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Start a Bookkeeping Business - Buying a Franchise

Date AddedNovember 30, 2009 01:08:09 AM

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CategoryAccounting Franchise

If you are thinking about starting a bookkeeping business, an option to investigate is that of a franchise. With the franchise model there is support starting, running and marketing your business. Branding and business recognition have already been established and it is often looked upon as an easier way to attract clients. Additionally a large franchise may already have a significant market share.

There are however some serious things to consider before taking the plunge into a franchise as the start up costs are considerably greater than going it alone and since it is an expensive exercise, it is something you need to research and ensure it is right for your needs.

The franchisor is the main business, the franchisee is the local business operator. The franchisor offers their systems including marketing and operating systems. This is worth a certain dollar value and that is why it is costly to enter into a franchise.
Franchises need to comply with the franchising code of conduct. This is a mandatory code of practice monitored under the Trade Practices Act 1974 (Cth) It regulates the relationships by setting the minimum standards. It also broadly defines what a franchise is.

When looking at the franchise as a possible purchase option, it is important to study carefully the franchise disclosure document and obtain your own legal and accounting advice. This will also be important as you will probably be financing the purchase of the franchise and the bank will require this information.

The disclosure document is a vital tool for the franchisee to see if they want to enter the franchise. It will contain details such as
Franchisor details and franchisors business experience. Any pending litigation, which will be vital knowledge for you. You don't want to get into business with someone who could lose their business goodwill with one legal case a week after you open your doors.
Find out how many existing franchisees. The area you have access to, or commonly known as territory. Investigate marketing funds that you will need to supply as the franchisee to be part of their joint marketing operations.

Potential earnings will be important and so will the costs of ongoing management of the franchise by the franchisor and the term of the franchise agreement.

Once you have had a look at the disclosure document, it is important to do further research. Talk to the other franchisees. See what the business is all about and how it operates. See if you can spend some time with a current franchisee. Have a look at the earning potential, how much of your own marketing and client marketing you need to do in addition to what the Franchisor has already in place.

Look at the earning potential of the franchise model and analyze expenses. Look at what expenses you pay to the franchisor and what you will still need to pay on your own.

Most importantly, make sure the term of the franchise is long enough to recover your money, make a reasonable profit and increased the capital value of your business.

If you do go ahead with a franchise model, the earlier set up section of this book will still help you with ideas of marketing and networking which will still be important elements in your business even with a franchisors help.
Julia Nitschke is an Accountant, business consultant and author of the book My Bookkeeping Business, how to Start, Run and Grow your Bookkeeping Business.

Visit http://www.mybookkeepingbusiness.info for more information and for a free bookkeeping e-course.

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