How to start a financial services franchise
Discover how to take advantage of this growing white-collar sector
What does the word ‘franchising’ mean to you? You may not have heard the names but white collar, business to business and financial based franchises are growing and there are plenty of opportunities to advise companies, particularly on cost reduction or assist small businesses with their tax and accounts needs.
Advice on cost reduction exists in the form of Auditel (UK) Ltd and Expense Reduction Analysts (ERA). These are separate though sister companies that offer consultancy services identifying ways to cuts costs in businesses.
In the UK, Auditel is the older of the two and specialises in working with energy, telecommunications and facilities services. ERA deals with everything else – from advertising and computers to office supplies and vehicles.
Other financial franchises exist to assist small business with tax and accounts. TaxAssist Direct Ltd was formed on the back of the introduction of self-assessment tax in 1995. This franchisor is a network of individuals who work with small businesses on a one to one level. What is it?
For both these franchises familiarity with and preferably contacts in the business to business world would be a good place to start. Not being afraid to leave the house and meet people could also be an asset. But as to how they work, this is better dealt with separately.
Cost reduction franchises Auditel and ERA are all about establishing a relationship with your clients. The process generally starts with networking – or you calling them. It is most unlikely a company will ring you up asking for your services. Companies still see cost management as slightly unsophisticated cost cutting.
Cost management is basically where discounts are negotiated from existing and new suppliers on the basis that they will be guaranteed more orders – something of a bulk buying exercise.
ERA’s franchise recruitment manager Robert Allison: “With an international network and £400 million spending potential, we can negotiate with any supplier to provide lower prices.”
The franchisor sets up these deals and the franchisee goes into a company to try and use them to reduce costs. But you can also source your own suppliers if you want to.
Once you’ve made contact, there will be an initial meeting to establish where the company is spending money – and how much. You will then tender price savings to the client and wait for their decision.
This process takes around six to 10 weeks, over which time you would perhaps meet up with the client three or four times. Assuming they adopt your cost saving suggestions, you will only receive a fee when the saving is made.
For example if it is on an electricity bill and the bill comes quarterly, you will take 50 per cent of that saving on a quarterly basis. This will continue for 36 months after the first bill.
Remember the client is not obliged to follow your savings and could pull out at any time throughout the negotiation period.
There’s always the possibility of more work if the client continues to make savings. A happy client is likely to look favourably on any further ideas you present. Kirsten Vigar, general manager at Auditel, explains:
“Franchisees don’t just do the initial audit, they keep monitoring and making recommendations – it is a good ongoing stream of income. For example, a client might sign you up to look at telecommunication then later ask you to look at their electricity.”
Working with other franchisees either jointly on projects or just seeking advice is possible through the Auditel/ERA network – including across franchise collaboration. For your fee you get access to the company intranet and bulletin board.
One Auditel franchisee said, “I posted up a question on the intranet bulletin board and within days people had replied seven-fold.” Being a network of people from varying industries means there is generally someone who can help where your knowledge is lacking. You are not alone.
“TaxAssist Direct franchisees will not find themselves alone either. Each franchisee can expect regular regional meetings and visits from technical personnel. There are also teams of Accountants, Tax, IT, software, Marketing and Sales experts on hand to offer support.
Barry McGougan from Kilmarnock states “To get to where I am now could not have been done without the support and help of TaxAssist Norwich. They have indeed “walked the talk”.
“The training I have received has been excellent. However the most important and comforting factor has been the day to day support given through the helpline – knowing that with a telephone call or E-mail your questions can be discussed and solutions achieved. ”
TaxAssist Direct franchisees are required to work initially from an office and within four years progress to a ‘shop front’ style office. Tom Smith from Ringwood moved into his high street shop front office in February 2004 and experienced immediate benefits.
“The shopfront has given my business a whole new dimension,” he says. “After six months of being here we have had £10,000 worth of business directly attritutable to walk-in traffic.”