I was hoping that you would be able to help - I am using Sage 50 to do the book-keeping for a company which runs a bar, shop and kitchen. Recently they have Franchised the kitchen out. However the sales still go through the bar till and we make up monthly sheets with the totals on for catering to pay back to the franchise. My problem lies in how to post this to sage - as there are nominals set up for Kitchen income and expenses - I could post the income to the 4000 nominals but it doesn't seem right to post what we are paying to clear this balance to an income nominal. I could remove the catering all together but would prefer that it went through sage so we have a record of what is going out to balance this off. Might be making this harder than it actually is but I am confused.
Hello Denise
I think before anyone can answer the how to key it in sage, more detail is required as to the exact nature of the deal. There are various options for franchising a kitchen and I am sure that in most cases the full sales value is not passed on to the chef/team running the kitchen - it is usually completed by way of percentages of a fixed fee. There is also the issue of VAT to be considered on food sales or the 'commission' charge payable. Is there a written contract in place showing that the two businesses are indeed separate? Can each and every bill show how much is food from the franchised kitchen and how much are wet sales? Also - what happens to the tips? Can you please provide some more detail?
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Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
It is my understanding that the team running the kitchen are responsible for their own book-keeping and will be taking copies from the till reports aswell - and therefore the VAT relating to the cartering income and expenses are completely separate. The tips are also their responsibility and is a separate issue............. it is a long story but there is an agreement in place and the new franchise are going to renovate part of the building as payment of the fixed fee for just now. This again I am not needing to address at the moment! I am more concerned with how I account for the income that is collected through the till for catering sales - and then of course is repaid to the franchise? There will be no VAT posted on this income as it is a transfer value - but it is still confusing me? The Till clearly seperates the business into wet sales, and catering so there is no problem in the breakdown of items. Hope that is a bit clearer - feel free to quiz me more if needed - as I am really needing an answer on this!!
isn't this a question about outsourcing (a paid service) rather than Franchising (an act of gross stupidity).
You are probably mixing things up a little in your question as you are talking about Sage and also accounting concepts so people such as myself who would not touch Sage will not answer it due to the Sage element and people who are Sage experts but are less confident with the accounting concepts behind the question will not answer it either.
Also the use of the word franchise where I don't believe from your initial question this is may also put people off responding.
I think that your first issue is to define a question such as "How should my client account for the xxxxxxxxxxxxxxxxx" and then once you have the accounting theory then ask the question about how to reflect that in the software that you are using which is really a seperate question.
Also, its traditional to introduce yourself to the forum so that people know at what level to plug the answers. i.e. I would not talk to most AICB's the way that I would speak with an FCCA of FCA.
Hope that this is read in the constructive manner in which it is intended.
kindest regards,
Shaun.
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
