How to approach this new franchise business..

[AZ-Tax]

I dropped in today to introduce myself to a new franchise business that opened up a couple miles from my home. I learned they kind of got their horse ahead of their cart. They plan to open late Nov and are a husband/wife LLC but would like to know which tax entity route (s-corp, c-corp, 1065 or sole proprietor) to go. They will have approx 12 employees and already hired ADP to handle their entire payroll. I am estimating the gross revenue to be around $1,000,000 annually. I understood them to say they are looking for a different bookkeeper due to their current bookkeeper’s location plus the bookkeeper does not offer much if any advice. Same goes with their current tax preparer. They invited me over to discuss this in more detail and I am going to try to bring a bookkeeper with me. What questions do you suggest I ask?

[Uncle Sam]

Franchise Business

I never have had franchise clients, but the first document I'd insist on seeing is their franchise agreement - to see what's required of them in the way of reporting information, financial arrangements, commitments, debts, etc.
Then I would read the landlord's lease, and any other contract agreement they've entered into.
With respect to the payroll service, I would request payroll reports to see how the payroll is being reported in the general ledger, with special attention to employee tips (if applicable in that franchise).
Next, I would review both the payroll and state sales tax returns and match to general ledger to see if it's been reported and paid properly.
These are just starters. Perhaps some franchise experience practtitioners will improve upon the above.

[taxmandan]

I would also read the Operating Agreement of the LLC, they do have one right? I would evaluate the Members and decide if they intend to do things properly and they have a temperment that I can work with or not. And if I was to take the engagement for bookkeeping and tax work, I would insist on doing the payroll in-house, and scrap ADP. I've had too many issues with ADP to rely on them for payroll.