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Brilliant bookkeeping franchise goes into liquidation

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29th Jul 2014
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Accounts Assist Franchise Limited, trading as Brilliant Bookkeeping, has gone into voluntary liquidation.

The Gazette reported on 15 July that Paul Weber and Martin Linton of Leigh Adams LLP had been appointed as joint liquidators.

The operation ran into difficulties last year after one of its franchise holders started legal proceedings for unexpected changes in its branding, marketing, PR and handling of sales leads. After another claim came in, founder Anita Brook decided to place the company into creditors’ voluntary liquidation.

At a meeting with creditors, Brook said monthly sales had never been substantial enough to cover outgoings.

The Accounts Assist practice is unaffected by the liquidation and continues to operate from its base near Silverstone.

Background

Brook set up Accounts Assist in 2008 and on the back of her initial successes in serving the freelance and contractor market, she incorporated Accounts Assist Franchise Limited in May 2009 to provide bookkeeping services under a franchise umbrella. In September 2010 it adopted the trade name Brilliant At Bookkeeping to differentiate it from the accountancy firm.

While Brook referred all queries to the liquidator, AccountingWEB spoke to some of the previous franchise holders who claim they paid more than £20,000 and now have little hope of getting their money back. The last franchisee joined just over a year ago, signing up to a five year contract.

One of the franchisees said the opportunity was appealing at first because they were told that branding, PR and marketing would be taken care of.

Some of the franchisees got in touch with the British Franchising Association, but were told the organisation could see no wrongdoing on Brook’s part.

For the franchisees who pursued legal action, their complaints alleged breach of contract when Accounts Assist Franchise changed its name to Brilliant at Bookkeeping.

One franchisee said: “You can’t just change the branding without the explicit approval of all the franchisees. When I paid the £20,000 I was paying for the goodwill of the brand.”

Asked why Brooks eventually pulled the plug, one franchisee answered: “It must have been apparent from the beginning that it wasn’t working because she wasn’t earning enough from the ongoing fees.

“Yet how could she be allowed to continue trading with hardly any cash in the account and still be able to take on new franchisees? Franchisees need to be better protected from franchisors going into liquidation."

The creditors have now asked the liquidator for a breakdown of exactly how their franchise fees were spent.

Liquidator Paul Weber told AccountingWEB: “Following my appointment as joint liquidator I am investigating the matters of concern raised by the creditors.”

A committee has been set up and the liquidators now have six months to investigate the accounts and send through their findings.

In view of the legal activity surrounding this liquidation, could members please refrain from commenting on the claims or competence of the individuals involved - unless you have direct, first-hand experience of the situation. Please limit your comments to wider issues surrounding the episode, and its implications for franchising within the profession.

Replies (25)

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By Elaine Clark
31st Jul 2014 15:52

Very disappointed to hear this 

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By shahsmititc
06th Feb 2016 10:04

Difficult times

Bad!

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Replying to PBH64:
David Ross
By davidross
30th Jul 2014 14:50

It's easy

[/quote]

How exactly do you propose to "help" the franchisees FOC?

[/quote]

I knew a successful computer business in the 1980s who took over the service contracts free of charge when the many other computer dealers went bust. The customers were happy that their contract would be honoured free of charge and my friend (who made a pile of money from these contracts) expanded his business on the renewals from the following year. By the way he would have charged me £300 per annum per machine and I saved a fortune by not falling for that one.

So, if there are people out there simple enough to want to pay good money to help them run a book-keeping business, they present a ready-made opportunity.

What help do they need?

• If they cannot do book-keeping they should not be in the book-keeping business;

• If they cannot get customers they should not be in business full stop.

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By Tickers
30th Jul 2014 09:57

"The creditors have now asked

"The creditors have now asked the liquidator for a breakdown of exactly how their franchise fees were spent"

Does the iquidator have an obligation to do this, I thought that they only needed to determine if the directors acted inappropriately and try and pay as many creditors as possible but the above request appears to be a bit of a fishing expedition that based on my understanding there is no obligation on the liquidator to fulfil?

