How AI Could Cut Franchise Accounting Costs

AI-Powered Bookkeeping Could Reduce Bookkeeping Expenses and Help Franchisors Monitor Unit Performance

How did your franchise locations perform last month?

For many franchisors, the answer might be: “Ask me in a few weeks.”

That’s not necessarily because anyone is doing a bad job, says Ryland Beard, founder of Switchbooks, an AI-powered bookkeeping platform. It’s because of how franchise books are set up.

“I worked inside franchisees’ QuickBooks files almost every day for eight years,” Beard says. “The setup was nearly always the same.”

Now AI-powered accounting technology is beginning to change that equation. New platforms can automate routine bookkeeping tasks, reduce reliance on manual processes and give franchisors a more timely look at their locations’ financial performance.

Beard says the financial implications could be significant. Based on costs reported by his clients, franchisees may spend approximately $435 a month on accounting software and bookkeeping services. His company, Switchbooks, offers an automated alternative starting at $25 per month, although actual savings depend on each owner’s accounting needs.

The Challenges of Franchise Accounting

According to Beard, many franchise systems rely on a familiar combination of accounting software, bookkeeping services and financial reporting tools.

He says QuickBooks Online is commonly used at individual locations, often because the franchisor requires or recommends it. Some franchise owners manage their own books, while others work with bookkeepers or accounting professionals.

To get a systemwide picture, Beard says franchisors may use platforms such as Qvinci or ProfitKeeper to combine financial information across locations. Larger franchise systems may rely on comprehensive management platforms such as FranConnect.

“It works. I’ve set these systems up for clients,” Beard says. “But it’s three layers stacked on top of each other, and each one sends its own bill.”

Beard points to several challenges with this approach:

• Rising expenses. Accounting software and bookkeeping services represent recurring operating costs. QuickBooks Online Essentials is listed at $85 per month, while Plus is $140. Beard notes that Intuit has raised prices every year since 2023.
• Inconsistent bookkeeping. Beard says financial reporting can vary depending on whether the books are managed by a franchise owner or an accounting professional. Consolidating those reports doesn’t necessarily correct underlying errors.
• Different accounting practices. One location may categorize an expense as “Payroll,” while another calls it “Wages.” According to Beard, those differences can require additional work to standardize accounts across locations.
• Reporting delays. Beard explains that consolidation tools depend on the information entered into each location’s accounting system. When bookkeeping falls behind, franchisors may not identify financial problems until weeks later.
• Multiple systems. Beard says using separate platforms for bookkeeping and reporting can add administrative work and make it harder to determine where financial discrepancies originate.

“Many brands are paying three companies to tell them what happened last month,” Beard says.

How AI Is Changing Bookkeeping

Artificial intelligence is moving beyond analyzing financial information and summarizing reports. Newer accounting platforms can automate bookkeeping tasks that previously required significant manual work.

Some systems connect directly with bank and credit card accounts, allowing transactions to be imported and automatically categorized. The technology can also help identify inconsistencies and apply standardized accounting categories across multiple locations.

For franchise systems, the implications go beyond reducing administrative work.

Having more timely and consistent financial information could help franchisors identify struggling locations, compare performance and provide better operational support to franchise owners.

Beard says the benefits could extend to several areas:

• Earlier intervention. More timely reporting may help franchisors identify financial challenges before they become larger problems.
• Better franchisee support. Field teams can use current profit-and-loss reports to help owners evaluate expenses, labor costs and other operational factors.
• Consistent reporting. Standardized accounting categories can make financial comparisons between locations more reliable.
• Financial disclosures. More consistent data may also help franchisors prepare financial performance representations for Item 19 of the Franchise Disclosure Document, subject to applicable requirements and legal review.
• Easier access to information. Some AI-powered reporting tools allow users to ask questions about financial performance in everyday language rather than manually reviewing multiple reports.

“Franchisors have always wanted this,” Beard says. “It just used to cost too much to get.”

But What about Accuracy?

Although AI can automate many bookkeeping functions, accuracy remains an important consideration.

Beard says an internal comparison conducted by Switchbooks found that its AI-powered bookkeeping system made 82% fewer errors than a team of experienced human bookkeepers. The claim is based on company testing, and the results have not been independently verified.

According to Beard, the technology flags transactions it cannot confidently categorize, allowing owners or accounting professionals to review them.

