Companies franchise because it’s a great way to build an organization, expand markets, and leverage growth beyond their capital limitations. Fast growth can be exciting but, too often, adding to the unit roster becomes a matter of quantity rather than quality. Successful franchisors know that being picky about who is allowed to buy a franchise is vitally important to the ultimate health of the company. It’s important to find qualified, competent franchisees who can and will promote the brand, add value to the organization, boost the unit success rate, and increase revenues and market penetration.

Here are our tips for selecting the best franchise candidates for your organization:

1. Conduct credit and background checks; investigate any red flags.
2. Be thorough when checking references.
3. Require a business or marketing plan to gauge the level of knowledge and expertise.
4. Reject candidates who don’t fit the personality profile and list of qualifications you’re looking for.
5. Have diverse staff members interview candidates, not just the franchise sales personnel.
6. Field staff should meet and interview candidates before completing the process.
7. Never rush to close a sale.
8. Don’t grant more territory or other considerations to close a sale.
9. Choose candidates who are active and able to network in their communities.
10. Look at current affiliations with professional and community service organizations

Many franchisors go into franchising with the wrong idea, and that is to sell as many franchises as possible to anyone and everyone who will buy into your franchised business. However this method is only going to be detrimental to your franchise brand and company integrity. Over time the unsuitable franchisees you have taken on will soon fold or mis manage the company giving your franchised business a trail of bad feeling and failed businesses. The correct way to choosing franchisees is to first ensure that they are suitable to run the business or trainable. If a window cleaner comes along looking to buy an executive coaching franchise then there is a distinct possibility that they just do not have the knowledge and experience to ever make this succeed, no matter how much training you give. This is not to say that people cannot learn new skill bases but you have to really learn about the prospective franchisee and ensure that you are set in your own mind that they will be able to run the franchise as a long term profitable business in the way that you want your brand to follow.

Quite simply: If you choose the right franchisees, making sure they are suitable, then your turnover rate should be fairly low, perhaps around the 15% mark. Franchising is not about the franchise fee but about expanding your brand, hopefully if you are one of the franchise companies that understands this, and many don’t, then you will have a long successful franchised business with a reputation to go with it. With so many franchised businesses out there now you have a lot of competition, so ensuring the integrity of your franchisee base and company is an absolute must.

Matthew Anderson is the founder of The Franchise Shop website which specialises in accountancy franchises for sale and is an accountancy franchises expert in the UK

Several years before, if one wanted to start his own business, his natural course of action would be to do it on his own, depending largely on his business instincts, limited know-how, and observation of the market. The advent of franchising, however, brought a big change in business. Many have since become rich because of franchising. Franchising has indeed many advantages.

Modern franchising came to prominence with the rise of franchise-based food service establishments. This trend started as early as 1919 with quick service restaurants such as A&W Root Beer. In 1935, Howard Deering Johnson teamed up with Reginald Sprague to establish the first modern restaurant franchise. The idea was to let independent operators use the same name, food, supplies, logo and even building design in exchange for a fee.

The growth in franchises picked up steam in the 1930s when such chains as Howard Johnson’s started franchising motels. The 1950s saw a boom of franchise chains in conjunction with the development of America’s Interstate Highway System. Fast food restaurants, diners and motel chains exploded. In regards to contemporary franchise chains, McDonalds is arguably the most successful worldwide with more restaurant units than any other franchise network.

Some of the advantages to owning a franchise can be:

You Own the Business – A franchise is a duplicate of a successful business concept. The franchisee owns the outlet, therefore, he hires his own employees and oversees the management its day-to-day operations. He has high stakes in the business because his money is involved.

Ready Market – When one buys a franchise, he is buying an established concept that has a good record of accomplishment. The franchisee is allowed the use of the company’s trademark and brand name. Because of this, the company is, in effect, giving the franchisee a license to market its products carrying a brand that is already familiar with the consumers. Many popular franchises have instant brand-name recognition and have created a loyal following among consumers. Therefore, the franchisee is getting into a business that already has a ready market.

Continuous Support from Franchiser – Although running his own business, the franchisee can tap the services of the parent company anytime he needs assistance. The services of the head office organization are available to him, too, whenever he needs help. Furthermore, many companies have field operations personnel whom the franchiser can call on to help him deal with any problem he may encounter in the operation of the business.

Most franchises being offered nowadays are turnkey operations. Upon the signing of the franchise agreement and payment of the franchise fee, the franchisee receives the equipment and supplies required in running the business. Furthermore, the franchiser provides assistance in identifying a good business location for the new outlet. The company assists the franchisee in negotiating his lease, preparing plans for outlet layout, shop fitting, and furnishing his store. It also provides assistance in determining the appropriate stock inventory for the opening of the business. This kind of support and the other benefits under the franchise agreement is what sets franchising apart.

