sure each franchisee contributes their share.

With that said, the use of antagonizing techniques to create fear, and intimidation by Dunkin Brands Loss Prevention is over the top and needs to stop, especially as these methods have been used to focus on issues best left to government agencies that have nothing to do directly with franchise agreement obligations or brand integrity.

Read some of these related stories and comments about Dunkin Brands Loss Prevention and judge for yourself.

• Dunkin's Stalking Scheme Plagues Franchisees in Court BlueMauMau
• My Franchise Story: How Dunkin' Used Conflict and Intimidation with My Employee BlueMauMau
• Duelin' Dunkin' Brands fights franchisees in court Franchise Times
• A real example of Horn's Extortion Game BlueMauMau
• Jury Finds Hole in Dunkin Donuts Case Against a Pittsburgh Franchisee AFA Legal Brief
• Smoking Gun Emails Billow Dark Cloud over Dunkin' Brands BlueMauMau
• Dunkin' Donuts Accused of Churning Franchises for Profit BlueMauMau