Human oversight remains an important part of the process. Even with automated bookkeeping, franchise owners and accounting professionals must ensure their financial records are complete and accurate. CPAs also continue to play a role in tax preparation and other specialized accounting functions.

Data security, software integration and the reliability of automated reporting are additional considerations for franchise systems evaluating AI-powered accounting platforms.

How Much Could Franchise Systems Save?

One of the biggest potential benefits of automated bookkeeping is lower operating costs. But the amount a franchise system could save depends on its existing accounting expenses, reporting requirements and need for outside professionals.

Switchbooks offers its services starting at $25 per month per location. Beard estimates that its approach could significantly reduce expenses for franchise systems currently using separate accounting software, bookkeepers and reporting tools.

To illustrate the potential savings, Beard compared estimated expenses for a hypothetical 100-location franchise system with the cost of using its platform. Under these assumptions, each franchisee could save approximately $410 per month, or $4,920 annually. The franchisor could save another $18,000 per year in financial reporting expenses.

Across a 100-location franchise system, combined annual bookkeeping and reporting costs could decrease from approximately $540,000 to $30,000, a potential reduction of about 94%.

Beard says businesses that have transitioned to Switchbooks have saved an average of $409 per month, according to company figures.

The comparison assumes that franchise owners review their own financial records rather than continuing to pay separate bookkeeping fees. Systems that retain outside accountants, require additional accounting services or maintain other software subscriptions would likely realize smaller savings.

The estimates also rely on historical pricing information for some reporting platforms and average bookkeeping costs reported by Switchbooks clients.

A New Approach to Franchise Accounting

Beyond automation and cost savings, AI-powered bookkeeping is creating new options for how franchise systems collect and analyze financial information.

Instead of maintaining separate systems for transaction processing and consolidated financial reporting, some newer platforms combine those functions.

Switchbooks is taking that approach with a platform that provides automated bookkeeping starting at $25 per month per location. According to the company, franchisors can also access financial information across participating locations without paying an additional reporting fee.

The platform allows franchise systems to:

• Consolidate financial information into profit-and-loss statements, balance sheets and cash flow reports.
• Calculate averages to evaluate typical location performance.
• Group locations by region, ownership or size to compare financial results.
• Compare individual locations and examine the transactions behind reported figures.

“Here’s the part that surprises people,” Beard says. “There’s nothing left to add up.”

Traditional reporting platforms often gather financial information from separate accounting files. By bringing bookkeeping and reporting into one system, platforms such as Switchbooks aim to reduce some of that additional work.

However, adopting a new platform doesn’t necessarily mean replacing every technology solution a franchise system currently uses.

Beard says brands using FranConnect management software for franchise sales and operations, for example, would still need those broader management capabilities. Switchbooks is designed to address specific accounting and financial reporting functions rather than replace a complete franchise management system.

What Franchisors Should Consider

For franchise systems interested in AI-powered accounting, a limited pilot program may be a practical way to evaluate the technology before making a systemwide commitment.

Beard recommends starting with five to 10 franchise owners willing to test a new platform over one quarter.

During that period, franchisors can compare several factors:

1. Cost savings. How do the platform’s expenses compare with existing accounting and bookkeeping costs?
2. Accuracy. Does the technology consistently categorize transactions and produce reliable reports?
3. Reporting speed. How quickly can franchise owners close their books and provide current financial information?
4. Integration and security. Does the platform work with existing systems and provide appropriate safeguards for sensitive financial information?
5. Human oversight. How much time must owners or accounting professionals spend reviewing automated transactions?

A pilot program could help franchisors determine whether AI-powered bookkeeping tools offer meaningful financial and operational advantages for their systems.

The Bottom Line

Franchising depends on consistency, and that includes how financial information is collected, analyzed and shared.

As AI-powered accounting tools evolve, they could help franchisors reduce administrative work, lower expenses and gain a clearer picture of how their locations are performing.

But the biggest opportunity may extend beyond the bookkeeping bill.

Having timely, reliable financial information can help franchisors recognize emerging problems, identify successful practices and provide better support to franchise owners.

As FranchiseWire recently reported, franchisee profitability should come before growth.

“You can’t protect what you can’t see,” Beard says.

For more information about the company’s bookkeeping and reporting platform, visit Switchbooks.