How does Management Recruiters handle the payment for regular vendor invoices on behalf of the franchisee?
Management_Recruiters Franchise · 2024 FDDAnswer from 2024 FDD Document
- invoicing customers for Recruiter Services and Contract Staffing Services;
- accounts receivable and cash receipts application services;
- basic accounting assistance including preparation of monthly profit and loss statements and balance sheets for the Franchise Business;
- collections assistance including calls and demand letters, provided, however, that Franchisee shall bear ultimate responsibility for collections;
- accounts payable assistance including payment of regular monthly, quarterly, and annual vendor invoices (which amounts Franchisee will advance to Franchisor) on behalf of Franchisee; and
Source: Item 23 — RECEIPTS (FDD pages 67–327)
What This Means (2024 FDD)
According to the 2024 FDD, Management Recruiters provides accounts payable assistance to franchisees, which includes paying regular monthly, quarterly, and annual vendor invoices on their behalf. However, the franchisee is responsible for advancing the funds to Management Recruiters to cover these invoices. This means that while Management Recruiters handles the administrative task of paying the invoices, the franchisee must ensure that Management Recruiters has the necessary funds in advance.
This arrangement implies that franchisees need to carefully manage their cash flow to ensure they can cover these vendor invoices when they come due. Failing to advance the funds could disrupt vendor relationships and potentially impact the franchisee's operations. It is a fairly common practice in franchising for the franchisor to handle certain back-office functions like accounts payable, but the franchisee remains responsible for providing the necessary funds.
In addition to accounts payable assistance, Management Recruiters also offers services such as updates to and maintenance of their billing and payroll system, invoicing customers for recruiter and contract staffing services, accounts receivable and cash receipts application services, basic accounting assistance, and collections assistance. For these services, the franchisee pays a fixed Back Office Services Fee, which is subtracted directly from the franchisee's share and reflected on the settlement statement.