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As a retired franchisor and half-time advisor, people often ask me about what they should do to franchise their company. Not long ago somebody requested about franchising an accounting company in the Northern Midwest.
This sector perhaps perfect for the “franchising format” model; the accounting man willneed Audited Financial Statements, and disclosure documents (FDD -Franchise Disclosure Document). In looking at region they could think about it seems that;
-Michigan is a notification state as I recall.
-IL is a registration state,
-NY is a registration state
-IN is a notification state and I believe KY can be,
-OH is open.
Registration states, I feel there are 14 of them that require filing and it is a process. Notification states you mail in a check, fill out a form, and enclose your disclosure documents. Check all this out with a franchise legal professional and ensure they are specialists in the franchising industry.
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In medical franchises, I believe the board of directors will need to have licensed medical doctors, and its suppose to be a ratio, as I understand it. So, I might assume that in an accounting type franchise the same can be true. And god forbid, should you only had one CPA and she or he already give up?
The audited financial statements for the franchisor must be peer reviewed and no hanky-panky with regards to board members and auditors or peer reviewers, or you’ll set yourself up for litigation later. The primary franchise ought to have CPAs on the board, and it might really be required, you will have to seek legal advice on this. The franchisees must have a CPA in the company, like a co-owner. There could be guidelines on that too, and state laws, a lot of which could be different.
Oh by the way, before we go too much further, understand that I am not an lawyer, so I do not want you to imagine I am practising legislation with out a license, this is simply common stuff, you must verify my comments with a franchise lawyer specialist, simply as I’d as a advisor if I were being paid by a client who was looking into franchising an accounting company.
I might take a look at “Jackson Hewitt” and a few of the other franchisors in the sector. You may get their UFOC or rather FDD online on the California Division of Corporations. There must be 6-7 of these types of franchisees out there. Some have recently had issues with the regulators for numerous disasters during final yr’s tax season.
Now, I’d assume that since there are independent small businesses that provide accounting services to other small businesses, that a franchisor may certainly, franchise in this sector and do quite well at it. So, there should be a potential here. Such companies may need licenses in some states, so it gets to be a pain to follow all of the rules.
The more sophisticated it is, the harder it is to stay out of trouble in the franchising business, particularly when you are selling a number of franchises in many different jurisdictions. It gets complicated too when businesses are on the borders of states and the owners who are wishing to purchase the franchise reside in a different state or want to later develop and take clients in nearby states. It’s a regulatory nightmare and it can lead to lawsuits and problems. After all, the lawyers like it because you become good bait, and those who work for you have endless issues to take care of at $300 per hour!
Here is what I might do, read through the FDDs of the top accounting, Tax and financial business consulting franchise offerings and read the paragraphs of “accounting services” then cut all of them out and take a look at each, from which you can deduce why they are doing, what they are doing, and how they are working around and within the law to do such services.
It’s almost as if you need to have regional Master Franchises which are CPAs to assist develop the concept, plus run the Franchisor Owners region with individual franchises to make the model work first. One downside might be that finding CPAs which might be interested in this alternative could be an enormous problem. Ever since Sarbanes Oxley, CPAs are all making plenty of money and are very busy, franchising is a risky endeavor.
I can tell you this. It’s really a needed service, because most small businesses get into trouble, because they lack the accounting skills, entrepreneurs are often like that. The other thing I might point out is that Franchise Corporations need accounting providers to assist their franchisees, so once this thing took off simply the franchising business alone may support it!
So far as advertising and marketing is concerned, I might suggest giving talks, speeches at local chambers of commerce, SBDCs, SCORE, SBA, economic development associations on accounting you’d sign up enough clients to keep every franchisee successful.
In truth, I might make that part of the cost of a franchise and the blitz advertising and marketing team. Go in and promote for the franchisee as seminars to small businesses in the region. Then train them how to do it too. Then Master Franchises would do the same. You’d also be picking up additional franchise buyers for neighboring areas and such.
Couple that with an enormous online marketing campaign particularly targeted to those regions, with informational selling, free-info, types, ideas. I see most accounting consulting type franchises use fear to sell, which works but it doesn’t need to be that way at all.
I might also say that those graduating from Community College may become workers that “work to own” their own franchise, kind of like Dominos Pizza did it. Well, those are my thoughts on the subject of franchising an accounting service. Think on this.
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