8 tips if you are considering an accountancy franchise

This isn’t intended to be complete treatise on the subject. I have simply jotted down a few thoughts in preparation for a magazine interview. If my contributions appear online I will provide a link in due course. The journalist seems to be undertaking extensive research so it should be a good piece – but probably won’t be published before the summer.

By way of background: There seem to be more accountancy franchise options and opportunities around today than ever before. Some rely on online marketing of a brand name, some provide exclusive areas and some are better known than others. You don’t need to be a start-up practice to join a franchise as many of them will allow you to migrate an existing practice into the franchise.

Here are 8 tips if you are considering an accountancy franchise.

1 – What is your objective? Many accountants will find it easier to focus on building a successful practice as a franchisee than to do so alone. Different skills are required to build a business then to be a good accountant. Can you do both? Do you want to do both? A good franchisor will probably enable you to build a successful practice faster than if you were to try to do so alone.

2 – Be realistic: Taking a franchise will rarely absolve you of the need to generate clients and, especially, to close the sale with prospective clients. If you need training in how to do this, where will you get it? Or would you be better off with a franchise that generates clients through focused and proven online marketing and conversion? Is marketing support available and do existing franchisees share what works and what doesn’t, perhaps through an online forum, at regular conferences, meetings or elsewhere?  You will especially want to check whether the franchisor has a record of meeting it’s promises re lead generation?

3 - Funding: Some franchises have arrangements with banks to fund the upfront fees – and this may enable you to build your practice more effectively than if you go it alone. Do be careful though to assess the validity of the new business projections and how often these have been fulfilled by other franchisees. And research how financially stable is the franchisor business itself.

4 – Compare and contrast: The various accountancy franchises may have some similarities but they are all different. Different in terms of how they promote the business name, the freedom they give franchisees, the level of fees payable, the length of the franchisee agreement, the level of handholding and support, ownership of clients and so on. Identify the issues that seem important to you and balance up the differences before deciding on your preferred approach. Do you need a big National support operation or would you be comfortable with something more personal?

5 - Legal advice: You may be tempted to sign up without taking independent legal advice. Don’t, unless you are the sort of person who would buy a house without having it professionally surveyed.  How balanced is the contract? How watertight is it? How easy is it to get out if the franchisor doesn’t deliver; not just within the first few months but a couple of years down the line?

6- The founder(s): How involved and committed are they? Are they your sort of people and can they deliver on their promises? Is what they offer more than just a catchy franchise name?

7 – Testimonials: Talk to YOUR choice of a selection of existing franchisees. Find out what has gone well for them, what hasn’t been as good as they had hoped and whether they would have joined up originally knowing then what they know now. You will especially want to know how many franchisees have opened up and how many have closed or left the franchise? And over what period?

8 – Goals: Will joining an established franchise enable you to achieve your goals re building an accountancy practice? Do you want to build something independent and to be your own boss? Will the franchise allow you to do this, help you to do this or restrict your ability to do this?

What other tips do you think would be helpful? 

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Comments

  1. says

    Expanding a little on your first tip there Mark ….

    My top tip for choosing a franchise is – Be clear what you want to achieve from setting up your business.

    Yes an accountancy practice is a business and the type of franchise model that may suit you will depend on what your business objectives are. For example, what do you hope to achieve by setting up your practice:

    • Full time work generating a certain (defined) level of profit
    • A part time revenue source to supplement your full time work
    • A multi staff practice run by you
    • A partnership practice
    • Other

    Everyone is different and it is not ‘one size fits all’ in the franchise world. All of the franchise models are different.

    Look around and you will be bound to find a franchise model that suits you, should you wish to pursue this route to operating your own Practice.

  2. says

    I think there could be more and more opportunities available to accountants because the model of just setting up in practice and charging time is disappearing. And, there are threats to traditional work.

    Strategy, branding, marketing and wider/deeper knowledge is becoming more important. It is very difficult for a sole-trader or small firm to keep up to date with all the developments so being part of something bigger than yourself does make sense.

    That can be a franchise or a network like AVN.

  3. Carl Reader says

    Hi Mark, great article. I work heavily in the franchise industry, advising both franchisors and franchisees on best practice. As I’m in practice, I don’t tend to advise franchisees of accounting networks (I’d expect them to be at least as technically competent as me!) but do socialise with their established franchisors.

    Just a few comments I’d make – that apply to all franchises, whether accountancy, estate agency, retail or man in van, are as follows:

    1. Has the franchisor committed to ethical business format franchising by joining the BFA? Franchising is unregulated in the UK, and as such anyone can set up a ‘franchise’, regardless of their actual business type. The BFA is the only self governing body for franchising in the UK, and the least you should expect a franchisor to do is to prove it’s intentions and protect its own business by taking advice from the leading franchise advisors and adhere to the European code of ethics.

    2. Further to Mark’s point 3, question the franchisor if they have not established relationships with the leading franchise banks (Natwest/RBS, HSBC and Lloyds at the time of writing). The franchise directors of these banks are particularly active in the franchise industry, and are keen to build profiles of franchise businesses, as they recognise the strength of franchise businesses vs non-franchised. As such, lending criteria is also preferable to recognised, ethical franchises.

    As an aside to this point, any prospective franchisee should ask their franchisor to introduce them to the banks franchise department, rather than approach the local branch themselves – often local cashiers will not know the franchise industry, and franchisee will then see a discrepancy between the positive arrangements promised by franchisor, and the lack of service / knowledge from local branch staff.

    If franchisor does not have these relationships – ask why not!

    3. Meet the franchisor at their premises, not a fancy hotel. Also, involve your partner – most franchisors insist on this. Some in fact have the second meeting at the franchisees home as part of their due diligence, to really understand their prospective franchisee. Speak to a range of franchisees (as Mark says), not limited to the ones put to you.

    4. The legal agreement tends to be non-negotiable. If franchisor offers a deal – this is a huge warning sign! Use a BFA affiliated solicitor – their understanding of franchising will far outweigh the extra £25 per hour they may charge… The biggest cause of problems that we see is a non-knowledgable legal advisor thinking that they can make a range of changes to the agreement – this is rarely the case and a waste of franchisees money and franchisors time. A typical review should cost £400 – 500 – we’ve seen ‘cheap’ local firms come in at 3 times this after they make a meal of the job.

    I’m sure more may come later!

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