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Man of Kent
By Kent accountant
30th Jul 2014 10:25

Franchise fees

@Tickers - I would expect that aggrieved franchisees may feel that their fees have been spent on non franchise related work - for example transferred to a group entity, sitting in a directors loan account, used to pay excessive directors bonuses/salaries.

The creditor can if they feel justified challenge the appointment of the liquidator - a costly process.

Interesting that the franchise has gone straight into liquidation and not administration. May be that the Insolvency Practitioner took one look and thought no chance of turning this around lets liquidate.

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By Moonbeam
31st Jul 2014 11:13

Ah yes, Franchises

I know nothing about this particular situation, but many of us have seen clients pay out more money than they can afford and have signed weighty legal contracts without asking any serious questions of the franchisor and without taking any legal advice.

But even if they had been reassured as to how the franchisor was to conduct the business in the future, there is no guarantee that they would get full value for the enormous fees so many franchises charge, and of course the franchisor can just go bust.

I get the feeling that a lot of franchisees with very little business nous initially think this is a quick path to success. In reality their bank account shows a minus balance to begin with and they quickly learn that the business success is largely down to their own efforts, including the ability to collect money from customers promptly.

My own feeling is that there are very few franchises out that that I would want my dear clients to spend any money on, but of course it's too late by the time I meet up with them.

I shall reach for another box of tissues at this point as this accurately describes one of my newer clients.

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By ireallyshouldknowthisbut
31st Jul 2014 11:39

.

@Moonbeam, I too have seen several clients getting sold the world and nothing has been delivered with franchises.

its usually just a commision only job you pay someone to take.

I cant understand the competitive advantage for a bookkeeper.

Al the good ones I have ever found get full stacked out for work inside of 2 years. 

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By Moonbeam
31st Jul 2014 12:19

Yes, commission only

@ ireally - It was the commission only sales aspect for my new client that very nearly gave me a heart attack.

I am still not clear what the £10k upfront money was for. I couldn't see anywhere in the agreement stating "money down the drain", but I suspect that would be an appropriate heading in the accounts as he's self employed, and it's a capital item.

Having told Mr Bloggs that I am always concerned about franchise agreements and have never had a client who made any money out of them I shall now keep quiet and just dr and cr.

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By Ken of Chester le Street
31st Jul 2014 13:09

Oops!
Brilliant bookkeeping franchise goes into liquidation.

 

There's certain rather sad irony in that.

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By GuestXXX
17th Mar 2015 17:14

.

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David Ross
By davidross
01st Aug 2014 16:39

I heard that the Fraud Squad checks all new franchisors

Says it all really

Does anyone remember Howard Hodson's Prontac (not to be confused with current operations of the same name)? Not fraudulent, but doomed from the outset

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By Bob Harper
04th Aug 2014 13:34

Bookkeeping

I don't know what happened but have put a call into the liquidators to find out more. My guess is that the franchisor could not deliver the leads to the franchisees.

Our experience with Crunchers was that most accountants want have some control over the bookkeeper. And, when it comes down to it a good bookkeeping reduces the year-end compliance fees for the accountant so there is potential for conflict.

This is why we added on accounts/tax and now offer a full package to business owners.

My recommendation to the Brilliant Bookkeepers is to seriously consider investing time and energy training to do statutory accounts/tax and take on accountants.

I no longer speak 1-2-1 to bookkeepers/accountants for free but will do for any franchisees. Although, I think you'd be best having a joint conference call. 

Bob Harper

The Crunchers Network

 

 

 

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By ireallyshouldknowthisbut
04th Aug 2014 13:51

.

er bob, I know you struggle with this stuff not being an accountant, but bookkeepers are not accountants.

