Tax Franchise - 5 Things to Consider Before Buying a Tax Franchise
- Author Joseph Rogers
- Published September 6, 2011
- Word count 636
Buy in Pricing - Tax Franchises such as H&R Block, Jackson Hewitt, Instant Tax Service and Liberty all have substantial up front "franchise fees". These fees make it nearly impossible to enter the industry let alone the challenges they put on attaining profitability any time soon. These up front capital investments range anywhere from $20,000 to $80,000+. If you are in talks with several franchises be sure to ask when they project your new venture to be profitable. If they state in 5+ years, my suggestion is to run in the other direction. I am not sure what your financial situation is, but I find it hard to envision investing in anything that does not have the potential to have any return on investment until the 5th year of operation.
Rules and Procedures - Franchises dictate hours of operation, office location, dress code, pricing, promotion, signage, etc. Franchise dealers will all tout these as positive aspects of choosing a franchise business model. I say the opposite. Tax preparation is a personal service business and these type of personal relationship services vary drastically in operation and appearance depending on the area, demographic and economic norms for your location. For instance nearly all franchise tax offices have territories that they will sell to you. It is hard to imagine that in the 20+ years that H&R Block has been in business that they have not already cherry picked the prime locations for the offices that are owned by corporate, or that other owners have not already had first pick over them. If you choose to go with a non-franchise tax office set up, you have the ability to pick and choose your own location. Many of the demographic information can even be obtained without their assistance, and I will provide that to you later in this article. Signage should be tailored to meet the need of each individual office and to target their customers. This is not possible when you marketing campaign is dictated from across the country by someone who has never seen your office, your neighborhood, your customers, or your competition!
Royalty Payments and Fee Splits - If you are looking for assistance in starting your new tax preparation business you should know that there are going to be some variable costs associated with bringing in some help. Franchises typically charge a 20% royalty on your office's gross earnings, and potentially up to another 5%-10% for marketing royalties. Partnerships and other tax business set up options can provide a less painful fee structure that is not tied to gross revenue and can free up more income for profitability.
Marketing - Tax franchises provide a "brand name" that is recognizable, or at least should be recognizable. The problem is that their companies and strategies are boiler plate and dictated by the corporate office for their general acceptability and effectiveness toward a generic segment of the market. You are a small business owner. Who better to know who and what your target market is than you? Franchised marketing efforts are not customizable to your office, area or target market. Independent solutions for starting your tax prep business provide you with the freedom to spend your marketing dollars the way you want, not the way dictated to you.
Length of Commitment - Franchise contracts require typically a 5 year or longer commitment from their new offices, and many of them have a "non-compete" clause in their contracts that forbid you from doing anything in the tax preparation business for many years following that contract period. This "locking in" is one of the most limiting factors, along with the large initial investment necessary, to starting a tax prep business by buying a tax franchise. Keep yourself free; If you decide that the business is not for you, you should be able to get out!
I would like to provide you with Free Target Market Report that typically is only available to those entrepreneurs looking to by a franchise tax office. I can tell you how many tax returns were filed in your area & how many returns were filed through a paid preparer, what income level’s in your area… For more info on starting your own tax prep business visit www.federaldirecttax.com.
Article source: https://articlebiz.comRate article
Article comments
There are no posted comments.
Related articles
- 10 essential tax-saving strategies for landlords: Maximise your rental income
- A Comprehensive Guide to Navigating the Process and the Role of Customs Brokers in the UK
- Outsourced Accounting Services for UK Businesses: A Cost-Effective Solution for Financial Management
- Top 8 Self Assessment tax return software
- How to Close a Limited Company in the UK
- Maximizing Your Finances: Unleashing the Power of CPA Services
- VAT penalties – New rules
- TAX-FREE STRATEGIES IN AN UNCERTAIN ECONOMY
- 2022 Energy crisis and failure to connect Reality.
- When Are Corporate and Personal Taxes Due in Canada in 2021?
- You Would Never Have Thought That Having Accounting Internship Could Be So Beneficial
- ACTIVATION OF UAN
- Focal motivations behind getting a Tax direct for Small Business Firms
- Avoiding the flood — tax issues with water rights in agribusiness
- Social security benefits for a family (COVID-19)
- How to use QuickBooks Component Repair Tool?
- Do you want to reduce your taxes for next year?
- Will you be responsible with your tax refund?
- Getting started with QuickBooks Enhanced Payroll in Brief
- Are DSTs Right For Your 1031 Exchange
- Tax Return Makeovers By Kenya Woodard
- Why have all crypto tax attempts failed?
- Are You a Corporation? Know Why Consulting a Tax Accountant Is Vital
- Share capital or share premium for your Dutch company?
- Everything investors should know about 1031 sponsors
- Why is the income tax so high in UK?
- Should I do my own tax return?
- Get More Money Back on Your Tax Return with help from the Tax Cuts and Jobs Act
- Don’t Fall Victim to these 3 Tax Scams in 2018
- Find Out If 72(T) Penalty Free Income Is a Solution for You