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Becoming an Accounting Franchisee - Top Tips and Pitfalls

Becoming an Accounting Franchisee - Top Tips and Pitfalls

Franchising can be a very effective way to set up your new business. You get the benefit of an established brand and operation. Running a business on your own can be quite isolating and being part of something bigger with moral as well as technical support brings you the best of both worlds: independence with support.  

How do you build up your new business? What sort of things should you focus on? What are the pitfalls?

On The Spot has been a franchised brand for over 8 years to other experienced chartered accountants and here are my personal tips to get you started.

1. Be clear what you are getting

You should receive a clear brand and image with a track record that is easily explainable to you and your clients. What contacts, networks and followers have been built up? Why does the franchisor think there is enough business for your company? Are you in a growing or stable market? Why should you sign up with On The Spot? 

 2. How can you repeat other franchisee successes?

You need to know how you can be expected to repeat previous successes. Will you be able to make a head start because of established procedures, business model, contacts? Is there a big enough market? Is it driven by geography? If so, how do you know another area will work? Does it require a large investment in certain assets? What return should you expect and why? How much training do you need? Are other softer skills needed? Can you talk with other franchisees?

3. What will you be charged and why?

You need to understand what you are paying for. It might be training, branded assets, a website, new clients. Will there be one fixed fee or a menu of options. Will you be charged a different amount to other franchisees? Will there be regular add-on charges eg for client leads, email storage, social media support? Or will you simply be charged the typical 10% of invoiced sales? Are there less tangible benefits implicit in the fee such as a tried and tested business plan, a network of contacts, ongoing training, email and phone support?

4. Review the franchise agreement

Check you can fulfil the requirements of the agreement, how you or the franchisor may terminate the agreement, what constitutes a breach of contract, will the agreement run for the usual 5 years, are there any minimum turnover requirements? The franchise is an investment in time and money, so make sure you get it right. Is there an operating manual? If so, this should also be reviewed.

Once you’re happy with the agreement, you may need to appoint a solicitor to review it on your behalf. The franchisor may have negotiated a good rate with an independent solicitor.

 

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