By definition if you are running a bookkeeping franchise you wont have the skills and experience to offer final accounts.

Its not a "time and energy" thing. Its a huge gulf in knowledge and experience. 

The "bookkeepers acting up" brigade are generally a disaster zone. 

 

 

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Man of Kent
By Kent accountant
04th Aug 2014 14:07

No

Wrong Bob.

I see bookkeeping as a necessary evil - will take it on if I must in some cases and in other will farm it out to a decent bookkeeper or suggest they find their own bookkeeper. 

As for bookkeepers doing accounts and tax, through a franchise? Look what happened here.

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By Bob Harper
04th Aug 2014 14:23

Knowledge

@YouReallyShouldn't - there is a knowledge gap but that can be filled with training and support. And, if they stick to certain client profiles they can limit the requirements.

We have technical support available from ACCA qualified accountants with 20+ years experience. But, it is possible to outsource the accounts/tax to qualified accountants while you build the client base. This can work if the fee is 50% compliance and 50% added value

@Kent - you see bookkeeping as a necessary evil and so do clients...where their is pain there is an opportunity.

Bob Harper

The Crunchers Network

 

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Replying to Wanderer:
Man of Kent
By Kent accountant
04th Aug 2014 14:29

WHAT??!!

Bob Harper wrote:

 it is possible to outsource the accounts/tax to qualified accountants while you build the client base. 

Have you gone bonkers!?

What qualified accountant, regulated by a professional body will be happy to take on subcontracted work from a bookkeeper? 

Where does the buck stop if the accounts/tax contain errors?

Who is the 'client' for the accountant and who is his letter of engagement addressed to?

Who does the accountant report to - the bookkeeper or the end client?

 

 

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Replying to Wanderer:
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By andy moore
16th May 2015 00:21

Yawn?

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blue sheep
By NH
04th Aug 2014 14:27

I could be wrong but

I could have sworn there was a condition to posting to AW that you were not allowed to freely advertise your services yet there are at least two links in this thread.

am i wrong?

as an aside, I notice from his site that Bob is offering more excitement in your life for your 25k franchise fee, really?  sounds like a bit of an expensive thrill.

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By Moonbeam
04th Aug 2014 14:33

Just a thought

I've got a little group of people for whom I've pressed the ignore button. It really does wonders for my blood pressure!

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By Bob Harper
04th Aug 2014 14:49

Wrong way around

@Kent - I am talking about the bookkeeper outsourcing work to a qualified accountant. There accountants on AWeb looking for work.

@NH - £25,000 is what we think people need to launch a practice...this is not what we charge! Where we get involved in lead generation we would look to charge 50% of annual fees on a results basis.

Bob

The Crunchers Franchise

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Man of Kent
By Kent accountant
04th Aug 2014 14:52

Still no!

So who signs the accountants report and in what capacity?

Its just too wrong you clearly haven't thought that one out...

...it explains a lot...

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blue sheep
By NH
04th Aug 2014 14:54

so its 50% of annual fees for more excitement in your life then, glad we cleared that one up

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By Bob Harper
04th Aug 2014 15:43

Options

@Kent - there are options.

@NH - no, it's 50% of annual fees for helping accountants win new business. We think this is fair and good value compared to marketing spend with no guarantees and buying fees. Having said that accountants can do a mix of all these or do their own lead generation like our first office has done.

Bob Harper

Crunchers

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Man of Kent
By Kent accountant
04th Aug 2014 15:51

Moonbeam

;)

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By Bob Harper
04th Aug 2014 16:02

Brilliant

@Brilliant Bookkeepers - sorry, but the truth is technology is reducing the amount of bookkeeping work available. And, smart accountants are using bookkeeping as a way of winning clients. Some are sending the paperwork to India and some are not worried about profit because they have year-end work.

Most accountants on here will not help you. 

Develop yourself and climb the value curve...do this on your own or with others.

Good luck.

Bob Harper

Crunchers

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