Matthew Anderson is the founder of The Franchise Shop website which specialises in accountancy franchises for sale and is an accountancy franchises expert in the UK

Accounts payable is found in the credit side of a company’s balance sheet statement. It represents short – term liabilities. Differentiated from mortgage payables, accounts payable is a debt to be paid in no more than one year. So, every account payable item is liquidated in less than one year. Mortgage payable on the other hand is debt with maturity or payment term exceeding one year. Accounts payables are part of the company’s current liabilities.

The importance of accounts payable explains how one business should handle or manage its creditors. In manufacturing firms, these are usually the supplier of materials. Some may view this accounting term as straightforward. What is understood by a layman – it is a debt to be paid at a given maturity. This is treating it as an ordinary personal credit, which is not supposed to be the case.

There are some accounts payable that can be conceived in the light of a personal loan. Examples are utilities such as telephone, electricity, water or even credit cards. These are uniform in treatment of the company – you have the amount and the due date which usually fall on the same date every month. Recording of this account in the company’s books may be handled by a different employee. When paid, the amount of payment will be treated as expense and the issuance of payment in form of checks are handled by another employee, maybe officer of the company.

The accounts payable must be treated with relative care. Scrutinize the provisions. Very common payment terms are similar to the following: within 30 days, net 30 or 2/10 net 30. Within 30 days implies that the account payable is to be paid within 30 days; 2/10 net 30 is a provision that allows for discounts. This 2/10 is a discount option where-in the supplier gives a 2 per cent discount when the amount is paid within 10 days but needs to be settled in 30 day time without discount.

Crucial to the treatment of accounts payable is monitoring the due date of each of the accounts payables. There are payables that even penalizes when payment is not done on the stipulated due date. With this, the firm may encounter additional expense instead of having accrued savings.

Even if your business is a small one and you do the payments to creditors by yourself, it is better still to understand and have familiarity with common payment terms. No matter how small the discount offered by a creditor, any amount is still a considerable savings when taken in the long run. Most of all, the accounts payable is an indication of billing process, something which is important in setting up a business.

Accounts payable will always be a part of a business financial statement. There will always be creditors and even simple utilities will be part of this account.

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The Office of Professional Responsibility (OPR) has prevailed in an agency appeal involving issues which include the due diligence responsibilities of a CPA under the Rules of Practice before the IRS (Circular 230). The May 28th decision of the Appellate Authority has upheld the Administrative Law Judge’s (“ALJ”) disbarment of CPA Tim W. Kaskey finding, among other things, that Mr. Kaskey failed to exercise due diligence in preparing tax returns for a corporation and its husband and wife shareholders.

“This is yet another decision highlighting that practitioners have a duty to the system as well as to their clients. Practitioners who do not take this duty seriously can expect to be held accountable,” said Office of Professional Responsibility (OPR) Director Karen L. Hawkins. On review, the Treasury Appellate Authority agreed that disbarment was proper. Mr. Kaskey defended against the due diligence allegations by arguing that his clients had misrepresented their income to him.

Mr. Kaskey is a CPA and tax advisor who also prepared individual as well as corporate tax returns. OPR alleged that Mr. Kaskey failed to exercise due diligence under Circular 230, section 10.22 when he failed to determine the correctness of the representations he made to the IRS on the tax returns of a corporation and its married shareholders.

OPR also alleged that Mr. Kaskey’s misconduct included a failure to comply with the requirement to advise clients of potential penalties and any opportunities to avoid such penalties by disclosure contained in Circular 230, former section 10.34(b) (now section 10.34(c))

When Mr. Kaskey failed to respond or appear at the administrative proceeding, the ALJ deemed the allegations against Mr. Kaskey admitted and entered a default judgment for disbarment. Mr. Kaskey appealed. On review, the Treasury Appellate Authority agreed that disbarment was proper. Mr. Kaskey defended against the due diligence allegations by arguing that his clients had misrepresented their income to him.

The Appellate Authority observed that there was “a great deal of evidence reflecting the lack of due diligence by Mr. Kaskey in the preparation of these returns and that “it was inconceivable that the individual taxpayers could pay their living expenses based on the income reported on their returns.”

“Practitioners who think OPR isn’t serious about due diligence should take heed,” added OPR Director Hawkins. “Practitioners may not ignore the implications of information already known, and must make reasonable inquiries if the information furnished by a client appears to be incorrect, inconsistent or incomplete.” The Appellate Authority’s and ALJ’s opinions are available on the IRS Website; search “OPR”.

Rizzolo Group has many years experience helping small business owners decrease taxes and improve profitability. You need the right financial data and the right tax preparer who knows accounting bookkeeping, payroll services and gives you timely advice. Rizzolo Group does that!

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