TaxAssist Accountants: The franchise opportunity (2013)
Startups speaks to franchise recruitment manager David Paulson about TaxAssist’s growing franchise success
Franchise: TaxAssist Accountants
Description: Established in 1995, TaxAssist Accountants are the UK’s largest network of franchised accountancy practices. Operating from customer friendly premises we specialise in the provision of professional accountancy services to small businesses.
Started in: 1995
Founder: John Westgarth
No. of franchises: 195
Coverage: UK and Ireland
Average cost per franchise: Franchise fee £36,950, total investment £50,000 – £100,000
With 195 franchises in the UK and Ireland and over 42,000 clients, TaxAssist Accountants are the largest accountancy franchise. For founder John Westgarth, the preferred route for expansion was always franchising, and it would seem it was a sensible business model. Current top performing franchisees have gross annual recurring fees in excess of £1m and, in 2012, the firm made its highest existing franchise resale for £1m. After training as a chartered accountant and working in and owning a number of practices of various sizes, Westgarth noticed a clear gap in the market. He felt that small businesses and personal tax payers weren’t well looked after by the traditional accountancy practices. TaxAssist was formed in 1995 with the remit to service small businesses (self-employed, sole-traders, partnerships and small limited companies with a turnover of up to £2m) and began franchising the following year. Here, Startups talks to franchise recruitment manager David Paulson, about TaxAssist’s current franchise model, the attributes of a perfect franchisee and the company’s plans for the future.
Moving into franchising
So David, how did TaxAssist move into franchising?
TaxAssist Accountants was formed with the plan from the outset to franchise. Our chairman converted his practice to TaxAssist Accountants and piloted it for 12 months before offering the first franchise.
Where did the business open its first franchises?
Our first franchise was in Bury St Edmunds.
How successful were those original franchisees?
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It was successful, however it was a steep learning curve and very different to today’s business model. Nevertheless, the business plan and goals were met.
The franchise opportunity
What makes the franchise different / unique?
Our franchise operates in a sector that traditionally isn’t well looked after. We have retailed the provision of accountancy services – rather than being located in offices that are either difficult to find or look intimidating to small business owners, our franchisees operate from highly visible shop front locations making them much more accessible and approachable for our target market. As a franchisor we have no clients or company owned outlets therefore no other sources of income.
What services do you offer?
Our franchisees provide a full range of professional tax and accountancy services for the small business sector.
How big is the market opportunity?
The market is enormous. According to the Department of Business Innovation and Skills (BIS) at the end of 2011 there were 4.5 million private enterprises of which 4.37 million had less than 10 employees, our target market.
How many franchisees does TaxAssist have today?
We’re now at 195.
How is the brand marketed?
Locally through the shop fronts, networking, local referral partners and online directories. Nationally we market through our online presence that we invest heavily in and through national referral partners.
How do you divide the regions?
Franchisees are allocated exclusive territories made up of adjacent postcode districts with a total population of around 100,000 people.
The perfect franchisee
What does TaxAssist look for in potential franchisees?
The franchise naturally suits someone with an accountancy background, either in practice or industry. But, as the role of the franchisee is primarily business development and practice management you do not have to be an accountant. We look for franchisees that can demonstrate:
- High levels of financial acumen
- Drive and energy
- Good communication skills
- Ability to recruit and manage a team of people
For non-accountants, it typically suits people from a banking or financial services background.
So do franchisees work from an office, or are they home-based? Is it part-time or full-time?
Initially this is a full-time opportunity operating from commercial premises. Franchisees can start from a commercial office but are committed to being in shop front premises by the end of the third year of trading.
How are franchisees vetted?
After completing an application form and an initial telephone interview with the recruitment manager, suitable applicants are invited to attend a franchise discovery day at our support centre in Norwich during which time we assess each other to see if we are a suitable match.
What do you offer franchisees that sign-up?
Franchisees receive a comprehensive package that includes:
- An exclusive territory
- IT equipment
- Initial six week training course with follow up training in the first six months
- Initial marketing campaign
- Business acceleration and nurture programme
- HR and employment law package
- Operation manuals and support site
- Ongoing technical and business development support
How much do franchisees pay and what are the ongoing franchise fees?
The franchise fee is £34,950 plus working capital depending on premises. Franchisees pay us an ongoing management service fee ranging from 1% to 9% depending on turnover.
How do franchisees finance the purchase – what arrangements does TaxAssist have in place with banks?
We have excellent relationships with NatWest/RBS, HSBC and Lloyds who will all typically lend up to 70% of the total investment. We work closely with franchisees on preparing their business plan to ensure that they are achievable, realistic and in a format accepted by the banks.
Success and growth
How successful are some of the franchisees today?
Extremely, we have franchisees turning over £200,000 plus per year now working three days a week and the top performing franchisees (a partnership) working full-time with gross annual recurring fees in excess of £1m. In 2012 we completed on our first £1m franchise resale.
How is the brand looking to grow?
We are looking to grow by around 15-20 new franchisees in the UK per year and are working closely with the current franchisees on business development and profitability. Our network has over 42,000 clients and combined gross annual recurring fees in excess of £27.8m making us the largest accountancy franchise in the UK. We are looking to achieve double digit growth in both of these areas year on year, something that we have consistently achieved throughout the recession.
What is the potential of the business?
The UK market could easily support 400 franchisees and with 42,000 clients from a potential of over 4 million the overall opportunity is enormous.
What will the challenges be in achieving that? T
he challenge is identifying the right franchisee who will have the desire and skill set to grow a business servicing 500 plus clients.
What awards has the business won?
- 2008 – British Franchise Association Franchisor of the Year Silver winners
- 2009 – British Franchise Association Franchisor of the Year Silver winners
- 2010 – British Franchise Association Franchisor of the Year Gold winners
- 2011 – Smith & Henderson Best Franchise Awards ‘Best Training & Support’
- 2012 – Smith & Henderson Best Franchise Awards ‘Best Training & Support’
- 2012 – Smith & Henderson Best Franchise Awards ‘Best Larger Franchisor’
- 2012 – Recognisee by Accountancy Age as the 26th largest network of UK Accountants
To what extent are the founders involved today?
John now takes a chairman’s and non-executive role. He has appointed a management team of three executive directors and 27 employees who are all focussed on franchisee support and network development.
Finally, is the company a British Franchise Association (BFA) member?
We are Full Members of the British Franchise Association and have been since 2003. Our chief executive, Karl Sandall and recruitment manager, David Paulson, are also recognised as British Franchise Association qualified franchise professionals.