Are you an individual with a strong financial or banking background working in a corporate job? Have you lost the zeal of wanting to work for anyone other than yourself? Do you often dream of taking a leap from a stable job to start your own tax and accounting business? Does the prospect of owning a franchise for an established brand appeal to you?
If your answer is “yes” to one or all of these questions, then you are an aspirational go-getter,and taking a shot at owning a tax and accounting franchise business might be one of the best options available for you.
Becoming part of an established franchise business increases your chances of success because you not only benefit from a proven business model and work practice, you also benefit from the franchise’s established reputation, brand image, and access to national advertising and on-going support
But how do you decide which tax and accounting franchise to choose from the plethora of options available? We made a list for you. Make sure you tick off everything from this list before you finally select the right one.
1. How much is it going to cost you?
The first thing to learn is if you can afford the opportunity; that is, the investment required to get your franchise up and running. This would involve costs like the initial franchise fee, ongoing royalty fees (which we call management service fees), ongoing marketing fees, (all charged by the franchisor), and other costs like rent, inventory, insurance, taxes, staffing, etc. You need to make sure you do not run out of money before you even break even. Hence, it’s crucial that you understand each of these costs.
Along with this you also need to decide how you will finance the opportunity. Because of the high success rate of franchisees in Canada, banks may be willing to fund your investment more than you think.
2. Is it something you’re passionate about? Assess your strengths
Does the franchise operate in an industry you’re familiar with? Do you like sales? Talking to prospective clients? It’s always better to choose an industry you have experience in. So being a CPA or having a financial background makes you an ideal candidate for a tax and accounting franchise. Moreover, being a Business owner, you will be your own boss. So, you can formulate your own strategies to attract and convert clients. Most franchisors provide you with initial training which equips you with the right skills to do so.
3. How much do you know about the franchisor? Do your homework
Take advantage of all the information available on the web about the franchisor. Download their prospectus, attend their Discovery sessions, read case studies and testimonials. Ask as many questions as you want from their sales team. In fact, as investing in a franchise is a big decision, not just for you but also for your family, you should take along your family member or business partner(s) when you talk to the franchisors.
You should also be well aware of their history, success rate and their Global network. However, this does not mean that a relatively new player in the franchise market will not be good. You just need to be sure that you have all the information needed to be able to make the right decision.
4. Services offered by the franchise
“You’re in business for yourself but not by yourself” is a phrase commonly used to describe the Franchise business model. The support provided by the franchisor can provide you that extra layer of comfort and security which otherwise might be missing if you start a business from scratch. So make sure you are aware of all the services provided by the franchisor. This can include training, marketing, IT, recruitment support and more.
5. Read the Financial Disclosure Document
The Franchise Disclosure Document (FDD) is an essential source of information in the franchise agreement process. It’s a goldmine of information like the history of the business, fees, rules and restrictions, all the franchisees in a system, turnover rates, renewal terms and other aspects of a franchise. Franchisees are required to operate their businesses according to the procedures and restrictions set forth in the franchise agreement, which is a separate document included in the Franchise Disclosure Document. So make sure you read through both the documents very carefully. If needed, hire a professional. These are extremely important documents, and it is very important to understand what’s in both of these documents.
6. Talk to other franchisees
Talk to the franchisees who have been in business with the franchisor. They will carve out the real picture for you. Understand their entire journey, the challenges they faced, how they overcame those challenges, the key success factors, how long did it take for them to break even, the flexibility they have in running their business, the support they receive from the franchisor and more. Doing your due diligence by speaking to as many existing and previous franchisees as possible will pay off positively for you. Learn from their experiences.
7. Do a cost-benefit analysis. Compare all your options
Once you decide to get into the franchise industry, you’ll be flooded with options. Canada has the second-highest number of franchisees in the world. Once you have zeroed down your options to a few, make sure you compare each of the options on the important parameters like the cost, training, support provided, brand name, global network, growth strategies and more. Also, compare the pros and cons of opening your business from scratch or buying a franchise.
8. What’s your end goal?
Do you plan to run your business for a few years and then sell it out? Or are you planning to pass it down to family members?If you have your long-term strategy in place, it’ll just be easier for you to select your franchise based on what exit strategies they have in place.
Buying a franchise can be a life changing decision for you. Make sure you ask all the right questions, and conduct your due diligence. Understand what you are getting into, why are you getting into it and with whom you are getting into it. Your understanding of the answers to these questions will make it easier for you to choose your perfect fit.
To learn more about the franchise opportunities available at TaxAssist Accountants Canada click here.
