This page contains a Flash digital edition of a book.
ADVICE FOR FRANCHISEES


Questions you should ask your accountant


ByJohn Leyden, Carbon Accountancy


going into business. You are your own boss, but have the support structure of a much larger organisation that has seen it all and learned from its mistakes. The franchisor will help you avoid making the same costly mistakes, and provide you with a tried and tested formula to run your business. If you are thinking of buying a


A


franchise, you must get independent accountancy and legal advice before proceeding. From years of experience working with franchisees, I offer these Q&As to guide you on what you should ask your accountant before you make any commitment.


Can you assess the quality of the franchise?


There are more than a thousand franchises and it can be difficult to assess which is right for you. A good accountant should be able to assist you in making your decision. Just because a franchise is low cost, it doesn’t mean it is worth taking. You and your accountant should look


at the history of the business, how many franchisees are there and how successful are they. If a business has little track record in getting franchisees on board, there is likely to be greater risk of failure due to lack of support and possibly the lack of a proven concept.


Can you advise me on how to fund the business?


Most people going into business will


want bank funding for at least part of the initial capital outlay. A good accountant should be able to advise you on whether you should take a bank loan, bank overdraft, or lease finance for assets. A good accountant will also be able to advise on the security and personal guarantees that you may have to put up


properly constructed and proven franchise can be a good way of


and introduce you to a bank which may be willing to lend (in these tough times banks are more likely to lend based on introductions from someone they trust).


Have you got any experience in the sector and franchising? You should try to find an accountant


who has experience of the sector you are targeting. Multi-site restaurants have different business, accounting and tax issues, for example, than printing companies. If you can get an accountant with experience of franchising even better, as he will be able to assist you with royalty returns and other issues specific to franchised businesses.


Can you assess the financial projections provided to me? Most franchise sales brochures will contain “illustrative financial projections” based on different situations. For example, a restaurant franchise


will give illustrations based on being located in either a high street, shopping mall, or an off- high street location. These projections will often be upbeat, based on best performance and may not be achievable by most first-time franchisees. Your accountant should be able to


advise you on what you can actually expect, based on the location you have chosen, the rent agreed and other factors that affect you.


Can you prepare financial projections based on my proposed franchise? It is always advisable to prepare


your own financial projections for your business. You can take the franchisor’s projections into account, but you need to consider factors specific to you, such as, the rent and rates relating to your property, wages rates based on what you will have to pay, and other costs that you need to pay or consider wise to pay that may not be in the franchisor’s projections. For example, the franchisor’s


22 www.franchiseworld.co.uk April/May 2013


● John Leyden is owner of Carbon Accountancy which provides a full range of accounting and tax advisory services and specialises in developing business plans and raising finance. He was with KPMG and has over 20 years experience in corporate finance and corporate strategy/advisory work.


projections are likely to include minimal provision for insurance costs, but many franchisees will want to ensure they have what they consider full and appropriate insurance.


Can you provide more than just book-keeping and accounting services? You need an accountant who can do the basics to a high standard, such as book-keeping, payroll, VAT returns and year-end accounts and tax. However, you also want an accountant


who is genuinely interested in you and your business and who can provide sound commercial advice when needed, whether it’s looking at a lease agreement, advising on your cash flow issues, or helping you to get better information from your systems.


Do you work on a fixed fee basis? Many accountants still charge their fees based on hours worked and hourly rates - the more hours they provide you,


Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32  |  Page 33  |  Page 34  |  Page 35  |  Page 36  |  Page 37  |  Page 38  |  Page 39  |  Page 40  |  Page 41  |  Page 42  |  Page 43  |  Page 44  |  Page 45  |  Page 46  |  Page 47  |  Page 48  |  Page 49  |  Page 50  |  Page 51  |  Page 52  |  Page 53  |  Page 54  |  Page 55  |  Page 56  |  Page 57  |  Page 58  |  Page 59  |  Page 60