As a retired franchisor and part-time consultant, folks often ask me about what they need to do to franchise their company. Not long ago someone asked about franchising an accounting company in the Northern Midwest.
This sector maybe perfect for the “franchising format” model; the accounting guy will need Audited Financial Statements, and disclosure documents (FDD -Franchise Disclosure Document). In looking at region they might consider it appears 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 is also,
-OH is open.
Registration states, I think 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 attorney and make sure they are specialists in the franchising industry.
In medical franchises, I believe the board of directors must have licensed medical doctors, and its suppose to be a ratio, as I understand it. So, I’d assume that in an accounting type franchise the same would be true. And god forbid, if you only had one CPA and he or she already quit?
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 main franchise should have CPAs on the board, and it may actually be required, you’ll have to seek legal advice on this. The franchisees ought to have a CPA in the company, like a co-owner. There might be rules on that too, and state laws, many of which might be different.
Oh by the way before we go too much further, realize that I am not an attorney, so I do not want you to assume I am practicing law without a license, this is just general stuff, you have to verify my comments with a franchise attorney specialist, just as I would as a consultant if I were being paid by a client who was looking into franchising an accounting company.
I’d look at “Jackson Hewitt” and some of the other franchisors in the sector. You can get their UFOC or rather FDD online at the California Department of Corporations. There must be 6-7 of these types of franchisees out there. Some have recently had issues with the regulators for various screw ups during last year’s tax season.
Now, I would assume that since there are independent small businesses that offer accounting services to other small businesses, that a franchisor could indeed, franchise in this sector and do quite well at it. So, there should be a potential here. Such firms may need licenses in some states, so it gets to be a pain to follow all the rules.
The more complicated it is the harder it is to stay out of trouble in the franchising industry, especially when you are selling lots of franchises in many different jurisdictions. It gets complex too when businesses are on the borders of states and the owners who are wishing to buy the franchise live in a different state or wish to later expand and take customers in nearby states. It’s a regulatory nightmare and it can lead to lawsuits and problems. Of course, the lawyers love it because you become good bait, and those that work for you have unending issues to deal with at $300 per hour!
Here is what I’d 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 them all out and look at each one, from that 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 that are CPAs to help expand the concept, plus run the Franchisor Owners region with individual franchises to make the model work first. One problem could be that finding CPAs that are interested in this opportunity could be a huge problem. Ever since Sarbanes Oxley, CPAs are all making lots 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’d mention is that Franchise Companies need accounting services to help their franchisees, so once this thing took off just the franchising industry alone could support it!
As far as marketing is concerned, I’d suggest giving talks, speeches at local chambers of commerce, SBDCs, SCORE, SBA, economic development associations on accounting you’d sign up enough customers to keep every franchisee successful.
In fact, I’d make that part of the cost of a franchise and the blitz marketing team. Go in and promote for the franchisee as seminars to small businesses in the region. then teach 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 a huge online campaign specifically targeted to those regions, with informational selling, free-information, forms, ideas. I see most accounting consulting type franchises use fear to sell, which works but it does not have to be that way at all.
I’d also say that those graduating from Community College could become workers that “work to own” their own franchise, kind of like Dominos Pizza did it. Well, those are my thoughts on the topic of franchising an accounting service. Think on this.
Lance Winslow – Lance Winslow’s Bio. If you have innovative thoughts and unique perspectives, come think with Lance; http://www.WorldThinkTank.net/.