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I’m thinking of investing in a book keeping franchise...
Posted by Anonymous on Thu, 02/07/2009 - 15:33
I’m considering investing in a book keeping franchise. If anyone has any experience in this area (good or bad!) your comments/thoughts would be appreaciated?
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Waste of money
I knew an accountant who had just paid £30k and had to pay £3k a year for 5 years and he said it had been a waste of money.
I thought he was a mug.
Why?
Why do you want to hand over a large fee up front and a significant percentage of your earnings for ever?
What are you lacking in that makes it sound attractive?
Look into what your money will buy you
Think very carefully before parting with your hard earned cash. Ask what your money will buy you. In the main a well estabished franchisor will buy you the brand (eg Macdonalds, Subway, Specsavers) and a sound proven business model. A turnkey solution in the main.
They are some very good franchisors but they are far more money grabbing franchisors - they are even regsitered with with the useless BFA. BFA has no real teeth. It certainly does not police franchisors. It has no real power. It gives an impression that it has.
I do not have much regard for accountancy franchisee. They are costly, once you are in you are stuck. With some you have to pay them to get out after 5 years. You cannot take your clients without a hefty fee. For the franchisors with sufficient franchisees it really is a money making machine. I think franchisee agreements should be made illegal and something that is not so in favour of franchisors should be allowed.
Spend the money you would have spent in paying a money grabbing franchisor in marketing.They are so many good marketing people who will help you.
Most franchises are poor value for money
Over 30 odd years I've seen many unfortunate would-be entrepreneurs sucked into the false riches claims of franchise companies and as a result become impoverished financial slaves.
I expect there might be one or two "good" franchises out there, but I think I've only ever seen one in a dozen.
The advantages of a franchise include:-
1. A known name and reputation / brand to work under to attract customers (I'm unaware of anything like this in bookkeeping) so I'd discount this benefit to £nil
2. Training to do the job - has some merit if you lack skills
3. Technical support (again has some merit)
4. Sales leads / a source of new customers (an intangible promise that could be of £nil outturn)
This disadvantages include:-
1. Financial slave to the franchise - you do the work, they're guaranteeed a profit at head office
2. Inflexibility for future development - onerous contract conditions
3. High financial risk re: upfront fees - if the business don't take off the upfront fees are probably a non-recoverable dead loss even if franchise company told you lies about business prospects.
PS. I once did the accounts for a franchisee of a "Franchise of the Year" winner. The figures and circumstances fully justified many of the points made above. To make a decent living had to work 60 hours a week to afford to pay the parasitic franchise fees.
The operative phrase is "caveat empor" - let the buyer beware (of franchise companies' deceptive promises) !
PS. The franchise companies will ALWAYS blame YOU if the franchise fails - it will be YOUR lack of effort - NEVER their false claims of riches to be had that were at fault !